1.1 .................... moves to amend H.F. No. 1283, the second committee engrossment,
1.2as follows:
1.3Delete everything after the enacting clause and insert:
1.4 "Section 1.
[181.723] INDEPENDENT CONTRACTORS.
1.5 Subdivision 1. Definitions. The definitions in this subdivision apply to this section.
1.6 (a) "Person" means any individual, limited liability corporation, corporation,
1.7partnership, incorporated or unincorporated association, sole proprietorship, joint stock
1.8company, or any other legal or commercial entity.
1.9 (b) "Department" means the Department of Labor and Industry.
1.10 (c) "Commissioner" means the commissioner of labor and industry or a duly
1.11designated representative of the commissioner who is either an employee of the
1.12Department of Labor and Industry or person working under contract with the Department
1.13of Labor and Industry.
1.14 (d) "Individual" means a human being.
1.15 (e) "Day" means calendar day unless otherwise provided.
1.16 (f) "Knowingly" means knew or could have known with the exercise of reasonable
1.17diligence.
1.18 (g) "Document" or "documents" includes papers; books; records; memoranda; data;
1.19contracts; drawings; graphs; charts; photographs; digital, video, and audio recordings;
1.20records; accounts; files; statements; letters; e-mails; invoices; bills; notes; and calendars
1.21maintained in any form or manner.
1.22 Subd. 2. Limited application. This section only applies to individuals performing
1.23public or private sector commercial or residential building construction or improvement
1.24services.
1.25 Subd. 3. Employee-employer relationship. Except as provided in subdivision
1.264, for purposes of chapters 176, 177, 181A, 182, and 268, as of January 1, 2009, an
2.1individual who performs services for a person that are in the course of the person's trade,
2.2business, profession, or occupation is an employee of that person and that person is an
2.3employer of the individual.
2.4 Subd. 4. Independent contractor. An individual is an independent contractor and
2.5not an employee of the person for whom the individual is performing services in the course
2.6of the person's trade, business, profession, or occupation only if (a) the individual holds
2.7a current independent contractor exemption certificate issued by the commissioner; and
2.8(b) the individual is performing services for the person under the independent contractor
2.9exemption certificate as provided in subdivision 6. The requirements in clauses (a) and (b)
2.10must be met in order to qualify as an independent contractor and not as an employee of
2.11the person for whom the individual is performing services in the course of the person's
2.12trade, business, profession, or occupation.
2.13 Subd. 5. Application. To obtain an independent contractor exemption certificate,
2.14the individual must submit, in the manner prescribed by the commissioner, a complete
2.15application and the certificate fee required under subdivision 14.
2.16 (a) A complete application must include all of the following information:
2.17 (1) the individual's full name;
2.18 (2) the individual's residence address and telephone number;
2.19 (3) the individual's business name, address, and telephone number;
2.20 (4) the services for which the individual is seeking an independent contractor
2.21exemption certificate;
2.22 (5) the individual's Social Security number;
2.23 (6) the individual's or the individual's business federal employer identification
2.24number, if a number has been issued to the individual or the individual's business;
2.25 (7) any information or documentation that the commissioner requires by rule that
2.26will assist the department in determining whether to grant or deny the individual's
2.27application; and
2.28 (8) The individual's sworn statement that the individual meets all of the following
2.29conditions:
2.30 (i) the individual maintains a separate business with the individual's own office,
2.31equipment, materials, and other facilities;
2.32 (ii) the individual holds or has applied for a federal employer identification number
2.33or has filed business or self-employment income tax returns with the federal Internal
2.34Revenue Service if the person has performed services in the previous year for which the
2.35individual is seeking the independent contractor exemption certificate;
3.1 (iii) the individual operates under contracts to perform specific services for specific
3.2amounts of money and under which the individual controls the means of performing the
3.3services;
3.4 (iv) the individual incurs the main expenses related to the service that the individual
3.5performs under contract;
3.6 (v) the individual is responsible for the satisfactory completion of services that the
3.7individual contracts to perform and is liable for a failure to complete the service;
3.8 (vi) the individual receives compensation for service performed under a contract on
3.9a commission or per-job or competitive bid basis and not on any other basis;
3.10 (vii) the individual may realize a profit or suffer a loss under contracts to perform
3.11service;
3.12 (viii) the individual has continuing or recurring business liabilities or obligations; and
3.13 (ix) the success or failure of the individual's business depends on the relationship of
3.14business receipts to expenditures.
3.15 (b) Individuals who are applying for or renewing a residential building contractor or
3.16residential remodeler license under Minnesota Statutes sections 326.83 to 326.992 and any
3.17rules promulgated pursuant thereto may simultaneously apply for or renew an independent
3.18contractor exemption certificate. The commissioner shall create an application form
3.19that allows for the simultaneous application for both a residential building contractor
3.20or residential remodeler license and an independent contractor exemption certificate.
3.21If individuals simultaneously apply for or renew a residential building contractor or
3.22residential remodeler license and an independent contractor exemption certificate using
3.23the form created by the commissioner, individuals shall only be required to provide, in
3.24addition to the information required by Minnesota Statutes 326.89 and rules promulgated
3.25pursuant thereto, the sworn statement required by subdivision 5 (a) (8) and any additional
3.26information required by subdivision 5 that is not also required by Minnesota Statutes
3.27326.89 and any rules promulgated thereto. When individuals submit a simultaneous
3.28application on the form created by the commissioner for both a residential building
3.29contractor or residential remodeler license and an independent contractor exemption
3.30certificate the application fee shall be $150.00. An independent contractor exemption
3.31certificate that is in effect before March 1, 2009, shall remain in effect until March 1, 2011,
3.32unless revoked by the commissioner or cancelled by the individual.
3.33 (c) Within 30 days of receiving a complete application and the certificate fee, the
3.34commissioner must either grant or deny the application. The commissioner may deny
3.35an application for an independent contractor exemption certificate if the individual has
3.36not submitted a complete application and certificate fee or if the individual does not
4.1meet all of the conditions for holding the independent contractor exemption certificate.
4.2The commissioner may revoke an independent contractor exemption certificate if the
4.3commissioner determines that the individual no longer meets all of the conditions for
4.4holding the independent contractor exemption certificate, commits any of the actions
4.5set out in subdivision 7, or fails to cooperate with a department investigation into the
4.6continued validity of the individual's certificate. Once issued, an independent contractor
4.7exemption certificate remains in effect for two years unless:
4.8 (1) revoked by the commissioner; or
4.9 (2) canceled by the individual.
4.10 (d) If the department denies an individual's original or renewal application for
4.11an independent contractor exemption certificate or revokes an independent contractor
4.12exemption certificate, the commissioner shall issue to the individual an order denying or
4.13revoking the certificate. The commissioner may issue an administrative penalty order to
4.14an individual or person who commits any of the actions set out in subdivision 7.
4.15 (e) An individual or person to whom the commissioner issues an order under
4.16paragraph (d) shall have 30 days after service of the order to request a hearing. The request
4.17for hearing must be in writing and must be served on or faxed to the commissioner at the
4.18address or fax number specified in the order by the 30th day after service of the order.
4.19If the individual does not request a hearing or if the individual's request for a hearing is
4.20not served on or faxed to the commissioner by the 30th day after service of the order, the
4.21order shall become a final order of the commissioner and will not be subject to review
4.22by any court or agency. The date on which a request for hearing is served by mail shall
4.23be the postmark date on the envelope in which the request for hearing is mailed. If the
4.24individual serves or faxes a timely request for hearing, the hearing shall be a contested
4.25case hearing and shall be held in accordance with chapter 14.
4.26 Subd. 6. Performing services under exemption certificate. An individual is
4.27performing services for a person under an independent contractor exemption certificate if:
4.28 (a) the individual is performing services listed on the individual's independent
4.29contractor exemption certificate;
4.30 (b) at the time the individual is performing services listed on the individual's
4.31independent contractor exemption certificate, the individual meets all of the following
4.32conditions:
4.33 (1) the individual maintains a separate business with the individual's own office,
4.34equipment, materials, and other facilities;
4.35 (2) the individual holds or has applied for a federal employer identification number
4.36or has filed business or self-employment income tax returns with the federal Internal
5.1Revenue Service if the individual performed services in the previous year for which the
5.2individual has the independent contractor exemption certificate;
5.3 (3) the individual is operating under contract to perform the specific services for
5.4the person for specific amounts of money and under which the individual controls the
5.5means of performing the services;
5.6 (4) the individual is incurring the main expenses related to the services that the
5.7individual is performing for the person under the contract;
5.8 (5) the individual is responsible for the satisfactory completion of the services
5.9that the individual has contracted to perform for the person and is liable for a failure
5.10to complete the services;
5.11 (6) the individual receives compensation from the person for the services performed
5.12under the contract on a commission or per-job or competitive bid basis and not on any
5.13other basis;
5.14 (7) the individual may realize a profit or suffers a loss under the contract to perform
5.15services for the person;
5.16 (8) the individual has continuing or recurring business liabilities or obligations; and
5.17 (9) the success or failure of the individual's business depends on the relationship of
5.18business receipts to expenditures.
5.19 Subd. 7. Prohibited activities. (a) An individual shall not:
5.20 (1) perform work as an independent contractor who meets the qualifications under
5.21subdivision 6, without first obtaining from the department an independent contractor
5.22exemption certificate;
5.23 (2) perform work as an independent contractor when the department has denied or
5.24revoked the individual's independent contractor exemption certificate;
5.25 (3) transfer to another individual or allow another individual to use the individual's
5.26independent contractor exemption certificate;
5.27 (4) alter or falsify an independent contractor exemption certificate;
5.28 (5) misrepresent the individual's status as an independent contractor; or
5.29 (6) make a false material statement, representation, or certification; omit material
5.30information; or alter, conceal, or fail to file a document required by this section or any rule
5.31promulgated by the commissioner under rulemaking authority set out in this section.
5.32 (b) A person shall not:
5.33 (1) require an individual through coercion, misrepresentation, or fraudulent means to
5.34adopt independent contractor status;
6.1 (2) knowingly misrepresent that an individual who has not been issued an
6.2independent contractor exemption certificate or is not performing services for the person
6.3under an independent contractor exemption certificate is an independent contractor; or
6.4 (3) make a false material statement, representation, or certification; omit material
6.5information; or alter, conceal, or fail to file a document required by this section or any rule
6.6promulgated by the commissioner under rulemaking authority set out in this section.
6.7 (c) A person for whom an individual is performing services must obtain a copy of the
6.8individual's independent contractor exemption certificate before services may commence.
6.9A copy of the independent contractor exemption certificate must be retained for five years
6.10from the date of receipt by the person for whom an individual is performing services.
6.11 Subd. 8. Remedies. An individual or person who violates any provision of
6.12subdivision 7 is subject to a penalty to be assessed by the department of up to $5,000 for
6.13each violation. The department shall deposit penalties in the assigned risk safety account.
6.14 Subd. 9. Commissioner's powers. (a) In order to carry out the purposes of this
6.15section, the commissioner may:
6.16 (1) administer oaths and affirmations, certify official acts, interview, question, take
6.17oral or written statements, and take depositions;
6.18 (2) request, examine, take possession of, photograph, record, and copy any
6.19documents, equipment, or materials;
6.20 (3) at a time and place indicated by the commissioner, request persons to appear
6.21before the commissioner to give testimony and produce documents, equipment, or
6.22materials;
6.23 (4) issue subpoenas to compel persons to appear before the commissioner to give
6.24testimony and produce documents, equipment, or materials; and
6.25 (5) subject to paragraph (c), with or without notice, enter without delay upon
6.26any property, public or private, for the purpose of taking any action authorized under
6.27this subdivision or the applicable law, including obtaining information or conducting
6.28inspections or investigations.
6.29 (b) Persons requested by the commissioner to give testimony or produce documents,
6.30equipment, or materials shall respond within the time and in the manner specified by the
6.31commissioner. If no time to respond is specified in the request, then a response shall be
6.32submitted within 30 days of the commissioner's service of the request.
6.33 (c) Upon the refusal or anticipated refusal of a property owner, lessee, property
6.34owner's representative, or lessee's representative to permit the commissioner's entry onto
6.35property as provided in paragraph (a), the commissioner may apply for an administrative
6.36inspection order in the Ramsey County District Court or, at the commissioner's discretion,
7.1in the district court in the county in which the property is located. The commissioner may
7.2anticipate that a property owner or lessee will refuse entry if the property owner, lessee,
7.3property owner's representative, or lessee's representative has refused to permit entry on a
7.4prior occasion or has informed the commissioner that entry will be refused. Upon showing
7.5of administrative probable cause by the commissioner, the district court shall issue an
7.6administrative inspection order that compels the property owner or lessee to permit the
7.7commissioner to enter the property for the purposes specified in paragraph (a).
7.8 (d) Upon the application of the commissioner, a district court shall treat the failure of
7.9any person to obey a subpoena lawfully issued by the commissioner under this subdivision
7.10as a contempt of court.
7.11 Subd. 10. Notice requirements. Unless otherwise specified, service of a document
7.12on a person under this section may be by mail, by personal service, or in accordance with
7.13any consent to service filed with the commissioner. Service by mail shall be accomplished
7.14in the manner provided in Minnesota Rules, part 1400.5550, subpart 2. Personal service
7.15shall be accomplished in the manner provided in Minnesota Rules, part 1400.5550,
7.16subpart 3.
7.17 Subd. 11. Facsimile; timely service. When this section permits a request for
7.18hearing to be served by facsimile on the commissioner, the facsimile shall not exceed 15
7.19pages in length. The request shall be considered timely served if the facsimile is received
7.20by the commissioner, at the facsimile number identified by the commissioner in the order,
7.21no later than 4:30 p.m. central time on the last day permitted for faxing the request.
7.22Where the quality or authenticity of the faxed request is at issue, the commissioner
7.23may require the original request to be filed. Where the commissioner has not identified
7.24quality or authenticity of the faxed request as an issue and the request has been faxed in
7.25accordance with this subdivision, the person faxing the request does not need to file the
7.26original request with the commissioner.
7.27 Subd. 12. Time period computation. In computing any period of time prescribed
7.28or allowed by this section, the day of the act, event, or default from which the designated
7.29period of time begins to run shall not be included. The last day of the period so computed
7.30shall be included, unless it is a Saturday, Sunday, or legal holiday, in which event the
7.31period runs until the next day which is not a Saturday, Sunday, or legal holiday.
7.32 Subd. 13. Rulemaking. The commissioner may, in consultation with the
7.33commissioner of revenue and the commissioner of employment and economic
7.34development, adopt, amend, suspend, and repeal rules under the rulemaking provisions
8.1of chapter 14 that relate to the commissioner's responsibilities under this section. This
8.2subdivision is effective the day following final enactment.
8.3 Subd. 14. Fee. The certificate fee for the original application and for the renewal of
8.4an independent contractor exemption certificate shall be $150. Fees collected under this
8.5subdivision are deposited in the general fund.
8.6 Subd. 15. Notice to commissioner; review by commissioner of revenue. When
8.7the commissioner has reason to believe that an individual who holds a certificate has failed
8.8to maintain all the conditions required by subdivision 5 or is not performing services for a
8.9person under the independent contractor exemption certificate, the commissioner must
8.10notify the commissioner of revenue and the commissioner of employment and economic
8.11development. Upon receipt of notification from the commissioner that an individual who
8.12holds a certificate has failed to maintain all the conditions required by subdivision 5
8.13or is not performing services for a person under the independent contractor exemption
8.14certificate, the commissioner of revenue must review the information returns required
8.15under section 6041A of the Internal Revenue Code. The commissioner of revenue shall
8.16also review the submitted certification that is applicable to returns audited or investigated
8.17under section 289A.35.
8.18 Subd. 16. Data classified. Data in applications for an independent contractor
8.19exemption certificate and any required documentation submitted to the commissioner are
8.20private data on individuals as defined in section 13.02. Data in exemption certificates
8.21issued by the commissioner are public data. Data that document a revocation or
8.22cancellation of an exemption certificate are public data. Upon request of the Department
8.23of Revenue or the Department of Employment and Economic Development, the
8.24commissioner may release to the requesting department data classified as private under
8.25this subdivision or investigative data that are not public under section 13.39 that relate to
8.26the issuance or denial of applications or revocations of certificates.
8.27EFFECTIVE DATE.This section is effective July 1, 2008.
8.28 Sec. 2.
APPROPRIATION.
8.29$800,000 in fiscal year 2008 and $1,200,000
8.30in fiscal year 2009 is appropriated from the
8.31general fund to the commissioner of labor
8.32and industry for the purposes of this act.
8.33The general fund base for this appropriation
8.34is $1,425,000 each year in the 2010-2011
9.1biennium. If an appropriation for this
9.2purpose is enacted more than once, the
9.3appropriation is effective only once."