A Minnesota independent contractor agreement is a document that defines a business relationship between a contractor and a client. It establishes the contractor’s duties, pay, and schedule. If you’re hiring an independent contractor in Minnesota, you must confirm the arrangement in writing.
- Worker Classification: Common Law Test
- Tax Structure: Graduated-Rate Income Tax
- Definition: § 181.723.4
- At-Will Employment: Yes
Independent Contractor Definition
According to Minnesota Statutes § 268.035(15)(a)(1), employment means services performed by a worker who is considered an employee under Minnesota law. Work performed by independent contractors does not count as employment.
Worker Classification Test
When determining whether a worker is an employee or an independent contractor, Minnesota courts look at the following factors:
- The alleged employer’s ability to control the means and manner of performance.
- How the alleged employer pays the worker.
- Whether the alleged employer gives the worker tools or materials to perform the work.
- Whether the alleged employer has control over the place where the work is done.
- The right of the alleged employer to fire the worker.
The main factor is the alleged employer’s right to control the manner and means of the worker’s performance [1] .
Rights and Responsibilities
Minnesota independent contractors do not have any specific rights, unlike employees.
State Taxes
Independent contractors receive Form 1099 for taxes, and employees receive Form W-2 [2] .
Minnesota law has the same definition of wages as section 3401(a) and (f) of the Internal Revenue Code [3] , which defines wages as payment for services carried out by an employee for an employer [4] .
Filing for Unemployment
Independent contractors are not eligible for unemployment benefits in Minnesota. However, the CARES Act provided weekly benefit payments for independent contractors during the pandemic. The CARES Act has now expired [5] .
When determining worker status for unemployment benefits purposes, Minnesota defines employment as services performed by someone who is considered an employee under the common law. They use the worker classification test to assess if someone is an employee or an independent contractor.
In the trucking industry, an owner-operator of a vehicle registered and licensed as a truck, truck-tractor, or tractor is an independent contractor if the owner-operator:
- Owns the equipment or holds it under a lease arrangement.
- Is responsible for equipment maintenance.
- Bears the main burden of the operating costs, including supplies, repairs, fuel, personal expenses, and vehicle insurance.
- Is responsible for providing services for operating the equipment.
- Is compensated based on factors related to the services performed, such as a percentage of rates, not on time expended.
- Enters into a written contract that states the relationship is that of an independent contractor.
Sample
Below, you can download a Minnesota independent contractor agreement template in PDF or Word format:
