labor lawAdivision of labor law center

Under a Minnesota law taking effect on January 1, 2009, employers must pay benefits for any workers who do not have a certificate showing they are an independent contractor.

 

The Minnesota Independent Contractor Exemption Certificate (ICEC) law requires individuals who work as independent contractors in the construction industry, to obtain a certificate from the Minnesota Department of Labor and Industry. The law does not apply to individuals doing business as corporations, LLCs or partnerships.

 

Contractors who employ individuals who do not have an ICEC must pay state workers’ compensation and unemployment insurance for those individuals. In addition, such workers are considered employees legally and all state and federal employment laws, including minimum wage, overtime and worker safety standards, apply.

 

The law was designed to prevent contractors from fraudulently listing employees as independent contractors.

 

Currently this law applies only to independent contractors in the construction industry. However, it may be expanded to include independent contractors in other industries, in the near future.

 

Individuals can obtain an ICEC completing and submitting an application, fees and supporting documents. These documents establish that the workers meet the conditions required to operate as independent contractors.

 

An individual who holds an ICEC certificate can work either as an employee or as an independent contractor. However, an individual without an ICEC certificate can work only as an employee.

 

Contractors who fail to pay workers’ compensation, unemployment insurance and other benefits for workers who do not have an ICEC certificate, face stiff penalties.  These include fines, citations and possible loss of business license for multiple violations.

 

The new law is enforced by the Minnesota Department of Labor & Industry or DLI. First offenses are subject to civil penalties of up to $5,000 per employee. DLI will also share information on contractors who violate the law with the Minnesota Department of Revenue and the Minnesota Department of Employment and Economic Development. This means that the contractor would have to pay past workers’ compensation and unemployment premiums, in addition to fines. For more information, contact the DLI at 651-284-5074.

 

 

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