EMPLOYER AUDITS AND MISCLASSIFICATION OF WORKERS
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.
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.