Big Government and Big Labor are teaming up to make it harder and riskier to use independent contractors in Minnesota under the guise of cracking down on “worker misclassification.”
Minnesota small business owners in many industries rely on independent contractors to keep their businesses moving.
But now Big Government and Big Labor are teaming up to make it harder and riskier to use independent contractors in Minnesota under the guise of cracking down on “worker misclassification.”
Deliberate worker misclassification is wrong and cheats honest businesses that do the right thing. But it’s also wrong to punish small business owners for honest mistakes and let government bureaucrats have unchecked power over how you operate, which is what could happen if two proposals at the Minnesota Legislature become law.
Read more about the proposals below and TAKE ACTION HERE – tell your lawmakers to reject new IC regulations and unfair penalties!
HF 4444/SF 4483 allows nearly unprecedented penalties in disputes involving worker classification issues, including personal liability for an owner or partner of a business and broad ability for the state to shut down job sites. These news penalties apply even if it’s a first-time violation or an honest mistake, and they could be a death sentence for many small businesses and their workers.
The bill also imposes a more complicated independent contractor test for construction firms with no plans to help affected businesses understand the new requirements. All agreements, including change orders, will have to be made in writing. And independent contractors will have to turn over their tax returns to a contractor in order to prove their status.
The harshest penalties should be reserved for egregious, intentional, or repeat offenders, and small businesses that make honest mistakes should be given the opportunity to make things right. But that’s not what this bill does – it makes life harder for good small business owners working in an area with increasingly complex laws and rules.
HF 4572/SF 4862 removes a longstanding safe harbor (Section 530) for small business owners and will leave them twisting in the wind. This safe harbor has existed for decades at the state and federal levels and protects small businesses who had a reasonable basis for classifying a worker as an independent contractor from shifting interpretations by government agencies.
The safe harbor only applies when three conditions are met: (i) the business has been consistent in their treatment of the worker, (ii) the business has been consistent in how they’ve treated workers in similar positions, and (iii) a prior audit, judicial precedent, or common industry practice justified the independent contractor classification. This is no ‘get out of jail free card’ and the safe harbor does not prevent punishment of bad actors who intentionally misclassify workers.
If this bill passes, a business could be forced to pay state employment taxes on independent contractors even though a state agency or court previously signed off on the work arrangement – and even if the IRS has signed off on the arrangement.
Worried about these proposals? TAKE ACTION HERE – tell your lawmakers to reject new IC regulations and unfair penalties!
