HF 1316

1st Engrossment - 94th Legislature (2025 - 2026) Posted on 04/02/2025 12:24pm

A bill for an act
relating to child support; adding independent contractors and payors to the
centralized work reporting system; requiring payors to report independent
contractors to the centralized work reporting system; amending Minnesota Statutes
2024, sections 142A.29, subdivisions 1, 2, 3, 4, 6; 518A.53, subdivision 5; repealing
Minnesota Statutes 2024, section 142A.29, subdivision 9.

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

Section 1.

Minnesota Statutes 2024, section 142A.29, subdivision 1, is amended to read:

Subdivision 1.

Definitions.

(a) The definitions in this subdivision apply to this section.

(b) "Date of hiring" means the earlier of: (1) the first day for which an employee new text begin or
independent contractor new text end is owed compensation by an employer new text begin or payor new text end ; or (2) the first day
that an employee new text begin or independent contractor new text end reports to work or performs labor or services
for an employer new text begin or payor new text end .

(c) "Earnings" means payment owed by an employer for labor or services rendered by
an employee new text begin or independent contractor new text end .

(d) "Employee" means a person who resides or works in Minnesota, performs services
for compensation, in whatever form, for an employer and satisfies the criteria of an employee
under chapter 24 of the Internal Revenue Code. Employee does not include:

(1) persons hired for domestic service in the private home of the employer, as defined
in the Federal Tax Code; or

(2) an employee of the federal or state agency performing intelligence or
counterintelligence functions, if the head of such agency has determined that reporting
according to this law would endanger the safety of the employee or compromise an ongoing
investigation or intelligence mission.

(e) "Employer" means a person or entity located or doing business in this state that
employs one or more employees for payment, and satisfies the criteria of an employer under
chapter 24 of the Internal Revenue Code. Employer includes a labor organization as defined
in paragraph deleted text begin (g) deleted text end new text begin (h) new text end . Employer also includes the state, political or other governmental
subdivisions of the state, and the federal government.

(f) "Hiring" means engaging a person to perform services for compensation and includes
the reemploying or return to work of any previous employee who was laid off, furloughed,
separated, granted a leave without pay, or terminated from employment when a period of
60 days elapses from the date of layoff, furlough, separation, leave, or termination to the
date of the person's return to work.

new text begin (g) "Independent contractor" means a person over 18 years of age, or a corporation or
limited liability company with a sole shareholder or member, who performs services for
compensation in an amount equal to or greater than $600 per calendar year, to another
person or entity doing business in this state. Independent contractor includes but is not
limited to a person who logs in as a driver to the digital network of a transportation company
doing business in this state or of a company operating a network in this state to facilitate
delivery of food, goods, or services. Independent contractor does not include domestic
service in the private home of the service recipient.
new text end

deleted text begin (g) deleted text end new text begin (h) new text end "Labor organization" means entities located or doing business in this state that
meet the criteria of labor organization under section 2(5) of the National Labor Relations
Act. This includes any entity, that may also be known as a hiring hall, used to carry out
requirements described in chapter 7 of the National Labor Relations Act.

deleted text begin (h) deleted text end new text begin (i) new text end "Payor" means a person or entity located or doing business in Minnesota who
pays money to an independent contractor according to an agreement for the performance
of services.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2026.
new text end

Sec. 2.

Minnesota Statutes 2024, section 142A.29, subdivision 2, is amended to read:

Subd. 2.

Work reporting system established.

The commissioner of children, youth,
and families shall establish a centralized work reporting system for the purpose of receiving
and maintaining information from employers new text begin and payors new text end on newly hired or rehired employees new text begin
and independent contractors new text end . The commissioner of children, youth, and families shall take
reasonable steps to inform the state's employers new text begin and payors new text end of the requirements of this
section and the acceptable processes by which employers new text begin and payors new text end can comply with the
requirements of this section.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2026.
new text end

Sec. 3.

Minnesota Statutes 2024, section 142A.29, subdivision 3, is amended to read:

Subd. 3.

Duty to report.

Employers new text begin and payors new text end doing business in this state shall report
to the commissioner of children, youth, and families the hiring of any employee new text begin or
independent contractor new text end who resides or works in this state to whom the employer new text begin or payor new text end
anticipates paying earnings. Employers new text begin and payors new text end shall submit reports required under this
subdivision within 20 calendar days of the date of hiring of the employee new text begin or independent
contractor new text end .

Employers new text begin and payors new text end are not required to report the hiring of any person who will be
employed new text begin or paid new text end for less than two months' duration; and will have gross earnings less than
$250 per month.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2026.
new text end

Sec. 4.

Minnesota Statutes 2024, section 142A.29, subdivision 4, is amended to read:

Subd. 4.

Means to report.

Employers new text begin and payors new text end may report by delivering, mailing, or
telefaxing a copy of the employee's new text begin or independent contractor's new text end federal W-4 form or W-9
form or any other document that contains the required information, submitting electronic
media in a compatible format, toll-free telecommunication, or other means authorized by
the commissioner of children, youth, and families that will result in timely reporting.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2026.
new text end

Sec. 5.

Minnesota Statutes 2024, section 142A.29, subdivision 6, is amended to read:

Subd. 6.

Sanctions.

If an employer new text begin or payor new text end fails to report under this section, the
commissioner of children, youth, and families, by certified mail, shall send the employer new text begin
or payor new text end a written notice of noncompliance requesting that the employer new text begin or payor new text end comply
with the reporting requirements of this section. The notice of noncompliance must explain
the reporting procedure under this section and advise the employer new text begin or payor new text end of the penalty
for noncompliance. An employer new text begin or payor new text end who has received a notice of noncompliance and
later incurs a second violation is subject to a civil penalty of $25 for each intentionally
unreported employee new text begin or independent contractor new text end . An employer new text begin or payor new text end who has received a
notice of noncompliance is subject to a civil penalty of $500 for each intentionally unreported
employee new text begin or independent contractor new text end , if noncompliance is the result of a conspiracy between
an employer new text begin or payor new text end and an employee new text begin or independent contractor new text end not to supply the required
report or to supply a false or incomplete report. These penalties may be imposed and collected
by the commissioner of children, youth, and families. An employer new text begin or payor new text end who has been
served with a notice of noncompliance and incurs a second or subsequent violation resulting
in a civil penalty, has the right to a contested case hearing under chapter 14. An employer new text begin
or payor new text end has 20 days from the date of service of the notice, to file a request for a contested
case hearing with the commissioner. The order of the administrative law judge constitutes
the final decision in the case.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2026.
new text end

Sec. 6.

Minnesota Statutes 2024, section 518A.53, subdivision 5, is amended to read:

Subd. 5.

Payor of funds responsibilities.

(a) An order for or notice of withholding is
binding on a payor of funds upon receipt. Withholding must begin no later than the first
pay period that occurs after 14 days following the date of receipt of the order for or notice
of withholding. In the case of a financial institution, preauthorized transfers must occur in
accordance with a court-ordered payment schedule.

(b) A payor of funds shall withhold from the income payable to the obligor the amount
specified in the order or notice of withholding and amounts specified under subdivisions 6
and 9 and shall remit the amounts withheld to the public authority within seven business
days of the date the obligor is paid the remainder of the income. The payor of funds shall
include with the remittance the Social Security number of the obligor, the case type indicator
as provided by the public authority and the date the obligor is paid the remainder of the
income. A payor of funds may combine all amounts withheld from one pay period into one
payment to each public authority, but shall separately identify each obligor making payment.

(c) A payor of funds shall not discharge, or refuse to hire, or otherwise discipline an
employee as a result of wage or salary withholding authorized by this section. A payor of
funds shall be liable to the obligee for any amounts required to be withheld. A payor of
funds that fails to withhold or transfer funds in accordance with this section is also liable
to the obligee for interest on the funds at the rate applicable to judgments under section
549.09, computed from the date the funds were required to be withheld or transferred. A
payor of funds is liable for reasonable attorney fees of the obligee or public authority incurred
in enforcing the liability under this paragraph. A payor of funds that has failed to comply
with the requirements of this section is subject to contempt sanctions under section 518A.73.
If the payor of funds is an employer or independent contractor and violates this subdivision,
a court may award the obligor twice the wages lost as a result of this violation. If a court
finds a payor of funds violated this subdivision, the court shall impose a civil fine of not
less than $500. The liabilities in this paragraph apply to intentional noncompliance with
this section.

(d) deleted text begin If a single employee is subject to multiple withholding orders or multiple notices of
withholding for the support of more than one child, deleted text end The payor of funds shall comply with
all deleted text begin of the deleted text end new text begin withholding new text end orders or notices to the extent that the total amount withheld from
the obligor's income does not exceed the limits imposed under the Consumer Credit
Protection Act, United States Code, title 15, section 1673(b), giving priority to amounts
designated in each order or notice as current support as follows:

(1) if the total of the amounts designated in the orders for or notices of withholding as
current support exceeds the amount available for income withholding, the payor of funds
shall allocate to each order or notice an amount for current support equal to the amount
designated in that order or notice as current support, divided by the total of the amounts
designated in the orders or notices as current support, multiplied by the amount of the income
available for income withholding; and

(2) if the total of the amounts designated in the orders for or notices of withholding as
current support does not exceed the amount available for income withholding, the payor of
funds shall pay the amounts designated as current support, and shall allocate to each order
or notice an amount for past due support, equal to the amount designated in that order or
notice as past due support, divided by the total of the amounts designated in the orders or
notices as past due support, multiplied by the amount of income remaining available for
income withholding after the payment of current support.

(e) When an order for or notice of withholding is in effect and the obligor's employment
is terminated, the obligor and the payor of funds shall notify the public authority of the
termination within ten days of the termination date. The termination notice shall include
the obligor's home address and the name and address of the obligor's new payor of funds,
if known.

(f) A payor of funds may deduct one dollar from the obligor's remaining salary for each
payment made pursuant to an order for or notice of withholding under this section to cover
the expenses of withholding.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2026.
new text end

Sec. 7. new text begin REPEALER.
new text end

new text begin Minnesota Statutes 2024, section 142A.29, subdivision 9, new text end new text begin is repealed.
new text end

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective July 1, 2026.
new text end

APPENDIX

Repealed Minnesota Statutes: H1316-1

142A.29 WORK REPORTING SYSTEM.

Subd. 9.

Independent contractors.

The state and all political subdivisions of the state, when acting in the capacity of an employer, shall report the hiring of any person as an independent contractor to the centralized work reporting system in the same manner as the hiring of an employee is reported.

Other payors may report independent contractors to whom they make payments that require the filing of a 1099-MISC report. Payors reporting independent contractors shall report by use of the same means and provide the same information required under subdivisions 4 and 5. The commissioner of children, youth, and families shall establish procedures for payors reporting under this section.