Iowa is the latest state to partner with the US Department of Labor (DOL) in a nationwide effort to share information and coordinate enforcement efforts aimed at preventing the misclassification of employees as independent contractors.
Thirteen other states - California, Colorado, Connecticut, Hawaii, Illinois, Louisiana, Maryland, Massachusetts, Minnesota, Missouri, Montana, Utah and Washington - also have signed a memorandum of understanding with the DOL as part of its Misclassification Initiative.
The initiative started in 2011, when the DOL joined forces with the Internal Revenue Service (IRS) to "work together and share information to reduce the incidence of misclassification of employees, to help reduce the tax gap, and to improve compliance with federal labor laws."
Since then, the DOL has collected $9.5 million in back wages for more than 11,400 workers when the primary reason for minimum wage or overtime violations under the Fair Labor Standards Act (FLSA) was that workers were not treated or classified as employees - an 80 percent increase in back wages and a 50 percent increase in the number of workers receiving back wages since the partnerships were forged, the agency said.
The DOL says it is "actively pursuing" agreements with other states as well.
An employer that misclassifies an employee as an independent contractor faces a variety of consequences, including back taxes plus interest, health and welfare benefits, and liability for state workers' compensation premiums.