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The Department of Labor and Industry was established as the Labor Statistics Bureau in 1887 to protect the rights of working people through the administration and enforcement of laws, rules, and regulations to foster safe and healthful working environments; to insure adequate compensation for work performed; to assist victims of occupational injury and illness; and to license and inspect establishments that use boilers and steam equipment.

The Labor Statistics Bureau collected statistics about the general condition of labor and working people in the state and reported that information to the governor and the Legislature. It was subsumed under the Labor Bureau that administered and enforced labor laws.

The department was known as the Labor, Industry and Commerce Bureau from 1907 to 1913 and then it became an official Minnesota state department and renamed the Labor and Industries Department. Also, in 1913, the first workers' compensation law in Minnesota was passed by the state Legislature. In 1925, it became the Department of Labor and Industry.

The department was directed by a labor commissioner until 1921. From 1921 to 1965, the department was headed by the Industrial Commission, which was made up of three commissioners. One of the commissioners, appointed by the governor with the consent of the State Senate, served as chair of the Industrial Commission. The Industrial Commission had two major functions:  the general administration of the affairs of the department and the quasi-judicial powers in hearings determining disputed claims under the workers' compensation law.

In 1967, the Legislature abolished the commission and its commissioners were designated as the Workers' Compensation Commission (now the Workers' Compensation Court of Appeals). The new Department of Labor and Industry assumed the Industrial Commission's responsibilities under the leadership of one commissioner appointed by the governor. Its duties included:  accident prevention (Minnesota OSHA); boiler inspection and steamfitting standards (Code Administration and Inspection Services); workers' compensation; apprenticeship; fee employment agencies and the Division of Women and Children (Labor Standards).

In 2005, five state construction code and licensing units were consolidated within DLI as a direct result of the governors' reorganization order. On May 16, 2005, the Department of Administration's Building Codes and Standards Division, the Department of Health's Plumbing and Engineering unit, the Board of Electricity and the Department of Commerce's Residential Contractors' Licensing unit joined DLI's boiler and high-pressure-piping groups to form a single division -- the Construction Codes and Licensing Division (CCLD).