Labor & Employment (Gig Economy)

HF 3597 exempts corporate officers of S corporations who own 25% or more of the company (directly or through subsidiaries) from Minnesota's paid leave program. The bill amends state law to exclude these officers from the definition of "employee," meaning they will not be eligible for paid leave benefits. This change applies specifically to officers who meet the ownership threshold under IRS rules for S corporations. The exemption clarifies that such officers are not covered by the state's paid leave requirements, aligning with existing exclusions for self-employed individuals and independent contractors.

This bill (SF 210) amends Minnesota Statutes section 290.01, subdivision 31, to clarify that Minnesota's definition of the "Internal Revenue Code" excludes section 530 of Public Law 95-600. This federal provision relates to worker classification rules under the Internal Revenue Code. The change ensures Minnesota employers are not subject to this specific federal rule when applying state tax laws. The amendment takes effect for taxable years beginning after December 31, 2025.