HF 1859

2nd Engrossment - 93rd Legislature (2023 - 2024) Posted on 03/23/2023 03:40pm

A bill for an act
relating to labor; creating new enforcement provisions for construction workers
wage protection; amending Minnesota Statutes 2022, sections 177.27, subdivisions
1, 4, 8, 9, 10; 181.171, subdivision 4; proposing coding for new law in Minnesota
Statutes, chapter 181.

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

Section 1.

Minnesota Statutes 2022, section 177.27, subdivision 1, is amended to read:

Subdivision 1.

Examination of records.

The commissioner may enter during reasonable
office hours or upon request and inspect the place of business or employment of any employer
of employees working in the state, to examine and inspect books, registers, payrolls, and
other records of any employer that in any way relate to wages, hours, and other conditions
of employment of any employees. The commissioner may transcribe any or all of the books,
registers, payrolls, and other records as the commissioner deems necessary or appropriate
and may question the employees to ascertain compliance with sections 177.21 to 177.435 new text begin
and 181.165 new text end . The commissioner may investigate wage claims or complaints by an employee
against an employer if the failure to pay a wage may violate Minnesota law or an order or
rule of the department.

Sec. 2.

Minnesota Statutes 2022, section 177.27, subdivision 4, is amended to read:

Subd. 4.

Compliance orders.

The commissioner may issue an order requiring an
employer to comply with sections 177.21 to 177.435, 181.02, 181.03, 181.031, 181.032,
181.101, 181.11, 181.13, 181.14, 181.145, 181.15, 181.172, paragraph (a) or (d), 181.275,
subdivision 2a, 181.722, 181.79, and 181.939 to 181.943, new text begin and 181.165 new text end or with any rule
promulgated under section 177.28. The commissioner shall issue an order requiring an
employer to comply with sections 177.41 to 177.435 new text begin or 181.165 new text end if the violation is repeated.
For purposes of this subdivision only, a violation is repeated if at any time during the two
years that preceded the date of violation, the commissioner issued an order to the employer
for violation of sections 177.41 to 177.435 new text begin or 181.165 new text end and the order is final or the
commissioner and the employer have entered into a settlement agreement that required the
employer to pay back wages that were required by sections 177.41 to 177.435. The
department shall serve the order upon the employer or the employer's authorized
representative in person or by certified mail at the employer's place of business. An employer
who wishes to contest the order must file written notice of objection to the order with the
commissioner within 15 calendar days after being served with the order. A contested case
proceeding must then be held in accordance with sections 14.57 to 14.69 new text begin or 181.165 new text end . If,
within 15 calendar days after being served with the order, the employer fails to file a written
notice of objection with the commissioner, the order becomes a final order of the
commissioner.

Sec. 3.

Minnesota Statutes 2022, section 177.27, subdivision 8, is amended to read:

Subd. 8.

Court actions; suits brought by private parties.

An employee may bring a
civil action seeking redress for a violation or violations of sections 177.21 to 177.44 new text begin and
181.165 new text end directly to district court. An employer who pays an employee less than the wages
and overtime compensation to which the employee is entitled under sections 177.21 to
177.44 new text begin or a contractor that has assumed a subcontractor's liability as required by section
181.165, new text end is liable to the employee for the full amount of the wages, gratuities, and overtime
compensation, less any amount the employer new text begin or contractor new text end is able to establish was actually
paid to the employee and for an additional equal amount as liquidated damages. In addition,
in an action under this subdivision the employee may seek damages and other appropriate
relief provided by subdivision 7 and otherwise provided by law. An agreement between the
employee and the employer to work for less than the applicable wage is not a defense to
the action.

Sec. 4.

Minnesota Statutes 2022, section 177.27, subdivision 9, is amended to read:

Subd. 9.

District court jurisdiction.

Any action brought under subdivision 8 may be
filed in the district court of the county wherein a violation or violations of sections 177.21
to 177.44 new text begin or 181.165 new text end are alleged to have been committed, where the respondent resides or
has a principal place of business, or any other court of competent jurisdiction. The action
may be brought by one or more employees.

Sec. 5.

Minnesota Statutes 2022, section 177.27, subdivision 10, is amended to read:

Subd. 10.

Attorney fees and costs.

In any action brought pursuant to subdivision 8, the
court shall order an employer who is found to have committed a violation or violations of
sections 177.21 to 177.44 new text begin or 181.165 new text end to pay to the employee or employees reasonable costs,
disbursements, witness fees, and attorney fees.

Sec. 6.

new text begin [181.165] WAGE PROTECTION; CONSTRUCTION WORKERS.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) For purposes of this section, the following terms have
the meanings given.
new text end

new text begin (b) "Claimant" means any person claiming unpaid wages, fringe benefits, or resulting
liquidated damages that are owed as required by law, including any applicable statute,
regulation, rule, ordinance, government resolution or policy, contract, or other legal authority.
new text end

new text begin (c) "Commissioner" refers to the commissioner of labor and industry.
new text end

new text begin (d) "Construction contract" means a written or oral agreement for the construction,
reconstruction, erection, alteration, remodeling, repairing, maintenance, moving, or
demolition of any building, structure, or improvement, or relating to the excavation of or
development or improvement to land. For purposes of this section, a construction contract
shall not include a home improvement contract for the performance of a home improvement
between a home improvement contractor and the owner of an owner-occupied dwelling,
and a home construction contract for one- or two-family dwelling units except where such
contract or contracts results in the construction of more than ten one- or two-family
owner-occupied dwellings at one project site annually.
new text end

new text begin (e) "Contractor" means any person, firm, partnership, corporation, association, company,
organization, or other entity, including a construction manager, general or prime contractor,
joint venture, or any combination thereof, along with their successors, heirs, and assigns,
which enters into a construction contract with an owner. An owner shall be deemed a
contractor and liable as such under this section if said owner has entered into a construction
contract with more than one contractor or subcontractor on any construction site.
new text end

new text begin (f) "Owner" means any person, firm, partnership, corporation, association, company,
organization, or other entity, or a combination of any thereof, with an ownership interest,
whether the interest or estate is in fee, as vendee under a contract to purchase, as lessee or
another interest or estate less than fee that causes a building, structure, or improvement,
new or existing, to be constructed, reconstructed, erected, altered, remodeled, repaired,
maintained, moved, or demolished or that causes land to be excavated or otherwise developed
or improved.
new text end

new text begin (g) "Subcontractor" means any person, firm, partnership, corporation, company,
association, organization or other entity, or any combination thereof, that is a party to a
contract with a contractor or party to a contract with the contractor's subcontractors at any
tier to perform any portion of work within the scope of the contractor's construction contract
with the owner, including where the subcontractor has no direct privity of contract with the
contractor. When the owner is deemed a contractor, subcontractor also includes the owner's
contractors.
new text end

new text begin Subd. 2. new text end

new text begin Assumption of liability. new text end

new text begin (a) A contractor entering into a construction contract
shall assume and is liable for any unpaid wages, fringe benefits, and resulting liquidated
damages owed to a claimant or third party acting on the claimant's behalf by a subcontractor
at any tier acting under, by, or for the contractor or it subcontractors for the claimant's
performance of labor.
new text end

new text begin (b) A contractor or any other person shall not evade or commit any act that negates the
requirements of this section. No agreement by an employee or subcontractor to indemnify
a contractor or otherwise release or transfer liability assigned to a contractor under this
section shall be valid except as otherwise provided herein. The provisions of this section
do not prohibit a contractor or subcontractor from enforcing a contractual provision or other
lawful remedies against a subcontractor for monetary damages incurred by the contractor
pursuant to this section.
new text end

new text begin (c) A contractor shall not evade liability under this section by claiming that a person is
an independent contractor rather than an employee of a subcontractor unless the person
meets the criteria required by section 181.723, subdivision 4.
new text end

new text begin Subd. 3. new text end

new text begin Enforcement. new text end

new text begin (a) In the case of a complaint filed with the commissioner under
section 177.27, subdivision 1, or a private civil action by an employee under section 177.27,
subdivision 8, such employee may designate any person, organization, or collective
bargaining agent authorized to file a complaint with the commissioner or in court pursuant
to this section to make a wage claim on the claimant's behalf.
new text end

new text begin (b) In the case of an action against a subcontractor, the contractor shall be jointly and
severally liable for any unpaid wages, benefits, and any other remedies available pursuant
to this section.
new text end

new text begin (c) Claims shall be brought consistent with section 541.07, clause (5), for the initiation
of such claim under this section in a court of competent jurisdiction or the filing of a
complaint with the commissioner or attorney general. The provisions of this section do not
diminish, impair, or otherwise infringe on any other right of an employee to bring an action
or file a complaint against any employer.
new text end

new text begin Subd. 4. new text end

new text begin Payroll records; data. new text end

new text begin (a) Upon request by a contractor to a subcontractor, the
subcontractor, and any other subcontractors hired under contract to the subcontractor shall
provide payroll records, which, at minimum, contain all lawfully required information for
all workers providing labor on the project. The payroll records shall contain sufficient
information to apprise the contractor or subcontractor of such subcontractor's payment of
wages and fringe benefit contributions to a third party on the workers' behalf. Payroll records
shall be marked or redacted to an extent only to prevent disclosure of the employee's Social
Security number.
new text end

new text begin (b) Upon request of a contractor or a contractor's subcontractor, any subcontractor that
performs any portion of work within the scope of the contractor's construction contract with
an owner shall provide:
new text end

new text begin (1) the names of all employees and independent contractors of the subcontractor on the
project, including the names of all those designated as independent contractors and, when
applicable, the name of the contractor's subcontractor with whom the subcontractor is under
contract;
new text end

new text begin (2) the anticipated contract start date;
new text end

new text begin (3) the scheduled duration of work;
new text end

new text begin (4) when applicable, local unions with which such subcontractor is a signatory contractor;
and
new text end

new text begin (5) the name and phone number of a contact for the subcontractor.
new text end

new text begin Failure to timely comply with a request for this information is a basis for a contractor to
withhold payments owed to a subcontractor at any tier.
new text end

new text begin (c) Unless otherwise required by law, a contractor or subcontractor shall not disclose an
individual's personal identifying information to the general public, except that the contractor
or subcontractor can confirm that the individual works for them and provide the individual's
full name.
new text end

new text begin Subd. 5. new text end

new text begin Payments to contractors and subcontractors. new text end

new text begin Nothing in this section shall
alter the owner's obligation to pay a contractor, or a contractor's obligation to pay a
subcontractor as set forth in section 337.10, except as expressly permitted by this section.
new text end

new text begin Subd. 6. new text end

new text begin Exemptions. new text end

new text begin (a) Nothing in this section shall be deemed to diminish the rights,
privileges, or remedies of any employee under any collective bargaining agreement. This
section shall not apply to any contractor or subcontractor that is a signatory to a bona fide
collective bargaining agreement with a building and construction trade labor organization
that: (1) contains a grievance procedure that may be used to recover unpaid wages on behalf
of employees covered by the agreement; and (2) provides for collection of unpaid
contributions to fringe benefit trust funds established pursuant to United States Code, title
29, section 186, subsection (c), paragraphs (5) and (6), by or on behalf of such trust funds.
new text end

new text begin (b) This section does not apply to work for which prevailing wage rates apply under
sections 177.41 to 177.44.
new text end

Sec. 7.

Minnesota Statutes 2022, section 181.171, subdivision 4, is amended to read:

Subd. 4.

Employer; definition.

"Employer" means any person having one or more
employees in Minnesota and includes the state new text begin or a contractor that has assumed a
subcontractor's liability within the meaning of section 181.165 new text end and any political subdivision
of the state. This definition applies to this section and sections 181.02, 181.03, 181.031,
181.032, 181.06, 181.063, 181.10, 181.101, 181.13, 181.14, and 181.16.

Sec. 8. new text begin EFFECTIVE DATE.
new text end

new text begin Sections 1 to 7 are effective August 1, 2023, and apply to contracts or agreements entered
into, renewed, modified, or amended on or after that date.
new text end