Almost twenty-five years ago, the Iowa Supreme Court recognized a new cause of action for the benefit of terminated employees: wrongful discharge in violation of public policy. (See Springer v. Weeks & Leo Co.). What it means is that an employee cannot be terminated if the employer is motivated by reasons that would frustrate a well-recognized public policy. Springer involved an employee who was terminated because she sought workers’ compensation benefits for an on-the-job injury. The rationale is that terminating an employee because of work injury would deter employees from pursuing legitimate workers’ compensation claims, and thereby frustrate the public policy underlying the workers’ compensation laws.
Since Springer, the Iowa Supreme Court has recognized myriad other types of employee conduct that is protected by public policy. Despite the many court decisions addressing the subject, however, the concept of what is and is not protected by public policy remains vague. Courts can look to the Iowa Constitution, statutes, and regulations as a basis for public policy claims, regardless whether the law or regulation in question was intended to give employees the right to sue. Given the countless number of laws and regulations that govern this state, public policy “exceptions” have the potential to swallow the general rule of at-will employment. Some might say that has already occurred.
Another practical concern is that the Court’s approach to these cases has encouraged more litigation. Even an employer that is careful to comply with known employment laws and rules can be sued for wrongful discharge based upon conduct that has not yet been recognized as unlawful. Most of the time, defendants settle these cases to avoid the costs, risk, and uncertainties associated with litigation, which in turn encourages even more claims.
Given the trend of expanding public policy claims, the Iowa Supreme Court’s decision last week in Berry v. Liberty Holdings, Inc. was a refreshing exception. Berry claimed he was terminated because he filed a personal injury lawsuit against Premier Concrete Holdings, Inc., which was owned by the same person as his employer, Liberty Holdings, Inc. Berry had been involved in a motor vehicle collision with one of Premiere’s concrete pumping trucks. He ultimately settled the case with Premiere’s insurance carrier, but soon after was terminated by Liberty Holdings.
The trial court dismissed the wrongful termination case on the grounds that suing a sister company of your employer was not conduct protected by public policy. However, in a 2010 decision, the Iowa Court of Appeals reversed the dismissal, holding that Iowa’s Comparative Fault Statute (Chapter 668) “does codify the state’s expressed policy that its citizens may seek legal redress for an injury caused by another’s negligence.”
The employer sought further review in the Iowa Supreme Court, and in a decision issued September 9, 2011, the Court reversed the judgment of the Court of Appeals and dismissed the suit. The supreme court rejected the court of appeals’ view that Iowa’s Comparative Fault Act contained a policy supporting an employee’s right to seek compensation for injuries. Rather, the court concluded Chapter 668 simply created a framework courts and juries use to allocate fault to one or more parties claimed to have caused a person’s injuries.
While Berry represents a victory for employers, it does little to stem the tide of more lawsuits based upon violations of public policy. The supreme court was careful to decide the case on narrow grounds. In a footnote, the court made clear it decided only whether Chapter 668 supported an employee’s protection from discharge if he files a lawsuit. The court specifically left unanswered the question whether the Iowa Constitution, other statutes, rules, or precedent would support Berry’s wrongful discharge claim.