A slate of new state laws took effect a week ago on July 1, 2025, teeing up new fraud-mitigation measures in state government, additional regulations for social media influencers, an official state fossil (the giant beaver), and more.

Among these were a slew of changes and updates that have both a direct and indirect impact on Minnesota's construction industry and its workers. We have included the bigger highlights below, but a full legislative summary can be found at the end.
 

Article 2: Labor Appropriations

Department of Labor & Industry (DLI) Budget
The DLI budget is established in Article 2 of SF17. This section details changes in the budget, including the following:

•  Misclassification Enforcement: The Labor Standards Division will receive an additional $281,000 in FY26 and an additional $286,000 ongoing from the general fund for misclassification enforcement.

•  Misclassification Fraud Impact Report: DLI will receive an additional $460,000 in FY26 and $160,000 in FY27 from the general fund to complete a misclassification fraud impact report.

•  Construction Worker Mental Health: The Construction Codes and Licensing Division will receive $500,000 in FY26 and $500,000 in FY27 from the workforce development fund for initiatives to promote mental health and prevent suicide in the construction industry. The funds are a one-time appropriation and are available until June 30, 2029.

•  Single-Egress Stairway Report: The availability of funds for the report is extended until June 30, 2026.

•  The funding for Dual-Training Pipeline has been consolidated to provide additional flexibility in the use of funds.

Direct Appropriations
This section details appropriations to DLI where the grant recipient is named in statute.

•  In FY26, $500,000 from the workforce development fund to the Minnesota Virtual Academy career pathways program with the International Union of Operating Engineers Local 49. This is a one-time appropriation and is available until June 30, 2027.
•  In FY26 and in FY27, $400,000 from the workforce development fund to Building Strong Communities for apprenticeship readiness programming. This is a one-time appropriation.
•  An additional $13,000 ongoing from the workforce development fund to Building Strong Communities for the Helmets to Hardhats program. Overall, this appropriate is now $238,000 ongoing.
 

Article 5: Labor Policy

Strengthening Break Laws
•  Employers will now be required to allow an employee a paid rest break of 15-minutes or enough time to use the nearest restroom, whichever is longer, for every four hours worked. Employers will be required to allow an employee an unpaid meal break of 30-minutes for every six hours worked.
•  This change will go into effect on January 1, 2026.

Temporary Restraining Orders
•  Article 5, Section 6, establishes the commissioner's authority to apply for an order enjoining and restraining violations of employment laws under DLI's jurisdiction. Previously, DLI only had this authority for violations of the Child Labor Act. Some violations, including certain violations of the Women's Economic Security Act, retaliation and more, are so time-sensitive that irreparable damage may be done to the employee by the time a compliance order is issued and resolved with an employer. This authority provides a pathway to swiftly restrain and enjoin violations of that nature.
•  This change goes into effect on January 1, 2026.

Misclassification Fraud Impact Report
•  Article 5, Section 9, establishes a misclassification fraud impact report that the commissioner must complete by January 15, 2027, and provides associated funding. It also establishes that the commissioners of the Department of Revenue and the Department of Employment and Economic Development must coordinate with the DLI commissioner on the report.
•  It also requires that the commissioners of the departments of Labor and Industry, Revenue, and Employment and Economic Development must submit a budget request detailing the costs to complete another report by January 15, 2031, and every six years thereafter.

Earned Sick and Safe Time
The following changes will be made to the earned sick and safe time (ESST) law:

•  Updates notice requirements when the need for ESST is unforeseeable;
•  Updates documentation requirements such that an employer may require reasonable documentation when an employee uses earned sick and safe time for more than two consecutive scheduled work days;
•  Updates replacement-worker requirements to clarify an employee may voluntarily seek or trade shifts with a replacement worker; and
•  Updates requirements related to advancing sick and save time to an employee before accrual buy the employee.

Construction Codes and Licensing Division Fee Alignment
CCLD fee alignment proposals is included over the next several sections, including the following:

•  Article 5, Section 14: Correcting a reference to the International Accreditors for Continuing Education and Training;
•  Article 5, Sections 15-19: Establishes plan review and inspections fees for industrialized / modular or prefabricated buildings, as well as associated definitions;
•  Article 5, Section 20: Establishes the $10 virtual inspection fees and includes class 4 electrical systems policy;
•  Article 5, Section 21: Increases the elevator operating permit fee to $145;
•  Article 5, Sections 22-30: Updates electrical inspection fees and includes class 4 electrical systems policy;
•  Article 5, Section 31: Integrates the fee schedule for energy storage and battery systems into law;
•  Article 5, Sections 23-34: Establishes plumbing plan review and plumbing inspection fees;
•  Article 5, Section 35: Increases the boiler and pressure vessel registration fee to $25;
•  Article 5, Section 36: Updates a definition of "manufactured home" for federal conformity;
•  Article 5, Section 37 & 40: Updates requirements for the notice of compliance form for a used manufactured home to require licenses to file the form with the commissioner and pay a filing fee of $100. It also establishes requirements to complete the notice of compliance form for rentals and filing the notice of compliance form are effective January 1, 2026;
•  Article 5, Sections 38-40 & Sections 47-48: Provides technical changes to manufactured home sections; and
•  Article 5, Sections 41-43 & 45-46: Updates fees related to manufactured homes.

Plumbing Plan Review & Inspections delegated to the Minnesota Department of Health for well contractors performing plumbing work
•  Article 5, Section 32, directs the commissioner to enter into an agreement with the Minnesota Department of Health (MDH) delegating plumbing plan review and inspections for work covered under Minnesota Statutes section 326B.46, subdivision 6, by January 1, 2026.
•  It also scopes what the agreement with MDH must contain and how the agreement may be terminated.
•  This section became effective June 15, 2025.

Data Center Regulations
•  Section 17, Paragraph I, provides that laborers and mechanics performing work on qualified, large-scale data centers must be paid the prevailing-wage rate and that the project is subject to prevailing-wage enforcement.
•  This is effective for sales and purchases made after June 30, 2025.
 

Regular Session Laws

Housing Policy Omnibus

Wood-Frame Carpenter Prevailing-Wage Rate
•  This provision provides a path to using the federal Davis-Bacon prevailing-wage rate for residential wood-frame carpenter projects up to six-stories, when the only source of financial assistance for the project is low-income housing tax credits.
•  The section of law establishing this path expires December 31, 2027.
•  This provision became effective May 24, 2025.

Underground Telecommunications Installers bill
This law makes updates to the underground telecommunication installers law, including the following:

•  It removes requirements that no fewer than two safety-qualified underground telecommunications installers must be present at all times where telecommunications infrastructure is being installed by means of directional drilling.
•  It updates effective dates such that all installations of underground telecommunications infrastructure in the state must be performed by safety-qualified underground telecommunications installers beginning January 1, 2026.
•  In provides a grandfathering provision that allows an approved training provider to apply to the commissioner to receive approval for equivalent or substantially equivalent classroom instruction course material delivered up to two years prior to becoming an approved training provider and before January 1, 2026. Once approved, a training provider may grant full or partial retroactive credit for completion of this training. A person granted retroactive credit must successfully complete the exam to be certified as a safety-qualified underground telecommunications installer.
•  The effective date for all provisions is May 20, 2025.

Worker's Compensation Advisory Council (WCAC) bill
The technical provisions of the bill amend Chapter 176. These provisions are effective May 23, 2025, unless otherwise noted:

•  Clarification concerning who qualifies as an employee for purposes of workers' compensation related to certain direct care programs under the Minnesota Department of Human Services;
•  Clarification of the definition of a corporate executive officer related to workers' compensation insurance requirements;
•  Clarification related to the payment for nursing services provided by a household member of an injured worker;
•  Technical changes to certain filing provisions in chapter 176;
•  Increases the limit of the amount of workers' compensation benefits the is non-assignable, effective for dates of injury on or after October 1, 2025; and
•  Repeal of Minnesota Rules, part 5220.2840, which was previously fully codified into statute.

The bill also includes provisions that amend Chapter 176 and 79, addressing workers' compensation fraud in the construction industry and workers' compensation policies allowed for certain construction projects. These provisions are effective as noted individually below:

•  It adds a definition for a key term used in the rest of the language, "zero estimated exposure policy," effective May 23, 2025.
•  It adds additional public information required to be reported by an insurer when issuing a zero estimated exposure policy, effective January 1, 2026.
•  It requires a construction employer that obtains zero estimated exposure policy to provide all entities with which it directly contracts to provide construction or improvement services written notification of its use of the policy and a copy of the policy, and for the entity receiving the notification to maintain the documents for three years. This is effective January 1, 2026.
•  It requires insurers to include a statement as part of any zero estimated exposure policy application that attests to the accuracy of the application, including the absence of employees and estimated zero exposure. This "attestation" must include specific language as described in the statute. This provision is effective for policies issued or renewed on or after January 1, 2026.
•  It allows for use of an owner or contractor-controlled insurance program in which a series of workers' compensation policies are issued to a project sponsor to cover the workers' compensation liability for multiple contactors on a specific project and sets out a requirement necessary to apply for the series of policies and the process for approval or disapproval with the Department of Commerce. This provision is effective January 1, 2026.

Agriculture and Broadband Finance Omnibus
This bill funds the Office of Broadband Development that DLI coordinates with regarding the underground telecommunications installer requirements. Relevant to that work, this bill provides $50,000 for a study of factors that may contribute to incorrect marking for the installation of underground telecommunication infrastructure. The study must include recommendations to the Legislature.

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You can view the full 2025 legislative session summary here. Listed above are all the changes and updates that have both a direct and indirect impact on Minnesota's construction industry and its workers. 

This information is also provided and intended for general informational purposes only. It should not be considered as legal advice. MBEX strongly recommends consulting with your business' attorney or legal advisor before taking any action based on its content.