1.1                          A bill for an act 
  1.2             relating to child support; modifying the penalties for 
  1.3             noncompliance with work reporting; requiring payors 
  1.4             who hire independent contractors for public projects 
  1.5             to comply with the work reporting laws; requiring a 
  1.6             report from the commissioner of human services; 
  1.7             amending Minnesota Statutes 2000, section 256.998, 
  1.8             subdivisions 6 and 9. 
  1.9   BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA: 
  1.10     Section 1.  Minnesota Statutes 2000, section 256.998, 
  1.11  subdivision 6, is amended to read: 
  1.12     Subd. 6.  [SANCTIONS.] (a) If an employer fails to report 
  1.13  under this section, the commissioner of human services, by 
  1.14  certified mail, shall send the employer a written notice of 
  1.15  noncompliance requesting that the employer comply with the 
  1.16  reporting requirements of this section.  The notice of 
  1.17  noncompliance must explain the reporting procedure under this 
  1.18  section and advise the employer of the penalty for noncompliance.
  1.19     (b) An employer who employs 19 or fewer employees, has 
  1.20  received a notice of noncompliance, and later incurs a second 
  1.21  violation is subject to a civil penalty of $25 $50 for each 
  1.22  intentionally unreported employee. 
  1.23     (c) An employer who employs 20 or more employees, has 
  1.24  received a notice of noncompliance, and later incurs a second 
  1.25  violation is subject to a civil penalty of $200 for each 
  1.26  intentionally unreported employee. 
  1.27     (d) An employer who has received a notice of noncompliance 
  2.1   is subject to a civil penalty of $500 ten times the amount 
  2.2   applicable under paragraph (b) or (c) for each intentionally 
  2.3   unreported employee, if noncompliance is the result of a 
  2.4   conspiracy between an employer and an employee not to supply the 
  2.5   required report or to supply a false or incomplete report. 
  2.6      (e) These penalties may be imposed and collected by the 
  2.7   commissioner of human services. An employer who has been served 
  2.8   with a notice of noncompliance and incurs a second or subsequent 
  2.9   violation resulting in a civil penalty, has the right to a 
  2.10  contested case hearing under chapter 14.  An employer has 20 
  2.11  days from the date of service of the notice, to file a request 
  2.12  for a contested case hearing with the commissioner.  The order 
  2.13  of the administrative law judge constitutes the final decision 
  2.14  in the case. 
  2.15     (f) This subdivision applies to payors that hire 
  2.16  independent contractors in the same manner as it applies to 
  2.17  employers and employees if the payor is required to report under 
  2.18  subdivision 9. 
  2.19     Sec. 2.  Minnesota Statutes 2000, section 256.998, 
  2.20  subdivision 9, is amended to read: 
  2.21     Subd. 9.  [INDEPENDENT CONTRACTORS.] (a) The state and all 
  2.22  political subdivisions of the state, when acting in the capacity 
  2.23  of an employer, shall report the hiring of any person as an 
  2.24  independent contractor to the centralized work reporting system 
  2.25  in the same manner as the hiring of an employee is reported. 
  2.26     (b) Other payors may report independent contractors to whom 
  2.27  they make payments that require the filing of a 1099-MISC 
  2.28  report.  Payors reporting independent contractors shall report 
  2.29  by use of the same means and provide the same information 
  2.30  required under subdivisions 4 and 5. 
  2.31     (c) Payors who hire independent contractors for work or 
  2.32  projects financed in whole or in part by the state or a 
  2.33  political subdivision of the state must report independent 
  2.34  contractors to whom they make payments that require the filing 
  2.35  of a 1099-MISC report.  Payors reporting independent contractors 
  2.36  under this paragraph must report by use of the same means and 
  3.1   provide the same information required under subdivisions 4 and 5.
  3.2      (d) The commissioner of human services shall establish 
  3.3   procedures for payors reporting under this section. 
  3.4      Sec. 3.  [REPORT.] 
  3.5      (a) The commissioner of human services must report to the 
  3.6   legislature on: 
  3.7      (1) the frequency that employers fail to comply with the 
  3.8   work reporting requirements of Minnesota Statutes, section 
  3.9   256.998; 
  3.10     (2) the sanctions imposed for failure; 
  3.11     (3) the overall effectiveness of the work reporting system; 
  3.12     (4) changes that should be made to improve the 
  3.13  effectiveness of the work reporting system, specifically 
  3.14  addressing whether or not the sanctions available for 
  3.15  noncompliance are sufficient to deter noncompliance; and 
  3.16     (5) the system by which the commissioner determines whether 
  3.17  or not an employer is underreporting or reporting late. 
  3.18     (b) The report must be completed by January 1, 2002, and 
  3.19  must comply with Minnesota Statutes, sections 3.195 and 3.197.