ST. PAUL — A recent report by the Office of the Legislative Auditor estimated that 22% of employers have misclassified at least one worker, which can affect worker pay, benefits and other legal rights. DFLers seek to beef up misclassification enforcement by state agencies.
Misclassifying employees is illegal under Minnesota statute and several agencies — including the Department of Labor and Industry, Department of Revenue and the Department of Employment and Economic Development — work to regulate the practice.
Companion bills in the Legislature introduced this session would expand the investigative authority of enforcement agencies, open up lines of communication between enforcement agencies, increase penalties for employers, and allow employees to bring a lawsuit against an employer who classified the employee incorrectly. The bill is part of a bigger fight to ensure worker rights in Minnesota, according to Sen. Jennifer McEwen, DFL-Duluth.
"The bill is fairly simple in that way," McEwen, one of the bill's authors, said. "It doesn't propose some sort of huge sweeping change, it really is shoring up what we already have to deal with misclassification."
She said the report, which compared data from 2007 and 2018 in Minnesota, held no surprises for her, saying it was part of the gig economy movement of corporate America.
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"This is part of the larger trend in corporate America sort of offshoring their responsibility for working people in this country," she said. "They can classify them as independent contractors and then they don't provide them the benefits that working people should expect and have come to expect in this country."
The report, presented on March 14, 2024, also noted the need for quicker investigations into worker misclassification, which can take months or years to complete.
“Lengthy investigations also harm workers and law-abiding employers. Employers may continue to misclassify workers throughout the duration of the investigation; during that time, misclassified workers may not receive the benefits or protections to which they are legally entitled," the report concluded, adding that a misclassified employee may not receive the pay and worker safety protections they are entitled to, which would continue to give the employer an unfair advantage over employers who follow the law. "The longer an agency takes to determine whether workers are misclassified, the longer misclassified workers and law-abiding employers are harmed.”
While the OLA report highlights workplace misclassification issues, the bills stem from a task force formed by Attorney General Keith Ellison in July 2023 to study the issue. The task force is co-chaired by Rep. Emma Greenman, DFL-Minneapolis, and Rod Adams of the New Justice Project, a social justice organization focused on equitable jobs and housing for the black community.
The bill's chief author in the Senate, Sen. Oumou Verbeten, DFL-St. Paul, also served on the task force, which held meetings across the state in 2023 and 2024.
“We have heard hours of testimony from workers and stakeholders with heartbreaking stories of wages that have been stolen, with workplace injuries that have broken workers' budgets, and with benefits denied workers,” Verbeten said in a statement. “Workers courageously shared their stories to offer a helping hand to those that will come after them. When bad actors continue to undermine their competition by taking the low road and avoiding their responsibilities to workers, we all suffer."
While DFL leadership supports the bill, McEwen said she expects some resistance to strengthening enforcement against businesses that misclassify workers.
"Powerful corporate actors are used to acting with impunity and they depend on this business model to make their outrageously enormous profits," she said. "So if we start enforcing our laws more effectively, that will cut into their bottom line and hopefully, that should mean that it cuts into their top executives' ability to buy their second yacht or to purchase their third house."
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She said that while the bill is a more measured response this session, there are bigger fights ahead for misclassification.
"This is just the first round," McEwen said. "Hopefully this should be a simple pass and if it's not a simple pass, if we get held up, that will tell us a lot as well."
The bill received has been referred to the Senate Judiciary and Public Safety Committee on Monday, March 18. The House version of the bill was referred to the Judiciary Finance and Civil Law Committee on March 13.
The Trust Project
