Recommendations from Advisory Task Force.
Section 1 [Construction contractors], subdivision 1 provides that this section governs registration of persons performing construction services. Modifies definition of “person” to include companies and limited liability partnerships. Provides definitions for “construction services,” “construction contractor,” and “business entity.”
Subdivision 3 (Employee-employer relationship) establishes that an individual who performs construction services for another person in the course of the other person’s construction business is an employee of that person, unless that individual meets the conditions provided to qualify as an independent contractor.
Subdivision 4 (Construction contractor) provides that a person qualifies as a construction contractor if they satisfy the registration requirements and meet the following conditions:
- the person maintains a separate business;
- the person holds a federal employer identification number or has filed business
or self-employment income tax;
- the person operates under written contracts;
- the person incurs the main expenses related to the construction services;
- the person is responsible for completion of construction services and is liable for a failure to complete the service;
- the person receives compensation on a commission or per-job or competitive bid basis;
- the person may have a profit or loss under contracts to perform construction services;
- the person has continuing or recurring business liabilities or obligations; and
- the success or failure of the person's business depends on the relationship of business receipts to expenditures.
Subdivision 4a (Registration) paragraph (a) requires a person who performs construction services in the state on or after January 1, 2012, must register with the Commissioner before performing construction services for another person.
Paragraph (b) provides that the registration requirements do not apply to:
- a person who, at the time the person is performing the construction services, holds a current license, certificate, or registration;
- a person who holds a current independent contractor exemption certificate;
- a person who has given a bond to the state;
- an employee of the person performing the construction services;
- an architect or professional engineer engaging in professional;
- a school district or technical college;
- a volunteer for construction services; and
- a person who provides construction services of less than $600 in gross annual receipts during a calendar year.
Paragraph (c) provides that the registration requirements do not relieve a person from complying with any other law concerning licensing.
Subdivision 5a (Registration and renewal application) provides that a person required to register must file an electronic application as prescribed by the Commissioner. The application for initial or renewal registration must include the following:
- legal name; any assumed; designated business address; physical address; phone number; and e-mail address;
- Minnesota tax identification number;
- federal employee identification number, if required;
- status of the applicant's business filings with the secretary of state;
- for the applicant's directors, officers, governors, and other owners and certain shareholders, the following: the individual's full name, business telephone number, Social Security number, and title; the percentage owned by each individual; and whether the individual personally performs construction services on behalf of the applicant;
- whether the applicant has any employees;
- information about the applicant's workers' compensation insurer;
- the unemployment insurance account number;
- a certification by the applicant regarding information provided in the application; and
- a signed authorization for the Department of Labor and Industry to verify the information provided with the application.
Paragraph (b) provides that a person's registration expires at the end of the calendar year following the year of initial registration and then every two years. Provides that the initial registration and renewal fees under this section shall be $80 for each initial or renewal application for registration.
Paragraph (c) requires a registered person to electronically notify the Commissioner within 15 days after there is a change in information. Requires a new registration if the business entity structure, legal form of the business entity, or business ownership has changed.
Paragraph (d) data privacy issues concerning information provided with an application for registration. Authorizes the Commissioner to share application data with the Departments of Revenue and Employment and Economic Development for purposes of enforcement of laws administered by those agencies. Information shared with the departments remains private and nonpublic data.
Subdivision 6a (Web site), paragraph (a) requires the Commissioner to develop and maintain a Web site where applicants can submit a registration application and payment. Requires the Web site to be capable of receiving and processing registration applications and payments and issuing registration certificates electronically.
Paragraph (b) requires the Commissioner to maintain the certificates of registration on the Web site and include: (1) the legal business name, including any assumed name; (2) the designated business address; and (3) the effective date of the registration and the expiration date.
Subdivision 7 (Prohibited activities), paragraph (a) provides activities that are prohibited in addition to other prohibited activities provided in Chapter 326B.
Paragraph (b) prohibits an individual from performing or offering to perform construction services on behalf of a business entity, unless:
- the business entity is a construction contractor under subdivision 4;
- the business entity is listed as active with the secretary of state, if required;
- there is a written contract between the business entity and the person for whom the construction services are performed;
- invoices for the construction services performed are submitted in the name of the business entity; and
- payment is made to the business entity.
Paragraph (c) prohibits a person from requiring an individual through coercion, misrepresentation, or fraudulent means to:
- form a business entity;
- represent that the person is a construction contractor;
- perform or provide construction services for another person if the person performing the construction services is not registered; or
- perform or provide construction services for another person in the course of the other person's business if the person performing or providing the construction services is not a construction contractor under subdivision 4.
Paragraph (d) prohibits a person who provides construction services in the course of that person's business from:
- paying a person not named in a contract for construction services, or paying a person without receiving an invoice from the person; or
- contracting with or paying another person to perform construction services if the other person is not registered under subdivision 4a.
Paragraph (e) provides that the subdivision does not apply to an employee of a 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.
Subdivision 8 (Enforcement; remedies and penalties), paragraph (a) authorizes enforcement by the Commissioner and provides monetary penalties for violations.
Paragraph (b) allows the Commissioner to assess monetary penalties against unregistered persons as follows:
- for the first violation, $2,000. If the person registers within 30 days, $1,500 of the penalty is forgiven; and
- for the second and each subsequent violation, up to $2,000.
Paragraph (c) allows the Commissioner to assess a monetary penalty against a person who pays an unregistered person for construction services as follows:
- for the first violation, a notice of violation under; and
- for the second and each subsequent violation, up to $2,000.
- Provides that payments to an unregistered person for construction services on a single project site are considered a single violation.
Paragraph (e) directs that monetary penalties be deposited in the assigned risk safety account.
Subdivision 13 (Rulemaking) allows rulemaking relating to the Commissioner’s amended responsibilities under this section.
[Effective date] provides an effective date of January 1, 2012, except for the new rulemaking authority is effective March 1, 2012, and the amendments do not apply to the regulation of an independent contractor exemption certificate issued before January 1, 2012, and are not effective for a certificate holder until the exemption certificate expires.
Section 2, subdivision 3 (Applicable law) amends the definition of “applicable law” to include references to section 181.723 (Construction contracts).
[Effective date] provides an effective date of January 1, 2012, except for exemption certificates issued before January 1, 2012, and are not effective for a certificate holder until the exemption certificate expires.
Section 3 [Repealer], paragraph (a) repeals Minnesota Statutes, section 181.723, subdivision 17 (Advisory task force on employee misclassification), effective May 15, 2011.
Paragraph (b) repeals Minnesota Rules, parts 5202.0100; 5202.0110; 5202.0120; 5202.0130; 55202.0140; 5202.0150; and 5202.0160 (all relating to independent contractor exemption certificates), effective January 1, 2012, except for regulation of an independent contractor exemption certificate issued before January 1, 2012.