Misclassification Of Iowa Workers
Misclassification
of workers as “independent contractors” rather than “employees,” is
a growing problem in Iowa and across the nation. The federal
Government Accountability Office reports that the underpayment of
Social Security taxes, unemployment and income taxes in 2006, due to
worker misclassification, totaled an estimated $2.72 billion,
nationally.
Iowa employers must report wages to Iowa Workforce Development’s
Unemployment Division and the Iowa Department of Revenue for
withholding unemployment and income taxes. When employers
misclassify workers:
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They avoid paying
these taxes.
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They might avoid
workers compensation coverage.
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They might fail to
follow wage, contractor registration, or other employment and
labor laws.
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They underbid
honest, law-abiding businesses that pay all taxes owed.
Misclassification
of workers threatens Iowa’s economy, its businesses and its most
important resource – it's workers.
The Iowa Legislature provided special funding for extra help to
protect workers, law-abiding businesses, and taxpayers.
FAQ's
If you do not know if your workers are employees or independent
contractors, visit our Frequently Asked Misclassification Questions.
Reporting Misclassification
If you believe that you,
or someone you know, are intentionally misclassified to avoid tax
payments, workers’ compensation coverage, and other legal
obligations, there is an easy way to report it.
Click here to report misclassification.
Contact
Information:
For questions about misclassification:
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Call the Iowa
Workforce Development Misclassification Unit at (515) 281-5387
or (800) JOB-IOWA (800-562-4692).
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Send an email to
Misclassification@iwd.iowa.gov.
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Contact the Iowa Department of Revenue.
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Write to the
Misclassification Unit, Iowa Workforce Development, 1000 East
Grand Avenue, Des Moines, IA 50319.
Penalties:
Intentional misclassification of workers is illegal. This practice
constitutes tax and insurance evasion. Employers could pay
significant penalties and fines. Under various Iowa laws,
intentional misclassification of workers can result in penalties,
ranging from monetary fines and interest for unpaid taxes, to
criminal charges. Penalties are determined on the facts of each
individual case.
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Failure to Pay
Unemployment Taxes: Iowa Code 96.16, 96.16(2), 96.14(2)
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Failure to Pay
Iowa Income Taxes: Iowa Code 422.16
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Failure to Provide
Worker’s Compensation Coverage: Iowa Code 87.14A, 86.13, 86.13A
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Failure to Pay
Wages Owed: Iowa Code 91A.12
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Failure to
Register as a Contractor: Iowa Code 91C.8
Iowa
Workforce Development