Minnesota lawmakers are introducing new legislation to improve the state's ability to fight employer misclassification fraud.
That's when an employer requires someone who, according to law, should be an employee to work as an independent contractor, making them pay their own payroll taxes with little to no labor protections.
Minnesota Attorney General Keith Ellison formed a task force last year to look into this problem.
"The bill gives Minnesota enforcement agencies better tools to detect misclassification and fraud and puts in place steeper penalties for breaking the law.
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.”
In addition to hurting workers and taxpayers, misclassification fraud also harms employers who follow the law and do right by their workers. Employers who take the high road often find themselves undercut on price and put at a competitive disadvantage by businesses who commit misclassification fraud.
Among other provisions, this legislation would create an intergovernmental misclassification enforcement and education partnership to improve communication and collaboration amongst government entities to detect, investigate, and deter employee misclassification. Providing workers and businesses with one stop, one resource to report and seek assistance.