Purpose of the Bill

The purpose of the bill is to address and manage the issue of worker misclassification in Minnesota. It requires specific entities of the Intergovernmental Misclassification Enforcement and Education Partnership to annually report on the extent and effects of worker misclassification, aiming to enhance enforcement and legal compliance among employers.

Main Provisions

• Annual Reporting Requirement:

  • Beginning March 1, 2026, and annually thereafter, entities involved in the partnership must submit reports regarding worker misclassification.
  • Reports must include estimates on:
  • The number of workers misclassified.
  • Financial costs of misclassification to affected workers.
  • Impact on law-abiding competitors due to employers who misclassify employees.
  • Misclassification rates by industry to assist in prioritizing enforcement actions.

• Impact Estimates:

  • The Department of Employment and Economic Development must include estimates on the impact of misclassification on:
  • The unemployment insurance trust fund.
  • The family and medical benefit insurance account.
  • Tax and premium rates for these programs.
  • The Department of Revenue must provide an estimate on the impact on:
  • Income tax collection.
  • Other government programs.
  • The Department of Labor and Industry must assess the impact on:
  • The workers' compensation fund.
  • Workers' compensation insurance rates.

Significant Changes to Existing Law

• Amendment to Minnesota Statutes 2024, section 181.725:

  • A new subdivision mandates the specific reporting practices regarding worker misclassification, thereby institutionalizing a systematic approach to monitoring and addressing this issue.

• Appropriations:

  • Appropriations from the general fund are designated for fiscal years 2026 and 2027 to various departments, including Labor and Industry, Revenue, Employment and Economic Development, Commerce, and the Attorney General's office.
  • These funds are to be used for analyzing misclassification fraud and estimating its impacts.

Relevant Terms

misclassification, worker misclassification, annual reporting, unemployment insurance trust fund, family and medical benefit insurance, income tax collection, workers' compensation fund, enforcement priorities, fiscal appropriations, fraud analysis.