SF 2360 Minnesota Senate · 2025-2026 Regular Session

Biennial misclassification fraud impact report requirement and appropriation

SF 2360 requires partnership businesses in Minnesota to annually report on worker misclassification (where employees are incorrectly classified as independent contractors) starting March 1, 2026. The reports must include estimates of affected workers, financial costs to those workers, impacts on fair competition, and industry-specific misclassification rates. The bill also appropriates general fund money for fiscal years 2026-2027 to fund analysis by state agencies (Labor, Revenue, Employment & Economic Development, Commerce, and the Attorney General) on how misclassification affects programs like unemployment insurance, workers' compensation, and tax collections. This data will help guide enforcement priorities and assess fiscal impacts without changing existing labor laws.

Bill status in committee 1 of 4 stages cleared

Introduction

Mar 2025

Committee Review

Floor Vote

Governor

Introduced Mar 10, 2025 Last action Apr 1, 2025

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What changed between versions

Introduction → 1st Engrossment · 5 edits · Apr 1, 2025

MODERATE

The bill was updated from its introduction to its first engrossment version, refining the legislative title and summary to focus on a biennial misclassification fraud impact report rather than annual partnership entity reporting. The core requirement now mandates that state agencies coordinate every two years to analyze the financial and social costs of worker misclassification, with a specific deadline of January 15, 2027, for the first report. The scope of data collection was expanded to include detailed impacts on unemployment insurance, family and medical benefits, income tax, workers' compensation, and workforce development funds.

Scope change

The bill's scope shifted from requiring annual reports from partnership entities to a broader, biennial analysis of misclassification impacts across the entire state workforce, involving multiple state departments.

REQUIREMENT

Reporting frequency changed from annual to biennial, with the first report due by January 15, 2027.

The reporting entity changed from partnership entities to a coordinated analysis by the commissioners of revenue, employment and economic development, and labor and industry.

New requirement to estimate impacts on five specific state funds: unemployment insurance, family and medical benefits, income tax, workers' compensation, and workforce development.

FISCAL

Appropriations were restructured to fund the new biennial report from the workforce development fund, with provisions for interagency agreements to transfer funds between departments.

TIMELINE

The effective date for the initial analysis and reporting was set to begin January 15, 2027, replacing the previous March 1, 2026 start date for entity reporting.

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Full legislative history

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Key actions

Committee

Apr 1, 2025

Upper · Passed

Comm report: To pass as amended and re-refer to Taxes

upper

Mar 10, 2025

Committee

Referred to Labor

upper

Mar 10, 2025

Introduced

Introduction and first reading

upper

1 primary · 2 co-sponsors