New Federal Contractor Rule Proposed — What Minnesota Builders Should Know
Changes to the Federal Contractor Laws could impact your Construction Business. Stay updated with North Star Law.
In February 2026, the U.S. Department of Labor proposed a new rule that could change how workers are classified as employees or independent contractors under federal law.
This news has many contractors asking the same question:
Will this change Minnesota’s construction contractor rules?
Right now, the answer is no.
What the Federal Rule Would Do
The proposed rule would make it easier for businesses to classify workers as independent contractors under federal wage laws.
The rule focuses mainly on two questions:
Who controls the work?
Can the worker make a profit or loss from the job?
If the worker controls their work and operates like an independent business, they may qualify as a contractor under federal law.
However, this rule is still only a proposal and has not taken effect yet.
Minnesota Law Is Still Much Stricter
Even if the federal rule becomes final, Minnesota construction companies must still follow Minnesota law.
Minnesota uses a 14-factor test to determine if a construction worker is an independent contractor.
To qualify as a contractor in Minnesota, all 14 factors must be met.
If even one factor is missing, the worker may legally be considered an employee under Minnesota law.
Because of this, a worker could qualify as a contractor under federal law but still be an employee under Minnesota law.
A Lawsuit Is Still Pending
There is currently a federal lawsuit challenging Minnesota’s construction misclassification law. You can find our previous blog on this issue here: NSL Blog on Misclassification
Construction industry groups argue the law is unclear and that the penalties are too severe.
So far, the courts have allowed the law to remain in effect while the case continues.
What Contractors Should Do Now
Until the law changes, contractors should:
Review how workers are classified
Make sure subcontractors meet all 14 Minnesota requirements
Keep clear contracts and documentation
Stay updated as the lawsuit and federal rulemaking continue
The Bottom Line
The federal government may move toward a more flexible contractor rule, but Minnesota’s construction law has not changed.
For now, contractors working in Minnesota must continue following the state’s 14-factor test.
If you have questions about worker classification or construction compliance, the attorneys at North Star Law help contractors and builders navigate Minnesota construction law and reduce legal risk. Email info@northstarlaw.com or call us at 651-363-4976.