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SF 2065

as introduced - 88th Legislature (2013 - 2014) Posted on 03/18/2014 03:15pm

KEY: stricken = removed, old language.
underscored = added, new language.
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A bill for an act
relating to labor and industry; making permanent an independent contractor
registration pilot project; amending Minnesota Statutes 2012, section 181.723,
subdivisions 4, 4a, 5, 7, 16; proposing coding for new law in Minnesota Statutes,
chapter 326B.

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

Section 1.

Minnesota Statutes 2012, section 181.723, subdivision 4, is amended to read:


Subd. 4.

Independent contractor.

(a) An individual is an independent contractor
and not an employee of the person for whom the individual is performing services in the
course of the person's trade, business, profession, or occupation only if the individual deleted text beginis
registered with the Department of Labor and Industry, if required under subdivision 4a,
and the individual
deleted text end:

(1) maintains a separate business with the individual's own office, equipment,
materials, and other facilities;

(2)(i) holds or has applied for a federal employer identification number or (ii) has
filed business or self-employment income tax returns with the federal Internal Revenue
Service if the individual has performed services in the previous year;

(3) is operating under contract to perform the specific services for the person
for specific amounts of money and under which the individual controls the means of
performing the services;

(4) is incurring the main expenses related to the services that the individual is
performing for the person under the contract;

(5) is responsible for the satisfactory completion of the services that the individual
has contracted to perform for the person and is liable for a failure to complete the services;

(6) receives compensation from the person for the services performed under the
contract on a commission or per-job or competitive bid basis and not on any other basis;

(7) may realize a profit or suffer a loss under the contract to perform services for
the person;

(8) has continuing or recurring business liabilities or obligations; and

(9) the success or failure of the individual's business depends on the relationship of
business receipts to expenditures.

new text begin An individual who is not registered, if required by section 326B.701, is presumed to
be an employee of a person for whom the individual performs services in the course of
the person's trade, business, profession, or occupation. The person for whom the services
were performed may rebut this presumption by showing that the unregistered individual
met all nine factors at the time the services were performed.
new text end

(b) If an individual is an owner or partial owner of a business entity, the individual is
an employee of the person for whom the individual is performing services in the course
of the person's trade, business, profession, or occupation, and is not an employee of the
business entity in which the individual has an ownership interest, unless:

(1) the business entity meets the nine factors in paragraph (a);

(2) invoicesnew text begin and paymentsnew text end are deleted text beginsubmitteddeleted text end in the name of the business entity;new text begin and
new text end

(3) the business entity is registered with the secretary of state, if requireddeleted text begin; anddeleted text endnew text begin.
new text end

deleted text begin (4) the business entity is registered with the Department of Labor and Industry,
if required under subdivision 4a.
deleted text end

new text begin If the business entity in which the individual has an ownership interest is not
registered, if required by section 326B.701, the individual is presumed to be an employee
of a person for whom the individual performs services and not an employee of the business
entity in which the individual has an ownership interest. The person for whom the services
were performed may rebut the presumption by showing that the business entity met the
requirements of clauses (1) to (3) at the time the services were performed.
new text end

Sec. 2.

Minnesota Statutes 2012, section 181.723, subdivision 4a, is amended to read:


Subd. 4a.

new text beginApplicability; new text endregistration deleted text beginpilot projectdeleted text endnew text begin requirementnew text end.

(a) deleted text beginThe
commissioner shall implement a pilot project, effective July 1, 2012, for the registration
of
deleted text end Persons who perform public or private sector commercial or residential building
construction or improvement services as described in subdivision 2new text begin must register with the
commissioner as provided in this section
new text end. The purpose of deleted text beginthe pilot project is to evaluate
whether the information obtained through registration assists
deleted text endnew text begin registration is to assist
new text end the Department of Labor and Industry, the Department of Employment and Economic
Development, and the Department of Revenue to enforce laws related to misclassification
of employees. deleted text beginThe commissioner shall issue a report to the legislature no later than
January 1, 2014, on recommendations for amendments to the registration program,
including reasonable registration fees to be used to aid in enforcing misclassification laws.
The commissioner must not charge a fee for registration under the pilot project, but may
take the enforcement action specified in subdivision 8a. The pilot project shall expire on
June 30, 2014, unless extended by the legislature.
deleted text end

(b) Except as provided in paragraph (c), any person who performs construction
services in the state on or after September 15, 2012, must register with the commissioner
as provided in deleted text beginsubdivision 5deleted text endnew text begin section 326B.701new text end before performing construction services for
another person. The requirements for registration under deleted text beginthis subdivisiondeleted text endnew text begin section 326B.701
new text end are not a substitute for, and do not relieve a person from complying with, any other law
requiring that the person be licensed, registered, or certified.

(c) The registration requirements in deleted text beginthis subdivisiondeleted text endnew text begin section 326B.701new text end do not apply to:

(1) a person who, at the time the person is performing the construction services,
holds a current license, certificate, or registration under chapter 299M or 326B;

(2) a person who holds a current independent contractor exemption certificate
issued under this section that is in effect on September 15, 2012, except that the person
must register under deleted text beginthisdeleted text end section new text begin326B.701 new text endno later than the date the exemption certificate
expires, is revoked, or is canceled;

(3) a person who has given a bond to the state under section 326B.197 or 326B.46;

(4) an employee of the person performing the construction services, if the person
was in compliance with laws related to employment of the individual at the time the
construction services were performed;

(5) an architect or professional engineer engaging in professional practice as defined
in section 326.02, subdivisions 2 and 3;

(6) a school district or technical college governed under chapter 136F;

(7) a person providing construction services on a volunteer basis, including but not
limited to Habitat for Humanity and Builders Outreach Foundation, and their individual
volunteers when engaged in activities on their behalf; or

(8) a person exempt from licensing under section 326B.805, subdivision 6, clause (5).

Sec. 3.

Minnesota Statutes 2012, section 181.723, subdivision 5, is amended to read:


Subd. 5.

Registration application.

(a) Persons required to register under
deleted text beginsubdivision 4adeleted text endnew text begin section 326B.701new text end must submit electronically, in the manner prescribed by
the commissioner, a complete application according to paragraphs (b) to (d).

(b) A complete application must include all of the following information about any
individual who is registering as an individual or a sole proprietor, or who owns 25 percent
or more of a business entity being registered:

(1) the individual's full legal name and title at the applicant's business;

(2) the individual's business address and telephone number;

(3) the percentage of the applicant's business owned by the individual; and

(4) the individual's Social Security number.

(c) A complete application must also include the following information:

(1) the applicant's legal name; assumed name filed with the secretary of state, if any;
designated business address; physical address; telephone number; and e-mail address;

(2) the applicant's Minnesota tax identification number, if one is required or has
been issued;

(3) the applicant's federal employer identification number, if one is required or
has been issued;

(4) evidence of the active status of the applicant's business filings with the secretary
of state, if one is required or has been issued;

(5) whether the applicant has any employees at the time the application is filed;

(6) the names of all other persons with an ownership interest in the business entity
who are not identified in paragraph (b), and the percentage of the interest owned by each
person, except that the names of shareholders with less than ten percent ownership in a
publicly traded corporation need not be provided;

(7) information documenting compliance with workers' compensation and
unemployment insurance laws;

(8) a certification that the person signing the application has: reviewed it; determined
that the information provided is true and accurate; and determined that the person signing
is authorized to sign and file the application as an agent of the applicant. The name of the
person signing, entered on an electronic application, shall constitute a valid signature of
the agent on behalf of the applicant; and

(9) a signed authorization for the Department of Labor and Industry to verify the
information provided on or with the application.

(d) A registered person must notify the commissioner within 15 days after there is a
change in any of the information on the application as approved. This notification must
be provided electronically in the manner prescribed by the commissioner. However, if
the business entity structure, legal form of the business entity, or business ownership has
changed, the person must submit a new registration application and registration fee, if
any, for the new business entity.

(e) The registered person must remain registered while providing construction
services for another person. The provisions of sections 326B.091 deleted text beginanddeleted text endnew text begin,new text end 326B.094 deleted text begintodeleted text endnew text begin,
326B.095, and
new text end 326B.097 apply to deleted text beginthisdeleted text end sectionnew text begin 326B.701new text end.new text begin A person with an expired
registration shall not provide construction services for another person if registration is
required under this section. Registration application and expiration time frames are as
follows:
new text end

new text begin (1) all registrations issued on or before June 30, 2015, expire on June 30, 2015;
new text end

new text begin (2) all registrations issued after June 30, 2015, expire on the following June 30
of each odd-numbered year; and
new text end

new text begin (3) a person may submit a registration or renewal application starting April 1 of the
year the registration expires. If a renewal application is submitted later than May 1 of
the expiration year, registration may expire before the department has issued or denied
the registration.
new text end

Sec. 4.

Minnesota Statutes 2012, section 181.723, subdivision 7, is amended to read:


Subd. 7.

Prohibited activitiesnew text begin related to independent contractor statusnew text end.

(a) The
prohibited activities in this subdivision are in addition to those prohibited in sections
326B.081 to 326B.085.

(b) An individual shall not hold himself or herself out as an independent contractor
unless the individual meets the requirements of subdivision 4.

(c) A person who provides construction services in the course of the person's trade,
business, occupation, or profession shall not:

(1) require an individual through coercion, misrepresentation, or fraudulent means to
adopt independent contractor status or form a business entity;

(2) knowingly misrepresent or misclassify an individual as an independent
contractordeleted text begin;deleted text endnew text begin.
new text end

new text begin Subd. 7a. new text end

new text begin Prohibited activities related to registration. new text end

new text begin (a) The prohibited activities
in this subdivision are in addition to those prohibited in sections 326B.081 to 326B.085.
new text end

new text begin (b) A person who provides construction services in the course of the person's trade,
business, occupation, or profession shall not:
new text end

deleted text begin (3)deleted text endnew text begin (1)new text end contract with or perform construction services for another person without first
being registered if required by deleted text beginsubdivision 4adeleted text endnew text begin section 326B.701new text end;

deleted text begin (4)deleted text endnew text begin (2)new text end contract with or pay another person to perform construction services if
the other person is not registered if required by subdivision 4a. All payments to an
unregistered person for construction services on a single project site shall be considered a
single violation. It is not a violation of this clause:

(i) for a person to contract with or pay an unregistered person if the unregistered
person was registered at the time the contract for construction services was entered into; or

(ii) for a homeowner or business to contract with or pay an unregistered person if
the homeowner or business is not in the trade, business, profession, or occupation of
performing building construction or improvement services; or

deleted text begin (5)deleted text endnew text begin (3)new text end be penalized for violations of this subdivision that are committed by another
person. This clause applies only to violations of this paragraph.

Sec. 5.

Minnesota Statutes 2012, section 181.723, subdivision 16, is amended to read:


Subd. 16.

Data classified.

Data in applications and any required documentation
submitted to the commissioner under this section are private data on individuals or
nonpublic data as defined in section 13.02. Data in registration certificates issued by
the commissioner are public data; except that registration information published on the
department's Web site may be accessed for registration verification purposes only. Data that
document a revocation or cancellation of a certificate are public data. deleted text beginUpon request of the
Department
deleted text end new text beginThe commissioners new text endof revenue deleted text beginor the Department ofdeleted text endnew text begin, labor and industry, and
new text end employment and economic developmentdeleted text begin, the commissionerdeleted text end may release to deleted text beginthe requesting
department
deleted text endnew text begin each of the other departments new text end data classified as private or nonpublic under this
subdivision or investigative data that are not public under section 13.39 that relate tonew text begin:
new text end

new text begin (1) investigations or determinations about misclassification of workers; or
new text end

new text begin (2)new text end the issuance or denial of applications or revocations of deleted text begincertificatesdeleted text endnew text begin registration
under section 326B.701
new text end.

Sec. 6.

new text begin [326B.701] CONSTRUCTION CONTRACTOR REGISTRATION.
new text end

new text begin The following definition applies to this section: "business entity" means a person
other than an individual or a sole proprietor.
new text end

Sec. 7. new text beginREVISOR'S INSTRUCTION.
new text end

new text begin The revisor of statutes shall renumber the citations in column A with the citations
in column B. The revisor shall correct any cross-references required because of the
renumbering and may make necessary grammatical and technical changes, including
changes to sentence structure, to preserve the meaning of the text.
new text end

new text begin Column A
new text end
new text begin Column B
new text end
new text begin 326B.701, subd. 1
new text end
new text begin 326B.701, subd. 1, paragraphs (a)
and (b)
new text end
new text begin 181.723, subd. 1, paragraph (g)
new text end
new text begin 326B.701, subd. 1, paragraph (c)
new text end
new text begin 181.723, subd. 4a
new text end
new text begin 326B.701, subd. 2
new text end
new text begin 181.723, subd. 5
new text end
new text begin 326B.701, subd. 3
new text end
new text begin 181.723, subd. 5a
new text end
new text begin 326B.701, subd. 4
new text end
new text begin 181.723, subd. 7a
new text end
new text begin 326B.701, subd. 5
new text end
new text begin 181.723, subd. 8a
new text end
new text begin 326B.701, subd. 6
new text end
new text begin 181.723, subd. 10a
new text end
new text begin 326B.701, subd. 7
new text end
new text begin 181.723, subd. 16
new text end
new text begin 326B.701, subd. 8
new text end