Minnesota AG, lawmakers combat employer misclassification fraud in new bill

ST. PAUL, Minn. (FOX 9) - The Minnesota Attorney General and lawmakers announced Monday they will have new legislation to fight employer misclassification fraud. 

According to a press release sent by lawmakers, misclassification is when an employer requires someone to work as an independent contractor when legally they should be an employee. An employee gets legal protection under federal and state labor laws. Independent contractors have to pay their own payroll taxes and have little labor protection. 

The bill would create an "intergovernmental misclassification enforcement" and an education partnership to improve communication between government agencies to help deter employee misclassification, lawmakers said. 

"All workers deserve economic security and protections of earning minimum wage and overtime, unemployment insurance when you get laid off and worker's compensation when you get hurt on the job," said Rep. Emma Greenman (DFL-Minneapolis). "But when irresponsible employers don’t play by the rules, workers get hurt, law-abiding businesses can't compete, and safety net protections like unemployment insurance are put at risk. This legislation ensures Minnesota has the legal and enforcement tools to turn the tide on the problem of misclassification fraud to protect workers, law-abiding businesses, and the Minnesota public for generations to come."

In July 2023, Minnesota Attorney General Keith Ellison formed a task force to look into employer misclassification, which led to the legislation being announced Monday.

According to the U.S. Department of Labor, "Misclassification denies employees access to critical benefits and protections they are entitled to — overtime, the minimum wage, family and medical leave and, in some cases, safe workplaces. It generates substantial losses to the U.S. Treasury and the Social Security and Medicare funds, as well as to state unemployment insurance and workers’ compensation funds. It cheats every taxpayer. It undermines the entire economy."