A recent lawsuit has been filed challenging the constitutionality of Minn. Stat. § 181.723 that passed last year. In the final hour of last year’s session, the Minnesota legislature passed an “omnibus bill” spanning nearly 1,500 pages. Among the many changes in that bill, was the new “14-factor test” governing subcontractors which takes effect on March 1, 2025. The essence of this new law is that if Minnesota subcontractors do not meet these 14 factors, then they will be reclassified as the general contractor’s employees accompanied by substantial financial penalties and compensatory damages.
The pending lawsuit alleges that the Statute is unconstitutional for a variety of reasons, including violating the 8th Amendment’s excessive fines clause. If the challenge is successful, the Statute may become unenforceable or be temporarily stayed pending the court’s determination on these issues. For now, Minnesota general contractors must still comply with this Statute and should make sure they’ve retained counsel to update their subcontractor agreements to reflect this change before the Statute goes in effect on March 1st.
Feel free to contact any of our construction attorneys for questions and SJJ will post developments as they arise.
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