When it comes to home improvement projects, selecting the right contractor is crucial. With recent changes to Minnesota's employee misclassification laws, homeowners need to be more vigilant than ever. These changes aim to protect workers' rights and ensure fair business practices, but they also impact how you should approach hiring a contractor and how much you will pay for your project. Here’s a guide to help you navigate these changes and make an informed decision.

Understanding the New Misclassification Law

In 2024, Minnesota passed a landmark bill to combat employer misclassification fraud. This law makes it harder for employers to incorrectly classify employees as independent contractors, which can deprive workers of important rights and benefits. Key provisions for remodeling contractors kick in on March 1, 2025.

Key provisions include:
  • Improved Reporting and Coordination: The law creates an Intergovernmental Misclassification Enforcement and Education Partnership, making it easier for workers to report violations and for agencies to coordinate investigations
  • Increased Penalties: Repeat offenders face stiffer penalties, ensuring that misclassification is not just a cost of doing business
  • Enhanced Contractor Tests: For those in building construction or improvement services, the law focuses on whether the contractor is a legitimate business entity and if the relationship is a true business-to-business transaction
  • Private Right of Action: Workers can now go to court to recoup wages and benefits they were denied due to misclassification

Tips for Choosing the Right Contractor

Given these changes, here are some steps to ensure you hire a reputable and compliant contractor:

  1. Verify Licensing and Insurance: Always hire a licensed contractor. A license ensures the contractor has met state requirements, including passing exams and maintaining liability insurance. You can verify a contractor's license through the Minnesota Department of Labor and Industry.

  2. Check References and Experience: Ask for references and check how long the contractor has been in business. A well-established contractor with a good track record is more likely to comply with the new laws and deliver quality work

  3. Review the Contract Thoroughly: Ensure the contract includes a detailed summary of the work, materials, total price, payment schedule, and timelines. The contract should also specify that any changes must be documented in a written change order

  4. Avoid Red Flags: Be wary of contractors who:

    • Offers unusually low prices (labor pricing for each job may increase from to 30-50% translating to 5% -15% increase in the total project cost)
    • Require substantial payment upfront
    • Refuse to provide a written estimate or contract
    • Use high-pressure sales tactics

  5. Understand Your Rights: Familiarize yourself with the protections offered by the new misclassification law. If you suspect a contractor is misclassifying workers, you can report it to the appropriate authorities

Conclusion

Choosing the right contractor in Minnesota involves more than just finding someone who can do the job. With the new employee misclassification laws, it's essential to ensure that your contractor is compliant with state regulations. By following these tips, you can protect yourself and contribute to fair business practices in the construction industry.

At Quarve Contracting, we are and always have been 100% compliant with all federal and state laws.

Minnesota Department of Labor and Industry : Minnesota Attorney General's Office