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Minnesota Legislature

Office of the Revisor of Statutes

HF 2914

as introduced - 90th Legislature (2017 - 2018) Posted on 02/22/2018 05:36pm

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - as introduced

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A bill for an act
relating to employment; requiring written employment contracts; expanding
employer obligation to provide workers' compensation and unemployment insurance
contributions; prohibiting noncompete agreements for certain employees; regulating
contracts for services for independent contractors; amending Minnesota Statutes
2016, section 181.721; proposing coding for new law in Minnesota Statutes,
chapters 181; 513; repealing Minnesota Statutes 2016, sections 181.55; 181.56;
181.57.

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

Section 1.

new text begin [181.551] WRITTEN EMPLOYMENT CONTRACTS REQUIRED.
new text end

new text begin Subdivision 1. new text end

new text begin Written contract required. new text end

new text begin Every employer in the state, whether public
or private, must enter into a written employment contract with each employee at the
commencement of employment.
new text end

new text begin Subd. 2. new text end

new text begin Required terms. new text end

new text begin (a) A contract required by this section must, at a minimum,
contain the following terms:
new text end

new text begin (1) pay and other compensation the employee will receive, including the amount and
whether paid hourly, by salary, or by other means;
new text end

new text begin (2) timing of employee pay;
new text end

new text begin (3) employer-provided benefits;
new text end

new text begin (4) grounds for employee termination;
new text end

new text begin (5) discipline and termination process;
new text end

new text begin (6) a grievance procedure by which the employee can contest any discipline or
termination, subject to paragraph (b); and
new text end

new text begin (7) restrictive covenants that apply to the employee, subject to paragraph (c).
new text end

new text begin (b) An employee must be granted a right to be represented in the grievance process by
an individual or organization of the employee's choosing, at the employee's expense.
new text end

new text begin (c) Any restrictive covenants are subject to sections 181.987 to 181.989. If the contract
contains a restrictive covenant, the provision must be limited to restrictions on the employee
that are reasonable in scope or duration and must be reasonably necessary to protect the
employer's trade secrets, goodwill, or existing business relationships.
new text end

new text begin Subd. 3. new text end

new text begin Exception. new text end

new text begin This section does not apply to employees covered by a valid
collective bargaining agreement.
new text end

new text begin Subd. 4. new text end

new text begin Construction. new text end

new text begin This section must not be construed as diminishing any employee
right under common law, statute, or regulation.
new text end

new text begin Subd. 5. new text end

new text begin Enforcement. new text end

new text begin (a) The commissioner of labor and industry shall receive,
investigate, attempt to resolve, and enforce a complaint of a violation of this section in the
same manner that the commissioner attempts to resolve a complaint of a violation of the
Minnesota Fair Labor Standards Act, subject to paragraph (b).
new text end

new text begin (b) The commissioner shall impose a civil fine on any employer that violates this section
in an amount not to exceed $5,000 for each employee aggrieved by the violation.
new text end

new text begin (c) In determining the amount of any civil fine under this subdivision, the commissioner
must consider the appropriateness of the fine to the size of the employer and the gravity of
the applicable violation.
new text end

Sec. 2.

Minnesota Statutes 2016, section 181.721, is amended to read:


181.721 deleted text beginCONSTRUCTIONdeleted text end BID EQUITY.

Subdivision 1.

Workers' compensation and unemployment contribution costs.

A
successful bidder on a project new text beginor agreement to provide landscaping or janitorial services
new text end must provide coverage for workers' compensation and unemployment benefits for its
employees required under chapters 176 and 268, respectively, and other state and federal
laws.

Subd. 2.

Employee status.

deleted text beginEmployeedeleted text endnew text begin (a) Subject to paragraph (b), employeenew text end status shall
be determined using the same tests and in the same manner as employee status is determined
under the applicable workers' compensation and unemployment insurance program laws
and rules.

new text begin (b) Notwithstanding anything to the contrary, for the purposes of this chapter and chapter
177, successful bidders on a project or agreement to provide landscaping or janitorial services
are considered joint employers with any subcontracted person or persons employing those
providing the landscaping or janitorial services.
new text end

Subd. 3.

Scope.

This section applies to deleted text beginany nonresidential project for the construction,
repair, remodeling, alteration, conversion, modernization, improvement, rehabilitation,
replacement, or renovation of a building or structure.
deleted text endnew text begin:
new text end

new text begin (1) any nonresidential project for the construction, repair, remodeling, alteration,
conversion, modernization, improvement, rehabilitation, replacement, or renovation of a
building or structure;
new text end

new text begin (2) any agreement between an employer and any person or persons for the labor of
employees employed primarily in occupations under North American Industry Classification
System code 561730 (landscaping services); or
new text end

new text begin (3) any agreement between an employer and any person or persons for the labor of
employees employed primarily in occupations under North American Industry Classification
System code 561720 (janitorial services).
new text end

Subd. 4.

Civil remedy.

A person injured by a violation of subdivision 1 may bring an
action for damages against the violator. There is a rebuttable presumption that a losing
bidder on a project new text beginor agreement to provide landscaping or janitorial services new text endon which a
violation of subdivision 1 has occurred has suffered damages in an amount equal to the
profit it projected to make on its bid. The court may award attorney fees, costs, and
disbursements to a party recovering under this subdivision.

Subd. 5.

Penalty.

In addition to any other penalties provided by law for the failure to
obtain required workers' compensation coverage or the failure to make unemployment
benefits contributions, a person violating subdivision 1 is guilty of a misdemeanor.

Sec. 3.

new text begin [181.987] DEFINITIONS.
new text end

new text begin Subdivision 1. new text end

new text begin Applicability. new text end

new text begin The definitions in this section apply to sections 181.988
to 181.989.
new text end

new text begin Subd. 2. new text end

new text begin Commissioner. new text end

new text begin "Commissioner" means the commissioner of labor and industry.
new text end

new text begin Subd. 3. new text end

new text begin Covenant not to compete. new text end

new text begin "Covenant not to compete" means an agreement:
new text end

new text begin (1) between an employee and employer that restricts the employee from performing:
new text end

new text begin (i) any work for another employer for a specified time period;
new text end

new text begin (ii) any work in a specified geographical area; or
new text end

new text begin (iii) work for another employer that is similar to the employee's work for the employer
included as a party to the agreement; and
new text end

new text begin (2) that is entered into after the effective date of this act.
new text end

new text begin Subd. 4. new text end

new text begin Employer. new text end

new text begin "Employer" means any individual, partnership, association,
corporation, business trust, or any person or group of persons acting directly or indirectly
in the interest of an employer in relation to an employee.
new text end

new text begin Subd. 5. new text end

new text begin Subaverage wage employee. new text end

new text begin "Subaverage wage employee" means any
individual:
new text end

new text begin (1) employed by an employer and who earns fewer wages, as calculated under section
268.035, subdivision 29, than Minnesota's average annual wage, as calculated under section
268.035, subdivision 23, at the time of entering into a covenant not to compete with such
employer; or
new text end

new text begin (2) prospectively employed by an employer and who will earn fewer wages, as calculated
under section 268.035, subdivision 29, than Minnesota's average annual wage, as calculated
under section 268.035, subdivision 23, at the time of entering into a covenant not to compete
with such employer.
new text end

Sec. 4.

new text begin [181.988] PROHIBITING COVENANTS NOT TO COMPETE FOR
SUBAVERAGE WAGE EMPLOYEES.
new text end

new text begin Subdivision 1. new text end

new text begin In general. new text end

new text begin No employer shall enter into a covenant not to compete with
a subaverage wage employee. Any covenant not to compete between an employer and a
subaverage wage employee is unenforceable against the employee.
new text end

new text begin Subd. 2. new text end

new text begin Notice. new text end

new text begin An employer who employs any subaverage wage employee shall post
notice of the provisions of this act in a conspicuous place on the premises of such employer.
new text end

Sec. 5.

new text begin [181.989] ENFORCEMENT.
new text end

new text begin Subdivision 1. new text end

new text begin In general. new text end

new text begin The commissioner shall receive, investigate, attempt to
resolve, and enforce a complaint of a violation of section 181.988 in the same manner that
the commissioner attempts to resolve a complaint of a violation of the Minnesota Fair Labor
Standards Act, subject to subdivision 2.
new text end

new text begin Subd. 2. new text end

new text begin Civil fine. new text end

new text begin (a) The commissioner shall impose a civil fine:
new text end

new text begin (1) with respect to any employer who violates section 181.988, subdivision 1, in an
amount not to exceed $5,000 for each employee who was aggrieved by such violation; and
new text end

new text begin (2) with respect to any employer who violates section 181.721, subdivision 2, in an
amount not to exceed $5,000.
new text end

new text begin (b) In determining the amount of any civil fine under this subdivision, the commissioner
shall consider the appropriateness of the fine to the size of the employer and the gravity of
the applicable violation.
new text end

Sec. 6.

new text begin [513.78] CONTRACTS FOR SERVICES; EXCLUDING THOSE WITH
EMPLOYEES.
new text end

new text begin (a) Any contract for services, where the service provider is an individual but not an
employee, must be in writing and contain, at a minimum, the following terms:
new text end

new text begin (1) the beginning and end dates of the agreement;
new text end

new text begin (2) the compensation for the services performed under the agreement;
new text end

new text begin (3) grounds for termination of the contract; and
new text end

new text begin (4) a concise, complete, and accurate summary of laws and regulations that would apply
to the individual if the individual was an employee rather than an independent contractor.
new text end

new text begin (b) If the parties fail to enter into a written contract as required by this section, the
agreement is unenforceable only against the individual service provider but may be enforced
against another party or parties by the individual service provider.
new text end

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

new text begin Minnesota Statutes 2016, sections 181.55; 181.56; and 181.57, new text end new text begin are repealed.
new text end

APPENDIX

Repealed Minnesota Statutes: HF2914-0

181.55 WRITTEN STATEMENT TO EMPLOYEES BY EMPLOYERS.

When a contract of employment is consummated between an employer and an employee for work to be performed in this state, or for work to be performed in another state for an employer localized in this state, the employer shall give to the employee a written and signed agreement of hire, which shall clearly and plainly state:

(1) the date on which the agreement was entered into;

(2) the date on which the services of the employee are to begin;

(3) the rate of pay per unit of time, or of commission, or by the piece, so that wages due may be readily computed;

(4) the number of hours a day which shall constitute a regular day's work, and whether or not additional hours the employee is required to work shall constitute overtime and be paid for, and, if so, the rate of pay for overtime work; and

(5) a statement of any special responsibility undertaken by the employee, not forbidden by law, which, if not properly performed by the employee, will entitle the employer to make deductions from the wages of the employee, and the terms upon which such deductions may be made.

181.56 NO STATEMENT GIVEN; BURDEN OF PROOF.

Where no such written agreement is entered into the burden of proof shall be upon the employer to establish the terms of the verbal agreement in case of a dispute with the employee as to its terms.

181.57 APPLICATION OF SECTIONS 181.55 AND 181.56.

Sections 181.55 and 181.56 shall not apply to farm labor, nor to casual employees temporarily employed, nor employers employing less than ten employees.