2022 Iowa Labor & Employment Year End Review

Kansas City, Mo. (February 8, 2023) - This alert reviews key developments in Iowa labor and employment law from the prior year, as well as how these developments will impact employees and employers in 2023.

“A Case of First, and Last Impression”: Iowa Supreme Court Clarifies Protections for Transgender Workers

For the first time in nearly four decades, the Iowa Supreme Court addressed the question of whether discrimination on the basis of “sex” includes discrimination based on a person’s transgender status.

This question was first addressed in Sommers v. Iowa Civil Rights Commission, 337 N.W.2d 470 (Iowa 1983). Sommers was a transgender female. Two days after starting a new job, an old acquaintance at her workplace recognized her, and her new employer then questioned her about her “sexual status.” The next day the employer told Sommers that she could not use the restrooms and terminated her employment. Thereafter, Sommers pursued claims against her employer under the Iowa Civil Rights Act, but at that time, the characteristics protected under the Iowa Civil Rights Act were only: “age, race, creed, color, sex, national origin, religion, or disability.” Iowa Code § 601A.6 (1981). The Iowa Civil Rights Act did not yet include protections for gender identity or sexual orientation, both of which were added in 2007. The civil rights commission and the district court found that neither “sex” nor “disability” in the statute provided protections for discrimination based on gender identity.

The Iowa Supreme Court in Vroegh v. Iowa Dep’t of Corr., 972 N.W.2d 686 (Iowa 2022) declared Sommers to be “a case of first, and last impression in Iowa” as the issue of whether “sex” included protection based on a person’s gender identity had not been raised in any case before the Iowa Supreme Court since. In Vroegh, the plaintiff sued the Iowa Department of Corrections and his supervisor for sex discrimination and gender identity discrimination for denying him use of the men’s restrooms and locker rooms. He also pleaded claims against the Department of Corrections and the Iowa Department of Administrative Services for sex discrimination and gender identity discrimination for denying the same level of healthcare benefit coverage that they provide to non-transgender employees.

The Iowa Supreme Court in Vroegh affirmed the jury’s verdicts on the two gender identity discrimination claims. The Vroegh court, however, dismissed the jury’s verdict as to the sex discrimination claims. In reaching this decision the Iowa Supreme Court noted:

Discrimination based on an individual’s gender identity does not equate to discrimination based on the individual’s male or female anatomical characteristics at the time of birth (the definition of “sex”). An employer could discriminate against transgender individuals without knowing the sex of the individuals adversely affected. But that employer, lacking knowledge of the male or female anatomical characteristics of any of the effected employees would (and could not) be engaging in unlawful discrimination based on the individual’s “sex.”

Citing to the amendments to the Iowa Civil Rights Act in 2007, the Iowa Supreme Court noted that the legislature did not insert into the statute a definition of “sex” that included one’s gender identity, as it could have easily done. Instead, it added “gender identity” to the list as its own separate characteristic and provided the term with its own separate definition.

Iowa Supreme Court Upholds Teacher’s Right to Performance-Based Training

Under Iowa Code § 284.8(2), if a teacher’s evaluator finds that the teacher’s performance is “not meeting district expectations under the Iowa teaching standards,” then “the evaluator shall, at the direction of the teacher’s supervisor, recommend to the district that the teacher participate in an intensive assistance program. The code provision requires every school district in Iowa to be prepared to offer an intensive assistance program and further requires any teacher not meeting the school district’s expectations under the Iowa teaching standards to participate in such a program.

In Braaksma v. Bd. of Dirs. of the Sibley-Ocheyedan Cmty. Sch. Dist., 981 N.W.2d 134 (Iowa 2022), the Iowa Supreme Court held that a finding against a teacher in her wrongful termination lawsuit was improper under Iowa Code § 284.8(2), because the school district violated the law when it terminated her contract for the same performance reasons addressed in her ongoing intensive assistance program before the teacher had been given the requisite time to participate in the program. In reaching this decision, the Iowa Supreme Court solely reviewed the reasons stated in the superintendent’s notice of recommendation of termination per Iowa Code § 279.16 and did not take into consideration the school district’s arguments regarding insubordination, which were argued for the first time on appeal. The Braaksma court noted:

This does not mean, of course, that a school district may never immediately terminate the contract of a teacher while an intensive assistance program is in progress. Participation in an intensive assistance program does not immunize a teacher from firing. One can conjure many actions that might justify a teacher’s immediate firing—assaulting a student, embezzling funds, falsifying student grades, among others—even if a teacher is currently participating in an intensive assistance program. But this case simply doesn’t present that fact pattern. A teacher’s insubordination might also constitute just cause to immediately terminate the contract of a teacher notwithstanding an ongoing intensive program, but the superintendent’s notice of termination doesn’t include insubordination among the grounds.

Stated another way, in Iowa, when a school district’s only apparent reason for a teacher’s termination is related to his or her performance, Section 248.8 requires the school district to give the teacher an opportunity to participate in the intensive assistance program before they may proceed with the teacher’s termination.

Iowa Maintains McDonnell-Douglas Burden-Shifting Analysis for Discrimination Claims Decided at Summary Judgment

In 2019, the Iowa Supreme Court in Hawkins v. Grinnell Regional Medical Center, 929 N.W.2d 261, 272 (Iowa 2019), announced that it applies a motivating-factor standard rather than the burden-shifting approach when instructing juries in discrimination cases. This left the question of which standard applies to summary judgment proceedings unanswered. The question was brought before the Iowa Supreme Court in 2021; however, at that time, the Iowa Supreme Court declined to decide on the issue. See Hedlund v. State, 930 N.W.2d 707, 715 (Iowa 2019) (declining to decide the issue because the plaintiff failed to raise a genuine issue of material fact). At that time, however, the Hedlund court noted in its dicta that Hawkins “did not disturb the court’s prior law as it applies to summary judgment.”

In 2022, this issue was presented before the Iowa Court of Appeals in Caldwell v. Casey’s Gen. Stores, Inc., 977 N.W.2d 117 (Iowa Ct. App. 2022). The Iowa Court of Appeals acknowledged the dicta of the Iowa Supreme Court in Hedlund, as well as the Eighth Circuit’s application of the burden-shifting approach in Carter v. Atrium Hosp., 997 F.3d 803, 808 (8th Cir. 2021) (holding that without contrary instruction from the Iowa Supreme Court, the Eighth Circuit will continue to apply a burden-shifting analysis to Iowa Civil Rights Act discrimination claims at summary judgment), to conclude the McDonnell-Douglas is the applicable standard for discrimination claims at summary judgment.

So, what does this mean for employers? Absent a future Iowa Supreme Court ruling to the contrary, courts applying Iowa law will use the McDonnell-Douglas burden-shifting standard at summary judgment and will continue to use the Price Waterhouse motivating-factor standard at trial. The Price Waterhouse motivating-factor standard used at trial is a lower standard than the McDonnel-Douglas burden-shifting analysis and determining-factor standard. This permits an employer to maintain a defense that it would have made the same employment decision even had it not taken into account the plaintiff’s membership to a protected class.

Keeping this in mind, Caldwell should not change an employer’s approach to litigation when defending an employment discrimination case in Iowa. With a potential trial in mind, employers should consider raising a “same-decision” affirmative defense at the outset of litigation and developing evidence during discovery demonstrating that they would have made the same decision without regard for a plaintiff’s protected characteristic.

Legislative Changes to Iowa’s Unemployment System

On July 1, 2022, HF2355 was put into effect, implementing several employer-friendly changes to Iowa’s unemployment laws. These new rules were passed by the Iowa legislature with the intent of stabilizing employment and bringing more Iowans back to the workplace.

Maximum Benefits Reduced

The first change reduces the maximum benefits payable to individuals eligible for unemployment benefits from 26 weeks to 16 weeks. If a sole proprietor goes out of business, the individual’s benefits are now capped at 26 weeks instead of 39 weeks.

Employers Protected from Overpayments Due to State’s Delay

Generally speaking, employers who fail to respond to Iowa Workforce Development’s (IWD) request for information, or who fail to cooperate in a fact-finding interview, could be responsible for overpayment even if the employer did not receive sufficient notice to participate. The new rules will now protect employers from overpayment if IWD fails to provide the employer with sufficient notice of the request for information.

Statutory Definition of Misconduct

In Iowa, an individual is disqualified from receiving unemployment benefits if they were terminated for misconduct. While the definition of “misconduct” has not changed, the new legislation has codified 14 examples of “misconduct”, which include, but are not limited to:

Material falsification of the individual's employment application.
Knowing violation of a reasonable and uniformly enforced rule of an employer.
Intentional damage of an employer's property.
Consumption of alcohol, illegal or nonprescribed prescription drugs, or an impairing substance in a manner not directed by the manufacturer, or a combination of such substances, on the employer's premises in violation of the employer's employment policies.
Reporting to work under the influence of alcohol, illegal or nonprescribed prescription drugs, or an impairing substance in an off-label manner, or a combination of such substances, on the employer's premises in violation of the employer's employment policies, unless the individual is compelled to work by the employer outside of scheduled or on-call working hours.
Conduct that substantially and unjustifiably endangers the personal safety of coworkers or the general public.
Incarceration for an act for which one could reasonably expect to be incarcerated that results in missing work.
Incarceration as a result of a misdemeanor or felony conviction by a court of competent jurisdiction.
Excessive unexcused tardiness or absenteeism.
Falsification of any work-related report, task, or job that could expose the employer or coworkers to legal liability or sanction for violation of health or safety laws.
Failure to maintain any license, registration, or certification that is reasonably required by the employer or by law, or that is a functional requirement to perform the individual's regular job duties, unless the failure is not within the control of the individual.
Conduct that is libelous or slanderous toward an employer or an employee of the employer if such conduct is not protected under state or federal law.
Theft of an employer or coworker's funds or property.
Intentional misrepresentation of time worked or work carried out that results in the individual receiving unearned wages or unearned benefits.

While the list does not cover every possible instance of misconduct, it provides employers with a list of common examples of what may disqualify an employee from unemployment benefits.

Suitable Work Wage Schedule

To receive unemployment benefits in Iowa, an individual must be able, available, and actively looking for work and willing to accept suitable work. Factors used to determine if the job offer is acceptable include wage, length of unemployment, working conditions and job duties.

The wage requirements for determining if work is suitable are calculated using the wages earned in the highest quarter of the base period. The highest quarter of the base period is divided by 13 (the number of weeks in a quarter) to calculate the average weekly wage (AWW).

An individual receiving unemployment benefits is required to accept lower wages the longer they receive unemployment. The new law accelerates the existing suitable work wage schedule for those receiving unemployment. A job offer may be considered suitable if the offered wages are at or above the following percentages of the individual’s AWW:

100% if work is offered during the week that the claim is established or during the first week of a claim;
90% if work is offered during the second and third week of a claim;
80% if work is offered during the fourth and fifth week of a claim;
70% if work is offered during the sixth, seventh, or eighth week of a claim; and
60% if work is offered during or after the ninth week of a claim.

Appeals to the District Court

Prior to HF2355, if a party wished to appeal an administrative law judge’s decision, it had to first appeal to the Iowa Employment Appeal Board before it may file an appeal with the district court. The new rules allow parties to appeal directly to the district court instead of initially appealing to the Iowa Employment Appeal Board.

Changes to Shared Work Plans

In Iowa, the Voluntary Shared Work Program is a short-term compensation program implemented by the state that is intended for use as an alternative to layoffs and has been an effective tool for Iowa businesses experiencing a decline in regular business activity. Under this program, work reductions are shared by reducing employees’ work hours with unemployment insurance replacing the partially lost earnings. Qualified employers set shared work plans that are subject to state approval.

The new legislation makes three changes to shared work plans: (1) the employee’s work hours must be based on a workweek that does not exceed 40 hours; (2) it requires the state to revoke its approval of a shared work plan if the employer lays off any employee while participating in the program; and (3) allows part-time employees to be eligible for shared work programs provided the employee meets all other program requirements.

Iowa Codifies Definition of Antisemitism

On March 23, 2022, Iowa Governor Kim Reynolds signed HF2220 into law. This new law adopts the International Holocaust Remembrance Alliance’s (IHRA) working definition of antisemitism, which defines antisemitism as: “a certain perception of Jews, which may be expressed as hatred toward Jews. Rhetorical and physical manifestations of antisemitism are directed toward Jewish or non-Jewish individuals and/or their property, toward Jewish community institutions and religious facilities.”

Although Iowa is not the first U.S. state to adopt the IHRA definition, the law is significant because it requires the State of Iowa to use the IHRA definition to assess the motivation behind illegal discriminatory conduct. The IHRA’s definition can now be used by law enforcement, public officials, and administrators “in reviewing, investigating, or deciding whether there has been a violation of any relevant policy, law, or regulation prohibiting discriminatory acts.” Iowa courts will also be required to use the IHRA definition of antisemitism as the same legal standard applicable to similar claims of discrimination arising under the Iowa Civil Rights Act. Finally, the law will require state employees to undergo training on antisemitism.

For more information on these developments, contact the author or editor of this alert. Visit our Labor & Employment Practice page for additional alerts in this area.

Author:

Alexander DeMasi, Associate

Editor:

Alan L. Rupe, Managing Partner - Kansas City, MO - Wichita, KS