Department of Labor and Industry Commissioner Nicole Blissenbach on key changes in worker classification for the construction industry

Since January 2023, Nicole Blissenbach has led the Minnesota Department of Labor and Industry (DLI) as commissioner, following a period as temporary commissioner beginning in August 2022. With a career deeply rooted in labor and employment law, Blissenbach has dedicated her work to ensuring Minnesota’s workplaces and living environments are equitable, healthy and safe. The department serves employees, employers and the public by regulating buildings and workplaces through education and enforcement. Here, Blissenbach shares key changes in worker classification for the construction industry.

HIN: What are the biggest changes in worker classification?

NB: A new 14-factor test to assess independent contractor status in the construction industry will go into effect on March 1, 2025. DLI will continue to apply the existing nine-factor test from now until March 1, 2025. Other changes to the misclassification of construction employees’ law (Minnesota Statutes § 181.723) went into effect on July 1, 2024. These include: • additional prohibited activities related to independent contractor status; • individual and successor liability for prohibited activities; • recordkeeping requirements regarding assessing independent contractor status; and • damages and penalties for violations.

HIN: What are the key deadlines and dates for industry members to be aware of?

NB: The 14-factor test to assess independent contractor status in the construction industry goes into effect on March 1, 2025. The other changes addressed above went into effect on July 1, 2024.

HIN: What actions should general contractors and subcontractors take?

NB: Be aware of record-keeping requirements. You must keep documents and information regarding what the independent contractor status determination was based on for at least three years. Recognize the 14-factor test will apply to change orders as well. Change orders cannot be used to disguise that the test is not met and reasons for legitimate change orders should be identifiable. Contractors should ensure subcontractors have responsible forepersons or supervisors who direct details of their work, written contracts accurately reflect the nature of the relationship and obligations of the parties and that contract negotiations are documented.

HIN: Why is there an industry-specific, 14-point test?

NB: Under existing law (Minn. Stat. § 181.723), there is an industry-specific nine-factor test. Many of the elements of the 14-factor test that will go into effect on March 1, 2025, are the same or similar to the elements of the nine-factor test. There are a number of industry-specific independent contractor tests in Minnesota, including those found in Chapter 5224 of Minnesota Administrative Rules. One of the recommendations in the Office of the Legislative Auditor’s report about worker misclassification was “the Department of Labor and Industry should propose to the legislature updates to the construction worker classification requirements outlined in Minnesota Statutes 2023, 181.723.” The report further states that “stakeholders and DLI staff described challenges with the construction worker classification test in law.” DLI believes the new test will provide clarity to regulated parties about the appropriate classification of workers in the construction industry.