Contractor Registration Pilot Project is Likely Here to Stay

As many commercial and residential construction contractors are aware, the Minnesota Department of Labor and Industry (“DOLI”) commenced a Registration Pilot Project effective July 1, 2012, which generally required any unlicensed individual or entity who performs commercial or residential building construction or improvement services for a contractor to register with DOLI.  The statute specifically provided that if such an individual or entity was not registered (or otherwise did not meet 9 other enumerated factors), the individual or entity would be considered an employee of the commercial or residential construction contractor.

At the time legislation was passed for the Registration Project, it required DOLI to issue a report to the legislature no later than January 1, 2014, on amendments to the Registration Project to be used to aid in enforcing worker misclassification laws.

The current Registration Project is set to expire on June 30, 2014.  However, DOLI issued its evaluation of the Contractor Registration Pilot Project on December 31, 2013, which recommended the continuation of the Registration Project.  The report also indicated that DOLI, the Department of Revenue and the Department of Employment and Economic Development have all taken enforcement actions based on the information obtained from the Registration Project and recommended adding investigators to enforce proper worker classification, increased investigations and enforcement efforts to make inroads in the misclassification of workers.

In light of DOLI’s recommendations, commercial and residential construction contractors who utilize unlicensed subcontractors as independent contractors should expect the Registration Project to continue beyond June 30, 2014.  Contractors should continue ensuring that their subcontractors are registered under the Registration Project and take steps to properly document and verify that their subcontractors meet the other independent contractor requirements.  In the coming year and thereafter, this will become more important considering the likelihood of increased enforcement efforts and investigations regarding this issue.

Additional Assistance and Questions

The information provided within this article is a broad overview and general discussion of only some of the major issues to consider when classifying workers and using independent contractors and is not intended to be legal advice.  You should seek the advice of competent and qualified counsel to review your specific situation.

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