Iowa Law Blog : Iowa Lawyer & Attorney : Sullivan & Ward Law Firm : Iowa Law Blog

A little over a year ago I wrote about the Court of Appeals' decision in Berry v. Liberty Holdings, Inc. In that decision the Court of Appeals determined that Iowa's comparative fault statute was a basis for a public policy exception to the at-will employment doctrine. I mentioned that, despite the Court of Appeals' decision, the case was far from over. 

Today, the Iowa Supreme Court issued its ruling in Berry v. Liberty Holdings, Inc., vacating the Court of Appeals decision and reinstating the district court's dismissal of the case. The Supreme Court disagreed that the comparative fault statute was a source of public policy. Rather, it found that the purpose of the law is to provide a framework or set of rules one must follow when assigning fault in negligence cases.

The Court explained that the statute being used to support a wrongful termination claim must "relate to the public health, safety or welfare and embody a clearly defined and well-recognized public policy that protects the employee's activities." The statute cannot deal merely with individual interests. The Court went on to explain the history and purpose of the comparative fault statute: 

Chapter 668 did not create any new causes of action. Rather, it created a set of rules under which the parties will try all tort actions when the action involved 'fault' as defined by the statute. Therefore, chapter 668 more closely resembles a statute that attempts to regulate private conduct and imposes requirements that do not implicate public policy concerns.

For this reason, the Supreme Court vacated the Court of Appeals' decision and reinstatned the district court's dismissal.  The decision reaffirms the Court's adherence to the at-will employment doctrine except in limited circumstances.

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Earlier this week the NLRB issued a final rule requiring employers to notify employees of their rights under the National Labor Relations Act (NLRA) by November 14, 2011. All private-sector businesses, except those "small employers" which the Board has chosen not to assert its jurisdiction over, are required to comply with the rule.

According to the NLRB press release, the notice will inform employees that they have a right to act together to improve wages and working conditions, to form, join and assist a union, to bargain collectively with their employer, and to refrain from any of these activities. It provides examples of unlawful employer and union conduct and instructs employees how to contact the NLRB with questions or complaints.

The required notice will be available on the NLRB website and from regional offices by November 1.

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In a rare appellate decision regarding unemployment benefits, the Iowa Court of Appeals upheld denial of a former Casey's employee's unemployment benefits. The facts in this case are uninteresting: the employee removed discarded soup from the garbage and took it home to feed her dog. This violated a written policy that had been provided and explained to the employee. The employee was terminated.

Generally, misconduct serious enough to justify denial of unemployment benefits is a series of infractions after repeated warnings or one major infraction of an employer's policies. Here, the infraction appears to be minor--one-time removal of $10.00 worth of discarded soup. However, the court focused not on the amount of soup or its status as garbage but on the employee's intentional disregard of rules that she either was aware of or should have been aware of.  It was the obvious intentional disregard that amounted to misconduct in the court's opinion.

I rarely advise employers to contest unemployment benefits, but this case does have some take away for employers who choose to contest employee's benefits.

1.      Have written policies and provide the policies to your employees. Casey's had a written handbook that was provided to all employees. Employees were required to sign receipt of the handbook and expected them to read the handbook. The policy about wasted foods was clearly stated in the handbook.

2.      Explain important policies to your employees. Casey's held a training meeting that specifically explained its policy regarding wasted foods.

3.      Be consistent in your enforcement. While the facts do not indicate whether Casey's terminated all employees for similar infractions, it's a good idea to be consistent in enforcement. Consistency creates expectations for employees. I would guess if the testimony had shown that Casey's had a written policy, explained the written policy, but never, rarely or even inconsistently enforced the written policy the employee would have received benefits.

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Transgender individuals are a protected class under the Iowa Civil Rights Act and, although, not specifically identified under federal law may be protected under Title VII's prohibition of "sex" discrimination. Thus, it is important for Iowa employers to be familiar with transgender issues and steps that can be taken to prevent discrimination.

Transgender or gender identity disorder is not the same as homosexuality or sexual orientation. Transgender is when a person's gender identity doesn't match his or her genetic sex. Individuals may attend counseling and sex reassignment therapy, hormone replacement therapy and possibly gender reassignment surgery. These different treatments may result in an employee representing himself or herself as the gender corresponding to their identity, becoming more masculine or feminine and ultimately changing his or her gender completely.

Employers must be careful to prevent discrimination based on nonconformity with gender stereotypes. This duty applies to all employees, regardless of their status as transgender. Female employees may not be discriminated, harassed or retaliated against because they are not "feminine" enough. Similarly, male employees may not be discriminated, harassed or retaliated against for not being "masculine". Additionally, employers may be required to allow transgender individuals to "cross-dress", reference employees with appropriate pronouns, allow use of a restroom that corresponds with gender identity, or provide time off for medical appointments.

While transgender employees may not be prevalent in your workplace, it is important that you understand their rights and your obligations before a problem arises.

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Here is another example of the importance of complying with wage and hour laws:

Lawsuit Claims Iowa Workers Owed Millions

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Wage claims and the proposed amendment to Iowa's Wage Payment Collection Act have become a hot-topic for the media lately (see here and here). Today's Des Moines Register highlighted the complaints against Flavor Flav's Chicken in Clinton, Iowa that have recently surfaced.  More information can be found here. The article doesn't say how many complaints have been made, but apparently 15-20 workers have been terminated recently and some of them may not be pleased about it… or it may be the paychecks that bounced that have caused their displeasure. Only time will tell.

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On March 8, 2011 the Iowa Senate passed S.F. 311, which amends Iowa Code Chapter 91A, Iowa Wage Payment Collection Act. Below is a list of important changes:

·         Employers will be required to do the following

o   Notify employees in writing at the time of hiring wages and regular paydays

o   Notify employees in writing whose wages are determined based on a task, piece, mile or load basis about the method used to calculate wages and the wages are earned

o   Notify at least one pay period prior to the initiation of any changes regarding calculation of pay, wages, regular paydays. The notice must be in writing.

o   Upon written request provide a written statement enumerating employment agreements and policies with regard to vacation pay, sick leave, reimbursement for expenses, retirement benefits, severance pay or other matters.

o   Failure to maintain payroll records showing hours worked, wages earned, and deductions made for each employee raises a rebuttable presumption that the employer did not pay the required minimum wage.

While many of these things were included in the statute previously, the amendment eliminates the requirement that the request come from the commissioner. Now, all employers will be required to comply with this section.

·         Liquidated damages are available whenever an employer fails to pay wages or reimburse expenses. The amendment removes the "intentional" requirement.

·         The amendment explicitly prohibits retaliation against anyone for exercising their rights or assisting one in exercising their rights under this chapter.

The bill now will move to the House. 

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The majority of non-unionized businesses tend to ignore the National Labor Relations Act (NLRA). Doing so, however, could cause problems in your organization. Below is a list of things even non-union employers need to know about the NLRA.

1.      NLRA protects activities of employees who have joined together to achieve common goals. It may include individual action taken on behalf of the group. For example, it can include complaints by an individual employee to management at a group informational meeting.

2.      Complaints or protests to management regarding wages, hours, or other terms and conditions can be protected. This means that certain confidentiality policies are prohibited. Employees cannot be precluded from discussing wages, hours, terms and conditions of employment.

3.      Non-fraternization policies are generally prohibited. Employers may still preclude romantic relationships, but should ensure that policies prohibit such relationships are tailored very narrowly.

4.      Broad prohibitions against abusive or threatening language may be unlawful. It has been determined that language that may be considered threatening or abusive may be used when an employee is exercising their rights under the NLRA. Policies reference abusive and threatening language should be reviewed.

5.      Unrepresented employees have the right to have a co-worker present at a meeting if the employee has a reasonable belief that he or she will be subject to discipline.

What's the takeaway? Review your policies and make sure you aren't unlawfully prohibiting certain behaviors. Employees cannot be disciplined or terminated for engaging in protected activities. If you have any questions about whether something constitutes protected activity or whether your policies are tailored narrowly enough contact your attorney.

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Iowa adheres to the “at-will” employment doctrine, which simply states that an employee can be discharged for any lawful reason or no reason at all. A termination is wrongful when it violates public policy. In Berry v. Liberty Holdings, the Iowa Court of Appeals determined that Chapter 668 of the Iowa Code, which allows injured persons to bring a claim against the negligent individual, serves as the basis for a public policy exception to the at-will employment doctrine.

Berry was an employee for Liberty Holdings. The owner of Liberty Holdings also had an ownership interest in Premier Concrete Pumping. On his way home from work one day Berry was hit by a Premier Concrete Pumping truck and injured. Berry brought a personal injury suit against Premier to recover for his damages, which was settled. A few months later, Berry was terminated.

In the decision, the Court stated that “nothing could be more fundamental than the right of reasonable access to courts to protect those inalienable rights possessed by all persons and recognized by both the United States and Iowa Constitutions.” While the overall purpose of Chapter 668 is to establish a system for apportioning fault in negligence actions it also includes the state’s expressed policy that its citizens may seek legal redress for an injury caused by another’s negligence. If the Court chose not to expand the public policy exception to include Berry’s claim, it felt that employees may be forced into giving up certain well-recognized rights.

This is not the end of this case, however. Judge Vaitheswaran dissented stating that Chapter 668 does not define a right; therefore, cannot be the basis for the proposed public policy exception. Liberty Holdings may appeal this decision to the Supreme Court of Iowa. The Supreme Court of Iowa may agree with Judge Vaitheswaran.  

Further, while Berry has won this battle, he still must prove that he was terminated because he filed a claim against Premier before he can recover. This opinion contained no facts that would suggest one way or another whether Berry’s claim will be successful.  It will be interesting to see what happens in the future.

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This weekend I will be heading to St. Paul, Minnesota for the 2010 Upper Midwest Employment Law Seminar. This will be my 3rd year attending. I am looking forward to hearing great speakers and receiving updates/refreshers on employment related topics. The seminar isn’t just for lawyers either.  The seminar includes practical sessions which teach HR personnel the application of the law as well.  If your business has human resources personnel you should consider sending them to the seminar.

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The Des Moines Register is reporting that local class action lawsuit against Casey's General Stores goes to a federal judge for approval of a settlement entered into with the parties.  Casey's would agree to pay $12.1 million for employees who were required to work off-the-clock, including cooks and assistant managers.

This case continues to remind employers that requiring non-exempt employees to work overtime needs to be properly compensated.  In fact, the argument has been successfully made in situations where the employer did not even authorize the overtime, yet still was required to pay overtime.

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Today President Obama announced a plan that will encourage unemployed workers to enroll in educational and retraining programs.  The President's plan encourages states to update their unemployment compensation rules so that unemployed workers taking advantage of the program do not lose their unemployment compensation benefits.  Iowa's current unemployment compensation scheme has such a speed-bump.

Under Iowa Code § 96.4 an unemployed individual is eligible for unemployment compensation benefits if the individual is "able to work, is available for work, and is earnestly and actively seeking work."  The Iowa Administrative Code state that full-time students "devoting the major portion of their time and effort to their studies are not "available" for work as required by the Iowa Code unless they are "available to the same degree and to the same extent as they accrued wage credits."  Thus, they are ineligible to receive unemployment benefits.  Exceptions include an indivdual in training with the approval of the director and training approved under 19 U.S.C. § 2296(a), the Trade Act of 1974, Relief from Injury Caused by Import Competition.

President Obama's plan only "strongly encourages" states to alter ther current rules.  With Iowa's unemployment rate still approximately 3.3% below the national rate, (according to March 2009 rates) I don't anticipate many changes in Iowa's rules in the near future.

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In the wake of tough economic times, many companies are exploring alternative cost cutting methods.  One method is requiring employee furloughs.  Employers are using required furloughs rather than terminations as a cost-cutting measure.  If you are thinking about using a furlough at your company remember the following rules regarding non-exempt and exempt employees:

·         Non-exempt employees must be paid only for actual hours worked.  An employer may send non-exempt employees home as a cost-cutting measure without worrying much about the legal problems.  You will need to review any contracts, including collective bargaining agreements, your company may have with non-exempt employees before implementing a furlough to ensure that you are not violating any of the provisions contained within the agreement.

·         Exempt employees must receive full salary for any week in which work is performed, without regard to the number of days or hours worked.  If any exempt employee does not receive full salary for every workweek in which the employee performs any work, exempt status is lost and the employee is entitled to overtime pay.  In general, furloughs for exempt employees should be scheduled in full workweek increments to protect an employee’s exempt status.

These should be considered general rules.  If you have specific questions about implementing a furlough plan please contact your attorney.

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With massive layoffs happening daily, even in Iowa (e.g. Microsoft, Electrolux, Meredith) it’s important to know your rights during a mass layoff or closing under Worker Adjustment and Retraining Notification Act (WARN).

What is WARN? WARN is a federal law which offers protection to employees by requiring employers to provide written notice 60 days in advance of covered plant closings and covered mass layoffs.

Is my employer covered by WARN?  Businesses with at least 100 full-time employees or a combination of at least 100 part-time and full-time employees who work a total of 4000 hours per week are covered by WARN.

What is a “mass layoff” or “plant closing”?  A mass layoff or plant closing occurs when:

·         at least 50 employees are laid off during a 30-day period, if the laid-off employees made up at least one-third of the workforce

·         500 employees are laid off during a 30-day period, no matter how large the workforce; or

·         an entire work site is closed down and at least 50 employees are laid off during a 30-day period.

What happens if WARN is violated?  If a business violates the WARN Act  the business is liable to each aggrieved employee for an amount including back pay and benefits for the period of violation, up to 60 days.

It is important to contact your attorney to discuss your specific situation if you feel your employer has violated the WARN act.

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The Iowa Legislature has a number of bills it will be considering this session. Although some bills may die in committee it’s interesting to see what is being considered. Below are the bills and study bills that are currently in the House Labor Committee and Senate Labor & Business Relations Committee. You can see the full text of the bills on the committee websites. 

Senate Labor & Business Relations Committee:

House Labor Committee:

I will be tracking these bills throughout the legislative session and provide updates periodically.

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