In Minnesota, as in most states, it’s common for general contractors to “1099” their workers — to misclassify them, in other words, as independent contractors. How common? A 2007 investigation by the state’s Office of the Legislative Auditor estimated that 1 in 7 employers engaged in this practice; in the construction industry, the ratio was closer to 1 in 3. Now, however, that ratio is bound to change, thanks to a new state law that requires contractors to treat all individuals and sole proprietors as employees unless they’ve received an exemption from the state.

Tough requirements. Under the new law — Statute 181.723, which took effect January 1 — anyone who wants to work as an independent contractor in Minnesota’s residential or commercial construction industry must first obtain an Independent Contractor Exemption Certificate (ICEC) from the state’s Department of Labor and Industry. In addition to...

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