State Specific Question About: MINNESOTA (MN)

Are resident Caretakers/Manager living on site considered employee's or independent contractors? And if, so- classified as independent contractors by the department of labor, do they need to have contractor’s liability insurance and a workers comp policy. My property is under an LLC. With a MN tax ID number. I inherited the caretaker/ Manager when I purchased the building recently. The caretaker / Management agreement was set up by the previous owner on the lease, where the tenant gets a free apt and a salary for the management responsibility. The caretaker/ manager have held this position for years. My accountant tells me that this situation is hairy, that it is a complex and difficult problem because of the length of time the person has held the position in question. There lease is up for renewal soon and I am considering terminating the position, however I sense a problem. This person does do an excellent job cleaning the building and managing the tenants, (has great tenant relations), but it is costly, due to the free two bedroom apt and the salary paid.

To make matters worse, this person does not do maintenance work- what so ever, I have to do it myself. I cannot afford to have this position as an employee base position, pay all the taxes and associated bookkeeping fees. What are my options?