HF 4579

as introduced - 93rd Legislature (2023 - 2024) Posted on 03/18/2024 04:11pm

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
2022, section 256.998, subdivisions 1, 2, 3, 4, 6, 9.

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

Section 1.

Minnesota Statutes 2022, section 256.998, 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 January 1, 2025.
new text end

Sec. 2.

Minnesota Statutes 2022, section 256.998, subdivision 2, is amended to read:

Subd. 2.

Work reporting system established.

The commissioner of human services
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 human services 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 January 1, 2025.
new text end

Sec. 3.

Minnesota Statutes 2022, section 256.998, 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 human services 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 January 1, 2025.
new text end

Sec. 4.

Minnesota Statutes 2022, section 256.998, 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 human services that will result in timely reporting.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2025.
new text end

Sec. 5.

Minnesota Statutes 2022, section 256.998, 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 human services, 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 human services. 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 January 1, 2025.
new text end

Sec. 6.

Minnesota Statutes 2022, section 256.998, subdivision 9, is amended to read:

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 deleted text begin may deleted text end new text begin shall new text end 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 human services shall establish procedures for
payors reporting under this section.

new text begin EFFECTIVE DATE. new text end

new text begin This section is effective January 1, 2025.
new text end