DES MOINES - Iowa Gov. Chet Culver signed an executive order Wednesday forming a task force to study employee misclassification, a practice some Democrats believe the construction industry has used to hire undocumented workers.

Some employers improperly hire workers as independent contractors to avoid paying benefits like Medicare, Social Security, insurance and workers' compensation, Culver said during a press conference at the Iowa Capitol.

"Employers who contribute to the local economy should not have to compete with those employers who choose to break the law by knowingly misclassifying their employees," he said.

The task force will take stock of employee misclassification in Iowa and report back to Culver in 60 days with recommendations on how to halt the practice and prevent it in the future.

The task force will be made up of representatives from Iowa Workforce Development, the state department of revenue, the department of economic development and the department of labor, he said.

Iowa Department of Revenue Director Mark Schuling, who will be a member of the task force, said misclassification is a national problem, and the panel will determine the extent of the practice in Iowa.

"My guess is this is a big problem in the state of Iowa," Schuling said.

James Piazza Jr., policy director for the Heavy Highway Contractors Association, applauded the executive order and said contractors who misclassify workers cheat taxpayers and hurt local economies.

"Our best law-abiding construction contractors and their employees are placed at a disadvantage when competing against those that violate labor, employment, insurance and tax laws," Piazza said.

Answering questions from reporters after signing the order, Culver denied that the move is meant to appease labor unions upset about Culver's veto last session of a collective bargaining bill that had received union backing.

Rather, Culver called the executive order a matter of fairness.

"It demonstrates most importantly that we are committed to making sure that our workers have a fair workplace," he said.

A measure cracking down on the practice was approved as a component of larger immigration packages that didn't gain approval in both chambers of the Legislature.

House Majority Leader Kevin McCarthy, D-Des Moines, said lawmakers already spent several months discussing worker misclassification.

"We'll certainly look at any recommendations that the governor's task force has as it relates to it, but you know, the bulk of the work and the foundation I think has already been laid by our legislative work," McCarthy said.

McCarthy said the practice of misclassification is isolated in certain industries and isn't a widespread problem.

"We do know that there's pockets of abuse, particularly in the construction industry," McCarthy said.

Senate Minority Leader Ron Wieck, R-Sioux City, blamed Democrats for the Legislature's failure to act on the issue last session.

"We had a great opportunity to step up and be proactive, but Democrats chose to do nothing," Wieck said in a statement. "Unfortunately, the tired old position of previous years of 'let us study the issue more,' has won out over action."

Charlotte Eby contributed to this report.

Contact Fred Love at

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fred.love@lee.net