Minnesota: Expanded Liability for General Contractors When Subcontractors Violate Wage and Hour Laws

From Lexology, Martin Kappenman discusses a recently enacted law in Minnesota that imposes liabilty for wages due to workers of subcontractors on the general contractor. Martin writes:

Written by Martin D. Kappenman – Peters, Revnew, Kappenman & Anderson, P.A.

On May 24, 2023, Minnesota Governor Tim Walz signed into law the Omnibus Jobs Bill, which carries far-reaching implications for businesses operating in Minnesota. Notably, the legislation introduces amendments that ensure contractors are liable for unpaid wages owed to construction workers by subcontractors. This publication aims to help employers in the construction industry understand their responsibilities regarding contractor liability.

Wage Protections for Construction Workers

The amendments are effective August 1, 2023, and cover construction contracts and agreements entered into, renewed, modified, or amended on or after that date.

Liability for contractors: When a contractor enters into agreements with subcontractors for construction projects, the contractor is responsible for any unpaid wages, benefits, penalties, and other owed payments to workers. Any agreements by workers or subcontractors to indemnify, or release or transfer liability assigned to a contractor are not valid.

Legal action against subcontractors: Contractors must first make sure that workers’ unpaid wages are taken care of before they can take legal action against subcontractors for any costs incurred.

Misclassification of workers: Contractors cannot avoid liability by classifying workers as independent contractors instead of employees of a subcontractor, unless the workers meet the statutory definition as such.

Joint and several liability of contractors in legal actions by workers: In legal actions taken by workers against subcontractors, the contractor shall be held jointly and severally liable for unpaid wages, benefits, penalties, and any other remedies available.

Source: Minnesota: Expanded Liability for General Contractors When Subcontractors Violate Wage and Hour Laws – Lexology

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