Minnesota Increases Penalties for Misclassification

From JDSupra, Avery Brooks Bennett, Daniel Prokott, and Molly Sigel discuss Minnesota employment law updates including increased penalites for misclassifying workers as independent contractors. Avery, Daniel, and Molly write:

Updates to Employee Misclassification Prohibitions, Minn. Stat. §§ 177.27, 181.722, 181.723

This new law imposes harsher penalties on employers for misclassifying employees. In addition, it changes the independent contractor test for those performing building construction or improvement services. Under the new statute, no person may:

  • Fail to classify, represent, or treat an individual who is an employee as an employee under applicable law.
  • Fail to report a person as an employee when required by applicable law.
  • Require an employee to misrepresent or misclassify themselves as non-employees, including as an independent contractor.

Officers or agents who engage in the above prohibited activities can be deemed personally liable. Compensatory damages to any misclassified person may be available, along with penalties of up to $10,000 for each misclassified person and each violation, and a penalty of up to $1,000 for each person who fails to cooperate or obstructs an investigation into violations of the classification law. Additional clarifications and additions specific to construction employees and contractors have also been added.

Changes to Minnesota’s employee misclassification law will be effective July 1, 2024.

Read the full story at Minnesota’s 2024 Legislation Updates: Employment Law | Faegre Drinker Biddle & Reath LLP – JDSupra

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