Paving the High Road | Policy Recommendations

Iowa’s leaders must recognize the realities of our construction sector’s threats and opportunities, then take action using the powerful, evidence-backed tools available to them. Across the board, local governments, state agencies and the Iowa Legislature should work to enforce and strengthen the laws, empower workers and take advantage of federal investment opportunities.

 

SOLUTIONS FOR LOCAL GOVERNMENTS

Enforce and strengthen laws

Involve County Attorneys in prosecuting wage theft

Although nothing in state law prevents Iowa counties from prosecuting wage theft crimes, none currently do so. County Attorneys should look for chances to go after this crime, which costs Iowans over 10 times more than all other types of theft combined.[i] In one great example, the County Attorney in San Mateo County, California, used grant funding to hire a full-time prosecutor and an investigator to tackle wage theft.[ii]

Educate local law enforcement on illegal misclassification and wage theft

County attorneys should direct local law enforcement to refer any cases of misclassification and wage theft rising to the level of criminal violations to them and work to connect affected workers to local resources and enforcement agencies who can assist with wage recovery. This approach will require training for officers to learn the signs and ask the right questions, but it has the potential to meaningfully increase community protection.

Ensure bidders on public projects are both responsive and responsible

Iowa’s “lowest responsive, responsible bidder” law gives local governments leeway to assess the responsibility of contractors bidding on public contracts. Several local governments have adopted new policies for post-bid quality assurance, requiring assessments of bidders’ labor standards violations, failure to complete work, employee classifications and more.[iii] These counties need to work on implementing the assessments and documenting their impact. Other localities throughout Iowa should work to adopt similar responsible-bidder policies.

Empower workers

Fund worker-led community organizations

Researchers have found that complaint-based enforcement of labor standards (relying on workers to file claims, as opposed to proactive efforts) does a poor job of protecting workers. Strategies involving partnership with local, community-based organizations — referred to as co-enforcement — are shown to better help workers report violations and boost education on worker rights.[iv] In Johnson County, the cities of North Liberty, Coralville and Iowa City joined the county to fund the Center for Worker Justice of Eastern Iowa to hire a wage theft community organizer.[v] The city of Minneapolis is another great example of this idea in action.[vi]

Publicize resources on worker rights and employee misclassification

Educating workers and businesses on labor standards and worker rights is crucial. Local governments should help get information in the hands of residents, who can then better advocate for themselves. The University of Iowa Labor Center is one excellent source of helpful materials.[vii]

Adopt wage theft ordinances, advisory committees and tracking dashboards

The more light directed at illegal practices of low-road contractors, the harder it is for them to continue. Several U.S. cities have put these practices into effect, directly tackling the issue and recovering hefty sums for wronged workers. See examples from Denver, Columbus, San Diego and Detroit.[viii]

Take advantage of federal investments

Learn about the available opportunities, especially grants and direct pay.

Local governments have access to extensive resources to help them navigate and access federal investment opportunities in the Inflation Reduction Act and Bipartisan Infrastructure Law. The BlueGreen Alliance and Clean Energy Tax Navigator are great sources for getting started.[ix]

Seek out infrastructure and clean energy development projects

Unlike some federal funding opportunities, the investment opportunities in the BIL and IRA require action on the part of local governments. Officials must be proactive to seek out opportunities to use these tools. It is critical for conversations to happen as soon as possible in order to make the most of these opportunities.

Maximize good labor standards on awarded projects

IRA and BIL funds are attached to required and optional labor standards, with preference for projects using strong standards. Local governments should implement prevailing wage and registered apprenticeship requirements, as well as using the extensive resources on community benefits agreements. Not only will this make them more competitive when seeking funding, but it will maximize the benefits to the local economy.

 

SOLUTIONS FOR STATE AGENCIES

Enforce and strengthen laws

Update administrative rules and agency practices to protect workers

There is much that Iowa agencies can improve without legislative action. Administrative rules, which fill in the details of carrying out Iowa law, govern agencies’ approaches to accepting and processing wage claims and misclassification complaints.[x] For example, DIAL should remove the rule that the agency does not accept wage claims over $6,500 and it should ensure that civil monetary penalties are assessed against violators, especially repeat violators. We recommend a variety of other administrative rule changes in Appendix A.

Reinstate the Misclassification Task Force

In 2008, Governor Chet Culver established a Misclassification Task Force with the mission of studying misclassification and reporting on ways to prevent it.[xi] The Task Force recommended creating a Misclassification Unit to implement its recommendations.[xii] The unit, which launched in 2009, identifies thousands of misclassified employees per year and recovers massive sums for workers and the state. However, the unit’s funding has been declining since it was established, and the Task Force has not released a report since 2010. State leaders should form a new interagency task force committed to regular reports on misclassification in Iowa and expand the Misclassification Unit’s funding and work.

Connect the work of the Wage and Child Labor Unit and the Misclassification Unit

Employee misclassification and wage theft often go hand in hand — yet the two state units working on these issues are housed in different departments (Department of Inspections, Appeals and Licensing and Iowa Workforce Development, respectively) under Governor Reynolds’ reorganization plan. These teams should work together to tackle issues of misclassification and wage theft, sharing information and referring cases to each other.

Empower workers

Make resources on labor standards and enforcement easier to find

Public awareness of wage payment law, illegal misclassification, and labor standards is very low. Workers are far less likely to stand up for themselves when they don’t know their rights. State agencies should act to increase the visibility and circulation of know-your-rights resources. For example, placing resources in obvious places on main web pages is a great, easy place to start. In addition, businesses trying to do the right thing should have ready resources available that can help them see problems with past or prevalent practices and help them against unscrupulous competitors.

Establish relationships with worker-led organizations

Nonprofits throughout Iowa work to support workers and their families. Groups including the Center for Worker Justice of Eastern Iowa, the Iowa Federation of Labor, AFL-CIO, and local chapters, and United Way have strong relationships in their communities and are often trusted more than government bodies. State agencies should establish ties with these organizations to increase the spread of resources, refer cases and complaints, and learn how to improve their own policies and practices.

Take advantage of federal investments

Seek opportunities through IRA and BIL

Iowa agencies, like the Department of Transportation and the Department of Energy, should actively seek out opportunities to improve Iowa’s infrastructure using investments and labor standards possible through the IRA and BIL. Funded projects should maximize the use of labor standards like prevailing wages and registered apprenticeships. See some great resources like the Iowa Environmental Council’s Energy & Infrastructure Funding Hub,[xiii] the Federal Highway Administration’s IRA Funding Matrix,[xiv] and the National Governors Association’s Infrastructure Implementation Resources.[xv]

 

SOLUTIONS FOR STATE LEGISLATORS

Enforce and strengthen laws

Reform the Wage Payment Collection Law

This law defines employer obligations and employee rights to wage payment, as well as the state’s role in enforcing the law.[xvi] Updates are needed to allow for stronger and more efficient enforcement and improve protections for workers who have been wronged. We suggest numerous improvements to the law in Appendix B.

End preemptions of pro-worker policies

Iowa legislators should reverse the large set of 2017 preemptions that hold back local governments from setting a local minimum wage, establishing prevailing wage laws, and using project labor agreements. Not only do these policies promote good local jobs for Iowa communities without increasing public costs, but they also can unlock additional funding through IRA and BIL investments.[xvii] Without the ability to implement PLAs, Iowa cities and counties are less competitive for billions of federal grant dollars.

Establish a state prevailing wage law

Legislators should adopt an Iowa prevailing wage law to apply to state-funded public works. These exist in several other states and have numerous benefits for workers and the public.[xviii] A comprehensive review of studies by the Institute for Construction Economic Research found that state prevailing wage laws do not increase costs for public projects but do increase worker training and safety.[xix]

Require labor brokers to register

A key piece of accountability for construction contractors is their required registration with the Iowa Department of Inspections, Appeals and Licensing (DIAL).[xx] Registration allows DIAL to ensure contractors are complying with unemployment insurance and workers’ compensation laws. Even though Iowa Code requires registration of all construction contractors and businesses performing “construction” work, labor brokers often evade registration requirements by arguing that they deal solely in the business of providing labor. Legislators should amend the code to clarify that labor brokers are required to register as contractors, as proposed in SF 128 in 2023.[xxi]

Extend liability for illegal practices up the contractor chain

When liability for violations of labor laws fall primarily on the subcontractors and labor brokers, the consequences are rarely felt by the large general contractors who incentivize such practices. Iowa legislators need to redirect the sector’s culture of misclassification by increasing accountability for the big players, like Minnesota did in 2024 through its general contractor liability law.[xxii]

Meet needs of disaster response & out-of-state workers

Efforts are underway across the U.S. to transform the resilience workforce into a stable, fairly compensated and sizable contingent able to engage in year-round climate adaptation, preparedness and reconstruction.  An example of a forward-looking solution is the federal Climate Resilience Workforce Act, which would officially recognize the resilience workforce and provide them with essential benefits, including health care, wage stability and a viable path to citizenship.  Regulatory bodies like OSHA must also evolve to meet the unique challenges faced by disaster-response workers. The current leniency of workplace safety policies in the aftermath of natural disasters exposes these workers to potential abuse and neglect, as companies often skirt regulations without facing any real penalties.

Empower workers

Protect workers’ rights to strong unions

The benefits of unions to workers, families and communities are well-documented.[xxiii] Legislators should protect unions, rather than creating obstacles for them. Many states enacted pro-union, pro-worker policies in 2023 that can serve as a strong model for Iowa.[xxiv]

Increase funding for agency enforcement and outreach

With a team of just four investigators and one secretary, the Wage and Child Labor Unit is responsible for addressing wage and child labor claims for the entire state workforce of 1.6 million.[xxv]  Funding for the Misclassification Unit is at its lowest point since it was established, and the loss of investigators has steadily reduced enforcement.[xxvi] The Iowa Legislature needs to steeply ramp up funding for both units to hire more investigators and support outreach efforts to educate Iowa employers and workers on compliance and rights.

A note on disaster response & out-of-state contractors

Nationally, efforts are underway to transform the disaster-recovery workforce into a stable, well-compensated and sizable contingent capable of engaging in year-round climate adaptation, preparedness and reconstruction endeavors.[xxvii] A federal example of a forward-looking solution is the Climate Resilience Workforce Act, which seeks to officially recognize the resilience workforce and provide them with essential benefits, including health care, wage stability, and a viable path to citizenship.[xxviii] Regulatory bodies such as OSHA must also evolve to meet the unique challenges encountered by disaster response workers. The current leniency of workplace safety policies in the aftermath of natural disasters exposes these workers to potential abuse and neglect, as companies often skirt regulations without facing any substantive penalties.[xxix]