The misclassification of workers as “independent contractors” rather than “employees” is a growing problem in Iowa and across the nation. The misclassification of workers threatens Iowa’s economy, its businesses and its workers - which are the most important resource we have.
Iowa employers must report wages to Iowa Workforce Development (IWD) Operations Division and pay unemployment insurance (UI) tax on wages paid to employees as required. Iowa employers must generally withhold State and Federal income taxes, as well as withhold and pay Social Security and Medicare taxes.
When employers misclassify workers they:
Avoid paying taxes.
May avoid workers compensation coverage.
May fail to follow wage, contractor registration, labor laws and/or other employment laws.
May be more financially capable to underbid honest, law-abiding businesses that are paying all taxes owed​.
Misclassification Reports and Information
Read the following for more information on misclassification, including decisions and contact information.
Visit the Misclassification Decisions page for a record of all misclassification decisions as heard by Iowa Administrative Law Judges. It includes records of all decisions since the inception of the Misclassification Unit at Iowa Workforce Development, in 2010.
These decisions are publicly accessible and used as a general reference for employers and members of the public in understanding the misclassification of workers and applicable rules and laws. Redactions have been made as necessary to protect confidential information.
Intentional misclassification constitutes tax and insurance evasion. Employers misclassifying their workers may face the following consequences:
Penalties and fines
Interest on back taxes
Criminal charges under various laws​
IWD investigates cases of potential misclassification on an individual basis and will issue a determination on whether the person providing service is an employee or an independent contractor.
When determining whether the person providing service is an employee or an independent contractor, all information that provides evidence of the degree of control and independence must be considered.
The right to control the work to be done and how it will be done is one of the main factors considered.
The right to discharge a worker at will and without cause is also strong evidence of the right of direction and control. ​
The Internal Revenue Service (IRS) provides excellent resources to help determine the proper classification of workers as employees or independent contractors.
Iowa Worker Misclassification Unit Iowa Workforce Development 1000 East Grand Avenue Des Moines, IA 50319 Telephone: 888-848-7442 Fax: 515-281-4273 email: misclassification@iwd.iowa.gov
Field Auditors
Iowa Workforce Development Unemployment Insurance (UI) Field Auditors perform important work across the state to ensure compliance with unemployment insurance laws.
Field auditors annually perform UI employer tax account audits based on inquiries received and through randomly selected audits on a percentage of Iowa employers, as required by the U.S. Department of Labor. Field auditors will verify that wages are being reported correctly or that individuals are classified correctly in accordance with UI law.
Field auditors are assigned to specific territories throughout Iowa. Territories are assigned based on mailing address ZIP code on the employers account. Employers can contact the auditor assigned to their account for any questions, and auditors are dedicated to assisting them with any questions related to the unemployment tax system.
Any members of the public can also use the link below to locate the IWD Unemployment Insurance Field Auditor assigned to their area.
