Minnesota’s 14-Factor Independent Contractor Test for Construction
Minnesota construction companies must use the state's 14-factor test when deciding whether a person performing building construction or improvement services may be treated as an independent contractor.
For covered work performed on or after March 1, 2025, the individual must operate through a qualifying business entity and that business entity must meet every requirement in Minnesota Statutes section 181.723. Meeting most of the factors is not enough.
A subcontract, W-9, certificate of insurance, or contractor registration may support the analysis, but no single document proves independent-contractor status by itself.
What Is the Minnesota 14-Factor Test?
The 14-factor test is Minnesota’s construction-specific worker-classification standard. It applies to people providing or performing commercial or residential building construction or improvement services in the course of another person’s trade or business.
The worker is treated as an employee unless the worker operates through a business entity that satisfies all 14 requirements at the time the services are performed. This is an all-or-nothing test, not a balancing test.
Who Does the Test Affect?
The test can affect general contractors, subcontractors, developers, restoration companies, remodelers, roofers, and other construction businesses that engage people or entities to perform covered work in Minnesota. Businesses outside construction may be subject to different classification rules.
“⚠️ Important:
A subcontractor is not an independent contractor just because the paperwork says so. The business relationship must satisfy all 14 requirements.”
Minnesota's 14 Independent Contractor Requirements
To qualify as an independent contractor for covered construction work, the business entity must meet all 14 requirements while the work is being performed:
Operate as a separate and independent business.
Own, rent, or lease the tools, vehicles, equipment, materials, office space, or facilities used for the work.
Offer the same or similar services to multiple customers or the general public.
Maintain required federal and Minnesota tax identification numbers, tax filings, 1099 records, and W-9 documentation.
Remain in good standing with the Minnesota Secretary of State when applicable.
Maintain an unemployment insurance account when required.
Carry workers’ compensation insurance when required.
Hold all required licenses, registrations, and certifications.
Use a written contract that identifies the work and compensation and is properly signed and dated.
Invoice and receive noncash payments in the business entity’s name.
Control the means and methods of performing the work and actually exercise that control.
Pay the main expenses associated with the contracted work.
Accept responsibility for completing the work and for consequences tied to nonperformance.
Have a real opportunity for profit or loss based on the relationship between costs and compensation.
Does a Subcontractor Have to Meet Every Factor?
Yes. A subcontractor who meets 12 or 13 factors may still be treated as an employee. The documents must also match how the business actually operates. A strong paper file cannot cure a working relationship that contradicts the contract.
What Should a General Contractor Collect?
A practical compliance file may include:
A signed subcontract or written proposal describing the work and compensation
A completed W-9 and required tax information
Secretary of State good-standing verification
Current licenses, registrations, and certifications
General liability and workers’ compensation documentation
Invoices issued in the business entity’s name
Evidence of tools, vehicles, equipment, business facilities, advertising, and work for other customers
Records showing that the subcontractor bears project expenses and has a genuine risk of profit or loss
Minnesota law also requires the hiring company to retain the information supporting its classification decision for at least three years and produce it to the Department of Labor and Industry upon demand.
Common Compliance Gaps
The subcontract is signed after work begins or does not clearly describe the scope and payment terms.
A business registration, contractor registration, license, or insurance policy has expired.
Invoices or payments use an individual’s name rather than the business entity’s name.
The general contractor controls hours, methods, staffing, or day-to-day performance.
The subcontractor does not offer services to the public or maintain evidence of independent operations.
The documents say one thing, but the parties operate differently in practice.
Why Classification Matters
Misclassification can affect wages, overtime, unemployment insurance, workers’ compensation, taxes, licensing, and other employer obligations. Minnesota law also permits significant penalties and can impose individual liability in certain circumstances.
Subcontractor Compliance Is Ongoing
Compliance is not a one-time onboarding task. Registrations expire, insurance changes, business operations evolve, and the actual working relationship may drift away from the written agreement. Construction companies should review subcontractor files before work begins and periodically confirm that key information remains current.
How North Star Law Helps
North Star Law helps Minnesota construction companies review subcontractor relationships and improve their compliance processes. That may include reviewing agreements, identifying missing or inconsistent documentation, evaluating how the parties operate in practice, and building repeatable onboarding and renewal procedures.
👉 Contact North Star Law to discuss your situation.
Frequently Asked Questions
Is a W-9 enough?
No. A W-9 addresses only part of the tax-documentation requirement. It does not establish the remaining factors.
Does a signed subcontract prove independent-contractor status?
No. The contract is one requirement, and the actual working relationship must be consistent with it.
When did the 14-factor test take effect?
The updated test applies to covered construction services performed on or after March 1, 2025.
Does the test apply outside construction?
This particular test applies to covered building construction and improvement services. Other industries may use different standards.
What happens if the test is not met?
The individual performing the work may be treated as an employee, which can create wage, tax, unemployment, workers’ compensation, licensing, and penalty exposure.