Since September 2012, all contractors providing residential or commercial building construction or improvement services that do not require a license must register with Department of Labor & Industry (DLI) through the Construction Contractor Registration Program.
Who Needs To Register
An individual or business entity that performs commercial or residential building construction or improvement services must register with DLI unless they
- have a current license, certificate or registration issued by DLI;
- are an employee of a business performing construction services; or
- hold a current residential building contractor or remodeler certificate of exemption issued by DLI; or
- were excluded from registration requirements by state law. Subcontractors not involved in the construction or physical improvement of a home, such as landscapers, cleaners and painters, are examplesof contractors not required to register with DLI.
Why is Registration Important?
- The Contractor Registration Program was created by the legislature to assist DLI in its investigation of worker misclassification (treating employees as independent contractors).
- By law, an unregistered “subcontractor” is presumed to be an employee of any contractor that hires them.
- The hiring contractor can rebut this presumption if they can prove that the relationship between them and the subcontractor complies with all nine factors of the Nine Factor Test found in Minn. Stat. § 181.723, subd. 4.
- Hiring an unregistered subcontractor is a violation of law, though the monetary penalty is forgiven for the first violation.
- Even if your subcontractors are registered, your relationship with them must meet the Nine Factor Test or they will be deemed to be employees of your company even if they operate as a business entity (corporation or LLC) and maintain their own liability and workers’ compensation insurance.
When hiring subcontractors, be sure to verify that the subcontractor is properly registered or licensed with DLI. Contractors can check on the status of subcontractor’s license or registration