New Rules and Remedies Designed to Target Misclassification of Employees

Minnesota has strengthened its laws relating to the misclassification of employees in general, and in the construction industry specifically. For non-construction employers, damages and penalties available that can be imposed for the misclassification of a worker as an independent contractor include: (1) compensatory damages to the individual wrongly classified, which can include: the value of supplemental pay including minimum wage, overtime, shift differentials; vacation and sick pay and other forms of paid time off; health insurance; life and disability insurance; retirement and related savings plans; social security and Medicare; and any other cost and expense incurred by the individuals resulting from the improper classification; (2) a penalty of up to $10,000 for each individual wrongly classified or related violations of the statute; (3) a penalty of $1,000 for any delay, obstruction, or failure to cooperate in an investigation by the commissioner (each day of delay, obstruction, or failure to cooperate constitutes a separate violation). 

This law goes into effect on July 1, 2024. Separate provisions specifically targeting the construction industry and misclassification will also go into effect on July 1, 2024.

Finally, based on Minnesota’s policy to prevent employers from misclassifying workers, the Minnesota legislature passed the “Intergovernmental Misclassification Enforcement and Education Partnership Act.” The Act is designed to allow several governmental entities, with separate jurisdiction over employee misclassification in Minnesota, to coordinate, collaborate, and share information with the governmental entities to ensure appropriate investigation and strategic enforcement of the misclassification laws. These governmental entities include: the Department of Labor and Industry; the Department of Revenue; the Department of Employment and Economic Development; the Department of Commerce; and the Attorney General in its enforcement capacity.

Source(s): JacksonLewis, received on June 3, 2024.