Staffing agency license in Iowa: chapter 84I and health care agency registration

Iowa licenses employment agencies, but only one kind: an agency that takes a fee from the worker. Iowa Code chapter 84I, which was chapter 94A until the 2023 government reorganization moved it, defines an employment agency by who pays, so a contingency firm, a retained search firm or a temporary staffing firm paid by its clients does not need the license. Health care staffing is the exception that catches ordinary staffing firms: since 2022, agencies supplying nurses and other workers to Iowa health care facilities register annually, cannot use noncompetes and cannot charge facilities a fee for hiring their workers.

This page covers the chapter 84I license, the few fee rules that apply to everyone, chapter 135Q health care agency registration, the unemployment rule specific to temporary employment firms, and what Iowa does not regulate. For other states, see employment agency license requirements.

Who needs the chapter 84I license

Under § 84I.1(5), an "employment agency" is a person who brings together those desiring to employ and those desiring employment "and who receives a fee, privilege, or other consideration directly or indirectly from an employee for the service." Theatrical, stage and platform attractions are excluded. The "director" is the director of the Department of Workforce Development; the 2023 realignment moved the program from the labor commissioner.

The license for agencies that charge workers

Section 84I.2 requires the license before "transacting any business." The application goes to the director with:

• a $30,000 surety bond conditioned to pay damages caused by a wrongful act or violation of law;
• the schedule of fees the agency will charge;
• all contract forms an employee will sign; and
• a $75 application fee.

Licenses expire on June 30 each year. The director must grant or deny a completed application within 30 days and may revoke, suspend or annul a license for good cause. Under § 84I.7 the director may delay or deny a license if the applicant owes a debt to the department. Iowa Workforce Development's application packet (forms PEA-1 to PEA-3) collects the bond on the department's own form.

Once licensed, § 84I.3 requires the agency to:

• keep an employee record for at least two years, showing each employee who signed a contract, the employer if a job was found, and the fee charged, paid or refunded; and
• give the employee a copy of the contract stating the fee before referring them to an employer.

Fee caps and prohibitions

Section 84I.4 has two layers. The first three subsections apply to any person, not only licensed agencies:

1. No one may require an employee to pay a fee as a condition of applying with an employer or an employment agency.
2. An employee may not be required to pay a fee to an employer as a condition of hire.
3. An employer may not require an employee to reimburse a fee the employer paid to an employment agency.

The third rule matters to employer-paid firms: if a client tries to claw your placement fee back from the new hire, for example through a repayment clause in the offer letter, that is the client's violation, but you will be the one explaining it. Keep fee and guarantee terms between you and the client.

The second layer binds licensed agencies. An agency may not:

• send an applicant to an employer who has not asked the agency for help;
• deceive anyone about the services it will provide;
• split a fee received from an employee with the employer or its staff (splitting with other agencies that helped is allowed);
• charge more than the filed fee schedule without the director's consent;
• charge more than 15% of the employee's annual gross earnings; or
• require payment before earnings. Advance payment is allowed only if the contract says it is voluntary, and if the employee works less than a year in the job, the agency refunds anything above 15% of actual gross earnings from it.

Under § 84I.6, a violation, or refusing the director access to records, is a simple misdemeanor, and the director "shall assess" a civil penalty of up to $2,000.

Health care employment agencies: chapter 135Q

Chapter 135Q, enacted in 2022 and amended in 2023 and 2024, is the Iowa rule most likely to apply to a mainstream staffing firm. Under § 135Q.1, a "health care employment agency" is an agency that contracts with a health care entity in Iowa to provide agency workers for temporary or temporary-to-hire placements. A health care entity is a facility, agency or program licensed or certified by the Department of Inspections, Appeals, and Licensing or by CMS. A facility staffing its own affiliates is excluded, and app-based shift marketplaces are regulated separately as health care technology platforms under § 135Q.3.

Under § 135Q.2, an agency must:

• Register annually with the department, paying $500 for each separate location. An unregistered agency is prohibited from contracting with any Iowa health care entity.
• Make sure each worker meets licensing, certification, training, health and continuing education requirements, and keep documentation.
• Carry professional and general liability coverage of at least $1 million per occurrence and $3 million aggregate.
• File quarterly reports for each Medicare or Medicaid facility it serves, showing the average amount charged and the average amount paid to workers in each worker category.

The same section bars a noncompete clause in any contract with a worker or facility, and bars requiring "liquidated damages, employment fees, or other compensation" if the worker is later hired permanently by the facility. The only exception is a contract placing a worker the agency helped obtain authorization to work in the United States, with an initial term of at least 24 months, a total term of no more than 36 months and a single facility throughout. A contract that breaks these rules is unenforceable. Compare this with how conversion fees work in other sectors in temp-to-perm conversion fee.

Penalties under § 135Q.4 are steep. Failing to register or report starts at $5,000 with a 30-day grace period, then $25,000, then another $25,000 with revocation and a bar of up to three years. A noncompete or conversion-fee clause costs $25,000 for the first violation, and a repeat means revocation and a three-year bar. Supplying a worker with a fraudulent license, diploma or background check is $5,000 per violation.

Temporary employment firms and unemployment

Iowa's unemployment statute has a rule written for staffing firms. Under Iowa Code § 96.5(1)(j), a temporary employee who fails to notify the temporary employment firm within three working days of finishing an assignment is treated as having quit voluntarily, but only if the firm gave written notice of that duty. The notice must be a separate document from the employment contract, read and signed by the employee at hire, with a copy given to them. If you skip that document, you lose the rule.

Other employer accounts:

• Unemployment insurance with Iowa Workforce Development.
• Workers' compensation under Iowa Code chapter 85. See staffing agency insurance requirements for the policies clients ask for.
• Withholding with the Iowa Department of Revenue, and Secretary of State registration for out-of-state entities.

What Iowa does not regulate

• PEOs: I found no professional employer organization registration statute in the Iowa Code as of October 2026. Bills to create one were introduced in 2005, but I could not confirm that any was enacted.
• Employer-paid search and temp staffing outside health care: no state license.

Iowa sits between two very different neighbors. Minnesota dropped its license in 2015 but kept fee rules (see staffing agency license in Minnesota), and Missouri repealed its law in 1999 while registering supplemental health care staffing (see staffing agency license in Missouri).

An Iowa checklist

IOWA CHECK — [date] — owner: [name]

Model:
  [ ] Employer-paid only: no 84I license; no applicant fees; no
      client clawback from the new hire
  [ ] Any fee from workers: 84I license, $30,000 bond, fee schedule,
      contracts filed; 15% cap; renew by June 30
  [ ] Health care facilities: 135Q registration ($500/location),
      $1M/$3M liability, quarterly reports, no noncompetes or
      conversion fees

Temp staffing:
  [ ] Separate signed 3-working-day reassignment notice (96.5(1)(j))
  [ ] IWD UI account; workers' comp; withholding
Next review: [date]

Re-check if you start charging candidates anything, including a "registration" or "resume" fee, because one fee from a worker moves you into the license, and § 84I.4(1) bars application fees outright.