SF 2360

1st Engrossment - 94th Legislature (2025 - 2026)

Posted on 07/02/2025 10:39 a.m.

A bill for an act
relating to employment; requiring a biennial misclassification fraud impact report;
appropriating money.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1. new text begin MISCLASSIFICATION FRAUD IMPACT REPORT.
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new text begin (a) Every two years, the commissioners of revenue, employment and economic
development, and labor and industry must coordinate to conduct an analysis of the costs of
misclassification to illustrate how misclassification impacts misclassified workers,
government programs, and tax collections.
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new text begin (b) By January 15 of every odd-numbered year, beginning January 15, 2027, the
commissioner of labor and industry must report on the analysis performed under paragraph
(a) to the chairs and ranking minority members of the legislative committees with jurisdiction
over taxes, workforce, and labor. The commissioner of labor and industry may contract
with external experts or an independent third party to conduct a study, develop a report, and
perform other functions.
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new text begin (c) At a minimum, the study and report must provide:
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new text begin (1) an estimate of the number of workers experiencing misclassification in Minnesota;
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new text begin (2) an estimate of the cost of misclassification to impacted workers;
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new text begin (3) an estimate of the prevalence of misclassification by industry; and
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new text begin (4) an estimate of the impact to:
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new text begin (i) the unemployment insurance trust fund;
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new text begin (ii) the family and medical benefit insurance account;
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new text begin (iii) state income tax collection;
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new text begin (iv) the workers' compensation fund; and
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new text begin (v) the workforce development fund.
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new text begin (d) Data and information relevant to the required report elements in paragraph (c) must
be provided to the commissioner of labor and industry for purposes of the study and report,
including, but not limited to, the following:
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new text begin (1) from the Department of Employment and Economic Development, information and
data relevant to:
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new text begin (i) the unemployment insurance trust fund;
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new text begin (ii) the family and medical benefit insurance account;
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new text begin (iii) unemployment insurance program audits and findings; and
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new text begin (iv) the workforce development fund;
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new text begin (2) from the Department of Revenue, information and data relevant to:
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new text begin (i) misclassification tax audits and findings;
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new text begin (ii) income tax collection; and
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new text begin (iii) 1099 filings; and
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new text begin (3) from the Department of Labor and Industry, information and data relevant to:
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new text begin (i) misclassification complaints, investigations, and findings; and
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new text begin (ii) the workers' compensation fund.
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Sec. 2. new text begin APPROPRIATION; MISCLASSIFICATION FRAUD IMPACT REPORT.
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new text begin (a) $....... in fiscal year 2026 is appropriated from the workforce development fund to
the commissioner of labor and industry for the misclassification fraud impact report and
for legal, technical, and clerical staff support for the report. This appropriation is available
until June 30, 2027. The base amount in fiscal year 2028 is $....... from the workforce
development fund.
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new text begin (b) The commissioner of labor and industry may enter into interagency agreements with
the commissioner of employment and economic development and the commissioner of
revenue to transfer funds appropriated under paragraph (a) to cover costs associated with
the misclassification fraud impact report.
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