Eighth Circuit upholds Minnesota law preventing misclassification of construction workers 

(CN) — A unanimous Eighth Circuit panel ruled on Friday to uphold a Minnesota law that levies penalties on employers who misclassify construction workers.

In the opinion authored by U.S. Circuit Judge Duane Benton, a George W. Bush appointee, the panel ruled that the trade associations and contractor company plaintiffs failed to show that they should be granted an injunction halting the law from being enforced.

Supporters of the law, amended by the state Legislature in 2024, claim that the enhanced rules will prevent construction workers from being denied earned benefits by being misclassified as independent contractors, since contractors don’t get the higher wages, benefits and job protections given to employees.

But the plaintiffs sued to block the amended law in February, claiming that it creates cumbersome hurdles and imposes excessive fines that are unconstitutional. A Minnesota federal court ruled in March to deny them a preliminary injunction.

The plaintiffs claimed that five words or phrases — including text like “invoice” and “realize additional profit or suffer a loss” — in the 14-point test that defines an independent contractor are too vague and could lead to unequal enforcement.

The panel disagreed, finding that the law was specific enough to survive their claims of vagueness.

“People of ordinary intelligence have a reasonable opportunity to understand the meaning of these words and phrases … First, many are commonly used and understood. And second, the contractors may clarify the meaning of the act by their own inquiry of [Minnesota Department of Labor and Industry],” Benton wrote.

Benton added: “The act is clear enough to be an imprecise but comprehensible normative standard.”

The plaintiffs also argued that the civil and criminal penalties violated the excessive fines clause of the Eighth Amendment, but the court found that speculative nature of future fines lacked merit.

“Without either an offense or penalty to compare, this court cannot conduct a proportionality test. The contractors identify no authority to the contrary. Even if they did, the district court correctly noted that Minnesota law requires enforcement authorities to conduct a proportionality analysis when imposing penalties under the act,” wrote Benton.

The state had argued at a September hearing before the panel that the associations lack standing because they cannot establish injury.

However, Benton noted that the act “arguably” outlaws several of the practices the plaintiffs want to continue.

“For example, the contractors often do not secure written contracts with subcontractors within 30 days of beginning work. And, they regularly pay subcontractors without receiving an invoice,” Benton said. “Because the contractors allege specific conduct that the act targets, and because state officials have not disavowed enforcing it, the contractors have standing.”

Also on the panel were U.S. Circuit Judges L. Steven Grasz and Jonathan Kobes, both of whom were appointed to the court by Donald Trump.

A fact sheet published by the office of Minnesota Attorney General Keith Ellison claims that as many as 20% of all employers in the state misclassify at least one employee and that independent contractors account for almost 10% of the state’s workforce.

Minnesota Department of Labor and Industry Commissioner Nicole Blissenbach said that the department was pleased by the ruling.

“It is important for our agency to continue this work and address the misclassification of workers in Minnesota’s construction industry. Worker misclassification laws protect misclassified workers and the law-abiding employers who are harmed by the unfair advantage gained by those employers who violate these laws,” she said.

A spokesperson for the Minnesota Chapter of Associated Builders and Contractors did not immediately respond to a request for comment.