Unemployment for Independent Contractors: Flight or Flee?

Unemployment for Independent Contractors in Minnesota is tricky. Independent contracting cases are strange because the laws in Minnesota keeps changing.  Even worse, the rules change based on a worker’s occupation.

As you might expect, employers do not want to call you an employee because they will owe thousands of dollars in unemployment taxes and payroll taxes. One way employers try to get through this process is by conveniently calling a worker a contractor.

The reason this issue is such a big deal is that it impacts whether a worker is eligible for unemployment benefits. So, I wanted to quickly work through a few rules to consider.

Unemployment Rules for Independent Contractors

The first rule is simple:  independent contractors do not get unemployment benefits in Minnesota.  For this reason, workers who are trying to seek this benefit should be arguing why they were an employee.

MN independent contractors are governed by dozens of statutes, rules and law cases. As a result, pinpointing the right law and rule is critical.

Which Law Applies?

You must assume all of the laws apply and be prepared for the reasons that help your case. Generally, a worker will need to be prepared for the following issues:

fight for unemployment benefits
  • Use of office, equipment, and materials,
  • Tax return process,
  • Contracts (verbal and written) used,
  • Expenses related to the service or work,
  • Responsibility and satisfaction of work completed,
  • Payment process (commissions, bid process, or other wage methods),
  • Profits and losses, and
  • Recurring business liabilities.

Even more important, workers need to be prepared to combat what their employer might say too.

Contractor Audits

At first glance, the rules for defining a contractor are crazy, strange and all over the board.  Luckily, you can help yourself by looking for two things:

  • Is an auditor asking you questions, or
  • Are you being informed about filing an appeal?

Unfortunately, the Work Force Center, auditors, and field agents are not necessarily on your side. Thus, prepare accordingly.

Minnesota Laws for Independent Contractors

Every employee and employer relationship is different.  Some people believe they are following rules and guidelines defined by the IRS.  Other employees have written contracts and some workers make verbal agreements.

In other words, protect yourself before the situation gets more challenging.

How Can An Unemployment Lawyer Help?

Attorney Jasper Berg