INDIANAPOLIS -- Lawmakers are accusing some Indiana companies of cheating employees out of jobless benefits.

Democratic legislators and union leaders agree that many construction companies avoid paying unemployment benefits by classifying workers as contractors, instead of full employees, 6News' Norman Cox reported.

"It's a very serious problem," said AFL-CIO President Nancy Guyott. "You have a large number of employers who are trying to skate past the rules of fair play."

Guyott said some workers lose out on benefits they've worked for, while others manage to get them, but then the state loses out because their employers never paid into the trust fund.

The Department of Workforce Development said the problem isn't that severe in Indiana.

"We actually lead the nation in identifying misclassified workers and have actually been asked by the U.S. Department of Labor to teach other states how we are so successful in doing this," said agency spokesperson Marc Lotter.

According to the department's figures, it has ranked first, second and fifth in the nation in the past three years for which figures are available on identifying misclassified workers.

But Democrats said the real reason the state catches so many cheaters is because there are so many of them here, up to one-quarter of all firms.

"They're prospering while good businesses that each and every day do everything by the rules are struggling," said Rep. David Niezgodski, D-South Bend.

Democrats want to give the state more power to punish cheaters. They have insisted that it be included in any final legislative settlement on unemployment taxation.