SF 1103

as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

A bill for an act
relating to employment; prohibiting misrepresentation of employees as
independent contractors; authorizing and requiring the commissioner of revenue
to review certifications of independent contractor status; amending Minnesota
Statutes 2006, sections 181.722; 289A.12, by adding a subdivision.

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

Section 1.

Minnesota Statutes 2006, section 181.722, is amended to read:

181.722 MISREPRESENTATION OF EMPLOYMENT RELATIONSHIP
PROHIBITED.

Subdivision 1.

Prohibition.

deleted text begin No employer deleted text end new text begin A person new text end shall new text begin not new text end misrepresent deleted text begin the
nature of its employment relationship with its employees deleted text end to any new text begin person, including new text end federal,
state, or local government deleted text begin unit; to other employers; or to its employees deleted text end new text begin agencies that an
individual is an independent contractor rather than an employee or that an independent
contractor satisfies statutory requirements so as not to be treated like an employee new text end . deleted text begin An
employer misrepresents the nature of its employment relationship with its employees
if it makes deleted text end new text begin A misrepresentation includes new text end any statement deleted text begin regarding the nature of the
relationship deleted text end that the employer knows or has reason to know is untrue deleted text begin and if it fails deleted text end new text begin . A
misrepresentation includes a failure new text end to report individuals as employees when legally
required to do so. new text begin This section applies only to individuals who are doing commercial or
residential building construction or improvements in the public or private sector.
new text end

Subd. 2.

Agreements to misclassify prohibited.

deleted text begin No deleted text end new text begin An new text end employer shall new text begin not new text end require
or request any deleted text begin employee deleted text end new text begin individual new text end to enter into any agreement, or sign any document,
that results in misclassification of the deleted text begin employee deleted text end new text begin individual new text end as an independent contractor
new text begin rather than as an employee, requires an untrue statement by the individual related to
classification of the individual as an employee, new text end or otherwise does not accurately reflect the
employment relationship with the employer.

Subd. 3.

Determination of employment relationship.

new text begin (a) new text end For purposes of this
section, the nature of an employment relationship is 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 new text end

new text begin (b) In addition to any other requirements of law or rule, an individual may not be
determined an independent contractor who is not an employee under section 176.042,
subdivision 2, unless the employer certifies in writing on a form provided by the
commissioner of labor and industry that the independent contractor satisfies the conditions
of section 176.042, subdivision 2, clauses (1) to (9). The commissioner of labor and
industry shall review certifications and, if a certificate for any reason raises a concern
of misclassification, the commissioner must investigate that certificate and inform the
commissioner of revenue of the concern. The commissioner of revenue must review
information returns filed under section 6041A of the Internal Revenue Code by employers
about whom the commissioner of revenue has received notice under this subdivision.
new text end

new text begin (c) In addition to any other requirements of law or rule, an individual may not be
determined an independent contractor under section 268.035, subdivision 9, unless the
employer certifies in writing that the individual satisfies the conditions of section 268.035,
subdivision 9, clauses (1) to (9).
new text end

new text begin (d) A copy of the certification under this subdivision must, upon request, be provided
to the individual who is the subject of the certification.
new text end

Subd. 4.

Civil remedy.

A deleted text begin construction worker, as defined in section 179.254, who
is not an independent contractor and has been deleted text end new text begin person new text end injured by a violation of this section,
may bring a civil action for damages against the violator. If the deleted text begin construction worker
injured is deleted text end new text begin person is determined to be new text end an employee new text begin or an independent contractor considered
an employee new text end of the violator of this section, the employee's representative, as defined in
section 179.01, subdivision 5, may bring a civil action for damages against the violator on
behalf of the employee. new text begin In addition to damages, new text end the court may award attorney fees, costs,
and disbursements to a deleted text begin construction worker recovering deleted text end new text begin recovery new text end under this section.

Subd. 5.

Reporting of violations.

Any court finding that a violation of this section
has occurred shall transmit a copy of its findings of fact and conclusions of law to the
commissioner of labor and industry. The commissioner of labor and industry shall report
the finding to relevant state and federal agencies, including the commissioner of commerce,
the commissioner of employment and economic development, the commissioner of
revenue, the federal Internal Revenue Service, and the United States Department of Labor.

new text begin Subd. 6. new text end

new text begin Penalty. new text end

new text begin A person making a certification under subdivision 3 with the
knowledge that it is untrue is guilty of a misdemeanor.
new text end

Sec. 2.

Minnesota Statutes 2006, section 289A.12, is amended by adding a subdivision
to read:

new text begin Subd. 15. new text end

new text begin Review of independent contractor certifications. new text end

new text begin The commissioner
shall participate with the commissioner of labor and industry in an annual review and
comparison of independent contractor certifications of employers required under section
181.722, subdivision 3, and information returns required under section 6041A of the
Internal Revenue Code. The commissioner must review any independent contractor
certifications applicable to returns audited or investigated under section 289A.35.
new text end