A new law now requires construction contractors to hire only subcontractors who are registered with the Minnesota Department of Labor and Industry.

The move is through the contractor registration pilot-program under a Minnesota statute that took effect this month.

According to the DLI, the 2012 law replaces the independent contractor exemption certificate program with a two-year pilot project for registration of contractors who provide building construction and improvement services on or after Sept. 15, 2012. 

Currently, 3,800 contractors have registered online since July 2012 at www.dli.mn.gov/Register.

Information in a DLI statement reminds contractors that in addition to their own registration or licensing requirements, they will now need to comply with the subcontractor requirements of the new law. 

This includes subcontracting work only to registered or licensed contractors unless the contractor meets an exemption specified in the law.

The new law establishes a framework within which individual construction workers would be considered employees or independent contractors. 

DLI also reminds contractors to ensure their subcontractors’ business filings are active with the Secretary of State and must have written contracts with their subcontractors in order to be able to treat them as independent contractors rather than employees.

Although the Sept. 15 registration deadline has passed, contractors can still register for free at www.dli.mn.gov/Register.

The DLI may assess penalties for failure to register, hiring unregistered contractors, misclassifying workers and coercing others to form a business entity. The penalty for failing to register will be forgiven if registration is done within 30 days, though a penalty assessed to a contractor for hiring an unregistered contractor is not reversible.

There are more than 20,000 licensed contractors in Minnesota’s construction industry. These licensed contractors do not need to register. However, if they hire a subcontractor for their project, the subcontractor must be registered, licensed or meet an exemption specified in the law.

DLI has made available online tools for construction contractors to use to verify subcontractors are licensed or registered and to verify subcontractors carry workers’ compensation insurance, at www.dli.mn.gov/Register.

For more information about DLI’s contractor registration program, visit www.dli.mn.gov/Register, call (651) 284-5074 or send an email message to dli.register@state.mn.us.