Minnesota H.F. 2742
Status: Referred to Committee, March 6, 2014
Current law contains a presumption of employment for the trucking and messenger/courier industries for purposes of workers’ compensation unless a multi-factor test is met. This bill would expand the presumption of employment to also include the delivery industry and would replace the old multi-factor tests with two new tests (an ABC test and a new multi-factor test) for overcoming the presumption of employment. The bill would also create a notice posting requirement and impose penalties for violations of the bill.
Presumption of employment in commercial goods transportation
For purposes of workers’ compensation, an individual performing commercial goods transportation services for a commercial goods transportation contractor is an employee, unless the person is a separate business entity or independent contractor, as described below.
“Commercial goods transportation services” means the transportation of goods for compensation by a commercial vehicle driver who possesses a state-issued commercial driver’s license and transports goods in Minnesota.
A “commercial goods transportation contractor” means any sole proprietor, partnership, firm, corporation, limited liability company, association, or other legal entity permitted by law to do business within the state that compensates commercial vehicle drivers, couriers, or messengers who possess a state-issued commercial driver’s license to transport goods in Minnesota, and includes a general commercial goods transportation contractor or a commercial goods transportation subcontractor.
Independent contractor – ABC Test
An individual is an independent contractor if:
- (1) the individual is free from control and direction in performing the job, both under contract and in fact;
- (2) the service is performed outside the usual course of business for which the service is performed; and
- (3) the individual is customarily engaged in an independently established trade, occupation, profession, or business that is similar to the service at issue.
Separate business entity – Multi-Factor Test
A business entity, including any sole proprietor, partnership, corporation, or entity that may be a commercial goods transportation contractor, shall be considered a separate business entity from (and, therefore, not an employee of) the commercial goods transportation contractor if all of the following criteria are met:
- (1) the business entity is performing the service free from the direction or control over the means and manner of providing the service, subject only to the right of the commercial goods transportation contractor for whom the service is provided to specify the desired result;
- (2) the business entity is not subject to cancellation or destruction upon severance of the relationship with the commercial goods transportation contractor;
- (3) the business entity has a substantial investment of capital in the business entity beyond ordinary tools and equipment and a personal vehicle;
- (4) the business entity owns the capital goods and gains the profits and bears the losses of the business entity;
- (5) the business entity makes its services available to the general public or the business community on a continuing basis;
- (6) the business entity includes income from services rendered on a federal income tax schedule as an independent business or profession;
- (7) the business entity performs services for the commercial goods transportation contractor under the business entity’s name;
- (8) when the services being provided require a license or permit, the business entity obtains and pays for the license or permit in the business entity’s name;
- (9) the business entity furnishes the tools and equipment necessary to provide the service;
- (10) if necessary, the business entity hires its own employees without the commercial goods transportation contractor’s approval, pays the employees without reimbursement from the commercial goods transportation contractor, and reports the employees’ income to the Internal Revenue Service;
- (11) the commercial goods transportation contractor does not represent the business entity as an employee of the commercial goods transportation contractor to its customers; and
- (12) the business entity has the right to perform similar services for others on whatever basis and whenever it chooses.
Notice Requirement
Every commercial goods transportation contractor shall post in a prominent and accessible place on the site where commercial goods transportation activity is conducted a legible statement, provided by the commissioner, that describes the responsibility of independent contractors to pay taxes required by state and federal law; the rights of employees to workers’ compensation, unemployment benefits, minimum wage, overtime and other federal and state workplace protections; protections against retaliation; and the penalties if the contractor fails to properly classify an individual as an employee. The notice must also contain contact information for individuals to file complaints or inquire with the commissioner about employment classification status.
This information shall be provided in English, Spanish, or other languages required by the commissioner. The posted statement shall be constructed of materials capable of withstanding adverse weather conditions. The commissioner shall create the notice and post it on the department’s Web site for downloading by commercial goods transportation contractors.
Penalties for Violations
Commercial goods transportation contractors who violate this law shall be subject to a civil penalty of up to $1,500 for a first violation, and up to $5,000 for a subsequent violation within a five-year period.
Effective Date
If passed, this bill would be effective August 1, 2014.
