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HF 348

A bill for an act prohibiting the misclassification of employees as independent contractors, providing penalties, and including applicability provisions.

2025-2026 Regular Session Introduced by Brian Meyer

The bill would enforce misclassification rules by tying worker status to IRS guidelines and give the state Department of Workforce Development the main authority to regulate and pe

Introduced, referred to Labor and Workforce.
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Bill Summary · HF 348

Summary of HF 348 (Introduced Feb 12, 2025)

Purpose and intent

HF 348 aims to prohibit the misclassification of employees as independent contractors, establish penalties for misclassification, and assign enforcement and related responsibilities to the state Department of Workforce Development. The bill seeks to ensure workers are correctly classified for purposes of employment rights, unemployment benefits, and related labor protections, using IRS guidance as a reference point for determining employee versus independent contractor status.

Key provisions

  • Section 1 (amendment to § 84A.5, subd. 3)

    • Expands the Department of Workforce Development’s scope to include enforcement of misclassification provisions (Chapter 95) alongside its existing duties (unemployment compensation, employer contributions, public employment services, job placement and training, and employment agency operations).
    • The department is also tasked with enforcement of Chapter 95 relating to misclassification and the delivery of related services.

  • Section 2 (new Sec. 95.1: Definitions)
    Establishes a new chapter of definitions to govern misclassification enforcement:

    • Department: Department of Workforce Development.
    • Employee: An individual who performs services in Minnesota for an employer for remuneration and who is considered an employee under IRS regulations or guidelines in effect on the date of the alleged misclassification.
    • Employer: A person who employs an individual in Minnesota for wages.
    • Independent Contractor: An individual who performs services in Minnesota for an employer for remuneration and who is considered an independent contractor under IRS regulations or guidelines in effect on the date of the alleged misclassification.
    • Misclassify / Misclassification: The act of classifying an individual for employment purposes as an independent contractor rather than an employee, contrary to IRS regulations or guidelines in effect on the date of the alleged misclassification, with the effect of denying the individual eligibility for an employment benefit (e.g., unemployment benefits).

  • The definitions tie the determination of status (employee vs. independent contractor) to IRS regulations or guidelines in effect at the time of the alleged misclassification.

What would be affected

  • Workers: Individuals who perform services in the state and could be classified as employees or independent contractors.
  • Employers: Employers in the state who hire workers and could misclassify employees as independent contractors.
  • Unemployment and benefits: Potentially affected eligibility determinations for employment benefits due to misclassification findings.
  • State agencies: The Department of Workforce Development would lead enforcement of misclassification, along with administering related programs.

Procedural and timeline notes

  • Status and actions: HF 348 was introduced on February 12, 2025, and referred to the Labor and Workforce committee. No further committee actions are listed in the provided information.
  • Interplay with IRS guidance: The bill relies on IRS regulations/guidelines as of the date of alleged misclassification to determine status, which could influence subsequent enforcement actions and interpretations.
  • Penalties: While the bill’s title and summary indicate penalties for misclassification, specific penalty provisions are not included in the excerpt provided. Details on penalties, enforcement mechanisms, and remedies would appear in the bill’s full text or later sections.

Potential impact (high level)

  • Encourages accurate worker classification to protect employee rights and eligibility for benefits.
  • Increases oversight and enforcement activity by the Department of Workforce Development.
  • Aligns state definitions with IRS criteria for employee status at the time of alleged misclassification, potentially affecting audits, wage classifications, and benefit eligibility decisions.
  • Could influence employer practices in contract labor, gig work, and other arrangements involving independent contractors.

Note: The summary is based on the introduced text provided and does not include provisions that may appear in later versions or sections not included here.

Compiled from official sources — confirm details with the bill’s official record.

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