After expansive changes in 2023, the Minnesota legislature has rolled out new legislation, once again impacting Minnesota businesses. Some of the changes go into effect July 1, 2024 and August 1, 2024. Employers should update their policies and practice. Below is a summary of the new requirements:
Oral Fluid Drug Testing
An employer may request an employee or job applicant to undergo oral fluid (saliva) testing for drugs, alcohol, and cannabis, as an alternative to using a certified laboratory.
The employee must be informed of the test result at the time of the oral fluid test. Within 48 hours of an oral fluid test that indicates a positive test result or that is inconclusive or invalid, the employee or job applicant may request a drug or alcohol or cannabis test at no cost to the employee or job applicant using the services of a testing laboratory.
Oral fluid testing must be performed pursuant to an employer’s written policy and must comply with most of the existing statutory requirements for drug, alcohol, and cannabis testing.
This law goes into effect August 1, 2024. Minn. Stat. § 181.950, subd. 9(a); Minn. Stat. § 181.953, subd. 5(a).
Job Postings
Employers who employ 30 or more employees at one or more sites in Minnesota are required to include the following information in job postings:
1. Salary range. The salary range cannot be open ended.
2. General description of all benefits and other compensation (health, retirement)
If there is not a salary range, the employer must list a fixed pay rate for the position.
The new law defines job posting broadly to include “any solicitation intended to recruit job applicants for a specific available position, including recruitment done directly by an employer or indirectly through a third party, and includes any postings made electronically or via printed hard copy, which includes qualifications for desired applications.”
This law goes into effect January 1, 2025. Minn. Stat. § 181.173.
Pregnancy and Parental Leave
Employers are now required to continue insurance coverage for employees and dependents during pregnancy and parental leave, as if the employee was not on leave. The employee must continue to pay any employee share of the cost of the benefits.
Employees are entitled to take time off work to attend prenatal care medical appointments, without it counting against the employee’s 12-week leave allowed under the pregnancy and parental leave law.
These laws go into effect August 1, 2024. Minn. Stat. § 181.941; Minn. Stat. § 181.943.
Gratuities
Gratuities received by an employee through a debit, charge, credit card, or electronic payment must be credited to the pay period in which they are received. The full amount of gratuity must be distributed to the employee no later than the next scheduled pay period.
This law goes into effect August 1, 2024. Minn. Stat. § 177.24, subd. 3(a).
Minimum Wage
The legislature eliminated the lower minimum wage standards carved out for small businesses, minor employees, and workers in the hospitality industry who are employed under a (J) nonimmigrant visa.
The new law makes the minimum wage standards more uniform for all Minnesota businesses. As before, a lower minimum wage may be paid only to those under age 20, and only for the first 90 days of their employment.
These minimum wage amendments go into effect January 1, 2025. Minn. Stat. § 177.24.
The amendments also modify the method of calculating minimum wage increases each year. This amendment is effective August 1, 2024. Minn. Stat. § 177.24, subd. 1(c). Beginning in September, employers should consult the Department of Labor's web site for the 2025 minimum wage.
Non-Solicitation Covenants Banned in Service Contracts
Non-solicitation covenants in service contracts that prevent customers of service providers from soliciting or hiring the service provider's employees are void and unenforceable.
When a provision in an existing contract violates this section, the service provider must provide notice to their employees of this section and the restrictive covenant in the existing contract that violates this section.
The ban does not apply to workers providing professional business consulting for computer software development and related services.
The law goes into effect July 1, 2024. Minn. Stat. § 181.9881.
Independent Contractor Criteria for Construction Industry
1. The legislature modified the criteria for determining whether a worker in the construction industry is an independent contractor or an employee. The changes are significant. The new law requires a worker to operate as a business entity at the time services are provided and the worker must meet all factors of a 14-factor test in order to be classified as an independent contractor. The new criteria can be found here.
2. All of the factors must be true of the contractor at and throughout the time the contractor provides services. Contractors who wish to work with other contractors will need to request documentation of compliance with all factors at the time of service and ongoing to avoid significant penalties. Individuals offering services in the construction industry may not hold themselves out as independent contractors if they do not satisfy all fourteen of the statutory criteria. The new criteria are effective for building construction or improvement services provided or performed on or after March 1, 2025. Minn. Stat. § 181.723, subd. 4.
The new criteria are effective for building construction or improvement services provided or performed on or after March 1, 2025. Minn. Stat. § 181.723, subd. 4.
Misclassification of Employees As Independent Contractors
The legislation includes harsher and potentially crippling penalties for misclassifying employees as independent contractors, including penalties specific to misclassification of construction workers. Business owners, officers, agents, and successors may be held individually liable for misclassifying workers as an independent contractors.
Failure to properly classify employees may result in all of the following liability:
• Compensation to the misclassified individual(s) for what the individual(s) would have earned (in salary and benefits) if they had been properly classified
• Payments that should have been made for unemployment, workers’ compensation, and Medicare and Social Security
• Up to $10,000 penalty for each individual not properly classified
• Up to $10,000 for each failure to treat an individual as an employee
• Up to $10,000 for each failure to report an employee to a government agency or another person as required by law (e.g., taxing authorities, unemployment agencies, Department of Labor)
• Up to $10,000 for each document that an employer requests an employee to complete that misrepresents or treats the employee as an independent contractor
• $1,000 for each day of delay of the commissioner’s investigation.
• In addition, in the construction industry, the following penalties may be imposed: Up to $10,000 for each time payment of an employee is condition on registration as a construction contractor, formation of a business entity, or agreement to misclassification as an independent contractor
Up to $10,000 if a person who does not meet the 14 factor statutory criteria claims to be an independent contractor. The commissioner of the Department of Labor may also issue stop work orders and may deny, suspend, and revoke licenses for misclassification.
The new penalties go into effect July 1, 2024. Minn. Stat. § 181.722, subd. 4; Minn. Stat. § 181.723, subd. 7 (penalties for misclassification in construction industry).
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If you have questions, please reach out to Arthur Chapman’s Employment Law Group.
