Misclassification is front and center again after Minnesota’s attorney general secured an $800K settlement over tightly controlled delivery work that looked more like employment than independent contracting.
Every time managers lean on “1099s” who have set shifts, must follow company procedures, and perform critical daily work, HR absorbs the misclassification fallout if regulators come calling.
In the latest in a string of state misclassification settlements, the state secured an agreement with a same-day delivery service that treated tightly controlled drivers as contractors instead of employees.
This settlement follows the resolution of similar cases from California and New Jersey, a pattern that makes it harder for employers to assume contractor models are safe in one state just because they have not been challenged yet.
The defendant employer in the Minnesota case was Shipt, a same-day delivery service owned by Target.
In the October 2022 lawsuit, Minnesota Attorney General Keith Ellison alleged that Shipt misclassified its delivery workers as independent contractors to avoid providing them with the employment protections afforded to employees under Minnesota law, exposing the company to back pay, benefit obligations and penalties.
The attorney general said the alleged misclassification deprived the delivery workers of multiple employment-law protections that most HR teams would associate with employee status, including:
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