Minnesota's new law ramps up risks for misclassifying contractors – find out what HR must do to stay compliant
Minnesota’s new contractor rules survived a major legal challenge, leaving HR teams in construction facing stricter standards and bigger risks for worker misclassification.
On October 24, 2025, the Eighth Circuit Court of Appeals upheld Minnesota’s 2024 overhaul of how construction companies must classify independent contractors. The law replaced a nine-part test with a tougher 14-part checklist, raising the bar for compliance and documentation in the industry.
The Minnesota Chapter of Associated Builders and Contractors, the Builders Association of Minnesota, and J & M Consulting, LLC led the charge against the law, arguing it’s too vague and exposes employers to hefty fines. Their lawsuit claimed the requirements around written contracts, invoicing, and expense responsibility were unclear, and that penalties – up to $10,000 per misclassified worker – could cripple businesses.
Under the new statute, every independent contractor in construction must have a written contract signed within 30 days of starting work. Payments must be processed through the contractor’s business entity, and the contractor is required to handle the main expenses and costs of their services. The law also insists that contractors have a real opportunity to make a profit or take a loss, rather than simply receiving a set fee for their work. These requirements are designed to draw a...
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