In the last two sessions, the Iowa legislature has amended Iowa’s private sector drug testing law to give employers additional tools to combat employee substance abuse.   In last year’s session, the legislature amended the law to allow employers to use hair follicle testing for pre-employment drug screens.  Prior to the amendment, the law allowed only testing using urine, blood, or oral fluid.

In the 2018 session, the legislature again amended the law to lower the threshold at which an employer may take action based upon an employee’s positive alcohol test.    Effective July 1, an employer may take action if the employee has a blood alcohol concentration of at least .02% .  The existing standard is .04%.

Continue Reading Iowa Legislature Toughens Drug Testing Law, But Legal Risks for Employers Remain

It’s been a difficult three months for central Iowa employers.   May, June, and July each saw a million dollar plus plaintiff verdict in an employment discrimination lawsuit.    One such verdict in these parts is notable, but three in three months is unheard of until now.  Back in January, we noticed juries in other parts of the country had returned some substantial plaintiff verdicts, and wondered then whether more and larger plaintiff verdicts were becoming a trend.     It remains uncertain whether the recent Iowa verdicts are evidence of a continuing pattern, or if it was simply a coincidence these particular cases were tried in three consecutive months.   But, whether this is the new normal or not, these types of verdicts have a significant impact on how lawyers and clients perceive the risk of employment claims.  Perception effectively becomes reality when clients settle cases that otherwise might be tried, or pay more than they otherwise would, to avoid the risk of being a victim of a headline grabbing and ruinous jury verdict.

The first verdict was issued May 4.   The plaintiff was a former athletic administrator at the University of Iowa who alleged she was discriminated against on the basis of sex and sexual orientation, and was subject to retaliation when she was reassigned to a position outside the athletic department and then had her position eliminated.   Verdict:  $1.4 million, including past and future emotional distress of $1.056 million.

The second was returned June 18.   The plaintiff was the former communications director for the Iowa Republican Senate Caucus who alleged she was subject to years of sexual harassment and then terminated when she complained about it.  Verdict: $2.195 million, which consisted entirely of damages for past and future emotional distress.

The third was just a couple of weeks ago, on July 25.    The plaintiff was a 40 year employee of the Grinnell Regional Medical Center who claimed he was terminated because of age and disability.  Verdict:  $4.5 million, including $4.28 million in emotional distress.

What is most eye-opening about these verdicts is not necessarily the total dollar amount, but that the lion’s share of the damages awarded in all three was because of emotional distress.    In the suit against the Republican Caucus, there were no economic damages awarded at all; the verdict consisted entirely of damage for past and future emotional distress.   In the other two cases, the ratio of emotional distress to back pay was 3 to 1 (U of I Athletic Dept.) and 19 to 1 (Grinnell Medical Center).

What should we make of these stunning awards for emotional distress?    The value of discrimination cases used to be driven by hard numbers like lost wages or back pay.   That certainly made it easier to assess the risk of employment claims.  Back pay or other economic damage is fairly objective and calculable.  Emotional distress, on the other hand, is almost entirely subjective and quite unpredictable.   It is possible that increased emotional distress verdicts simply reflect the modern cultural attitude of greater sensitivity to emotional and mental distress resulting from traumatic events in life, and a willingness to put a dollar value on it.

Unfortunately, the knee jerk reaction among many is to panic and think runaway verdicts are more common than they really are.   We lawyers often contribute to the problem by using these big verdicts as examples of “what might happen to you” if you don’t follow the policies and practices we recommend in our client seminars.   Not that the standard advice is bad, but we should also not ignore the data that shows most employment discrimination cases that are tried result in an employer win.

The response I propose to these out-sized verdicts seems like common sense but is not very common:  employers should try more and settle fewer employment lawsuits.   So few cases are tried nowadays, we really don’t have a benchmark on how to reliably value the claims.   Instead, we look to the few outliers that are being tried and those verdicts are used to place settlement values on future cases.   Is this approach risky?  Sure.  Would you lose some cases?  Naturally.  Would it be expensive? Of course, at least in the short term.   But, over time, the defense bar would get better at responding to and countering claims of emotional damage.    Perhaps we would find out whether most of these cases are defensible like we think they are.    If we are right, it just might discourage the filing of cases just because the plaintiff expects to get a settlement.

 

The 2017 Iowa legislative session has been one of the more rancorous in recent memory, driven in large part by proposed amendments to the public sector collective bargaining law.  Following all-night debates and massive protests by union supporters, the house and senate both voted on February 16 to make the most sweeping changes in the public sector collective bargaining statute since it was first enacted in the 1970s.  Governor Branstad signed the bill into law on February 17, a Friday.  Predictably, by the following Monday, the State’s largest public employee union, AFSCME Local 61, filed a lawsuit to prevent the law from going into effect.574px-Gov_Walker_Protests1_JR

In our view, the amendments are a much needed re-set of the relationship between public employees and the state agencies, municipalities, and school districts that employ them.  It’s true that the vast majority of public employees are hard-working, conscientious, and have a true spirit of public service.  Very few citizens begrudge paying competitive wages and benefits to public employees.   But, granting public employees the right to collectively bargain has, over time, unduly favored the interests of employees and unions at the expense of public employers and taxpayers.  It’s no coincidence that public employee union membership exceeds private sector membership  by more than five times (34.4 percent to 6.4 percent in 2016).

When benefits such as health insurance and pensions are taken into account, there can be little doubt public employee compensation typically exceeds the compensation of comparable private sector employees.   In some circumstances, public employees are eligible to retire in their 50s and receive their full pension benefit under the Iowa Employee Public Retirement System (IPERS).   Early retirees can sometimes “double-dip;” that is, they return to public employment while at the same time drawing a pension.    Much of the criticism of public sector compensation is based upon the fact that, while receiving generous wages, benefits, and retirement payouts, public employers have more job security and less accountability for poor performance compared to a similarly situated employee in the private sector.

Unfortunately, most of the news coverage and commentary published while the legislature debated the new law glossed over or even ignored fundamental differences between public and private sector employment that justify limiting the subjects over which public employees are allowed to bargain.  The most important difference is that the market imposes at least some check on a private sector union’s ability to bargain for economically unsustainable wages, benefits, and work rules.  Private employers have customers that won’t necessarily accept ever increasing prices or poor quality goods or services.  History is replete with examples of companies that failed or became less competitive under the weight of unsustainable collective bargaining agreements.  Public employers, on the other hand, are almost always a monopoly.   Citizens have nowhere else to go for public services, and governments can always raise taxes to pay for ever increasing wages and benefits.

Before the recently enacted changes, unions held most of the advantages in bargaining.  If the two sides could not reach an agreement on wages, insurance, and other items, the matter was submitted to binding arbitration.  Each party submitted its final offer to the arbitrator, who had to choose between them.  Among the criteria the arbitrator could rely upon in the decision was the arbitrator’s judgment whether the public employer could levy taxes and appropriate funds to pay for the wages and benefits in question.   Thus, even if a public body did not want to raise taxes to pay for the union’s proposed wage or benefit increases, an arbitrator had the effective power to impose a tax increase (or force the public body to cut services to pay for the arbitrator’s decision).

There is one other important reason public sector collective bargaining has unduly favored employee interests over those of employers.   Before it was amended, Iowa law allowed unions to demand that public employers withhold union dues from employee’s paychecks.   Public sector unions, in turn, use this dues money to support candidates running for city council, school board, or other public offices.  Over time, the unions end up negotiating contracts with the very public officials they helped elect to office.   In effect, the employee’s interests are represented on both sides of the bargaining table.

Even Franklin Roosevelt, one of history’s greatest supporters of workers’ right to collectively bargain, expressed opposition to public sector collective bargaining.   “All Government employees should realize that the process of collective bargaining, as usually understood, cannot be transplanted into the public service,” he wrote. “It has its distinct and insurmountable limitations when applied to public personnel management.”  He added: “[t]he very nature and purposes of Government make it impossible for administrative officials to represent fully or to bind the employer in mutual discussions with Government employee organizations,”

The amendments to Iowa’s law are not perfect.   One of the gaping loopholes is the exemption for certain “public safety” employees.   The AFSCME lawsuit relies upon the public safety exemption in its constitutional challenge to the law.   We will discuss the lawsuit in a future post.  It is sufficient for now to say that its ultimate outcome is far from certain, and the loophole in the amendment may yet serve as the law’s undoing.

Image Credit from Google, Creative Commons license, Gov. Walker Protests

Last week, the co-founder of a Minnesota based organization called “Gender Justice” accused the Iowa football team of “pink shaming” its opponents and engaging in what she calls “cognitive bias.”    Jill Gaulder, who also happens to be a former UI professor, claims the infamous pink visitor’s locker room at Kinnick Stadium is “sexist”, “homophobic”, and may subject the University to legal liability under Title IX of the federal Civil Rights laws.

The pink locker room was the brainchild of legendary former coach Hayden Fry. When he took over the perennially losing program in 1979, Fry was looking for every edge available. He had once read that pink had a calming effect on people, and thought the pink locker room would calm the Hawkeye’s opponents. But, Gaulder claims Coach Fry also believed many people associate pink with girls’ bedrooms, and consider pink to be a “sissy” color.   Gaulder contends the pink walls send the message that it’s “bad to be a girl”, because femininity is supposedly associated with weakness.   

 

It’s easy to laugh off Ms. Gaulder’s claims as a publicity stunt. Most people understand the pink locker room is a joke designed to get attention and distract the opposing team. The anti-discrimination laws don’t protect people from being offended by a subliminal message associated with certain colors (assuming there was such a message here, which is debatable).   The law provides a remedy only when a person is subject to some concrete adverse action, or is denied a right or benefit because of gender (or other protected characteristic). Who are the victims here? The Michigan football team? Ohio State? Perhaps Minnesota, which has won only 3 games out of 16 played in Iowa City during the pink locker room era.    

 

But, Ms. Gaulder cannot be so easily dismissed to the extent she is trying to advance the proposition that employment decisions should not be based upon stereotypes, whether gender or otherwise.   Many courts, including our own Eighth Circuit, have recognized that an employer is liable under Title VII not just for employment decisions based upon gender, but also based upon stereotypes about how an employee of a particular gender should act.   To the extent that a person’s language, dress, or color choices impact employment decisions, employers are well advised to proceed with caution so as to avoid decision making based upon sterotypes.

Earlier this week Iowa District Court Judge Robert Blink granted judgment for the State of Iowa in a high profile class action race discrimination lawsuit.   (Pippen v. State of Iowa, link here). The plaintiffs alleged that 37 departments in the State’s executive branch maintained hiring and promotion practices that had an adverse disparate impact on African Americans. The plaintiffs claimed the State favored white applicants and employees over equally or even better qualified black applicants and employees in hiring and promotion decisions.    The class included approximately 6,000 employees, former employees, and applicants, and sought over $70 million in damages.

Although the State won the case in the trial court, the plaintiffs plan to appeal. More importantly, it appears the plaintiffs’ lawyers in Pippen view the case as an opportunity to fundamentally reshape the landscape of discrimination litigation in this state. Indeed, Judge Blink noted in his opinion that one of the stated purposes of the plaintiff class was to “broaden the horizons of Iowa’s legal landscape premised on their belief in our state’s progressive stance on civil rights.”   

There are three novel aspects of the case that warrant close scrutiny during the appellate process because of the potential impact on future discrimination cases: 1) the scope of the class; 2) the nature of the challenged employment practices; and 3) the type of evidence the plaintiffs relief upon, most particularly the concept of so-called “implicit bias.” 

The first unique aspect of the case was its scope: it covered every executive branch department.    Each of the 37 departments exercises its own hiring authority. There are more than 700 diverse job classifications and 2000 supervisors that have authority in the hiring process. The sheer number of different hiring and evaluation processes within each department, and for each job, made the case unwieldy. 

The “glue” the plaintiffs relied upon to tie these various processes together was the State’s statutory merit based employment system. The goal of the merit system is to hire and promote employees solely on the basis of merit and fitness, as ascertained by examinations or other appropriate screening methods.    There is another agency, the Department of Administrative Services (DAS) which oversees the merit employment system for all executive branch departments.   In Wal-Mart v. Dukes, the famous employment class action case the U.S. Supreme Court decided last year, the Court ruled that a proposed class of millions of current and former employees at thousands of Wal-Mart Stores across the United States was too large and disparate to qualify as a class action.   Notably, Judge Blink had already ruled that the plaintiff class in Pippen satisfied the criteria to proceed as a class action, notwithstanding the Wal-Mart decision.

The second novel aspect was the nature of the employment practice the plaintiffs claimed was discriminatory.    Disparate impact is a form of unintentional discrimination.    The plaintiffs are required to prove that a particular employment practice that is racially neutral on its face—say a test–impacts African Americans more adversely than whites.    In this case the “particular” employment practice at issue was not particular at all.   The plaintiffs did not claim a single test, screening mechanism, or interview process had disparate impact.   Rather, they alleged a systemic failure within the executive branch to adequately enforce the state’s merit based employment system.   Specifically, the plaintiffs attacked the fact that lower level managers have discretion to make subjective judgments about an applicant’s qualifications.  In essence, Plaintiffs claim the State should have done more to ensure that individual managers were complying with the policies requiring equal opportunity. Unlike most discrimination cases that are based upon the commission of an act, Pippen was based upon the State’s alleged omissions.

The third and most troubling aspect of the case (from an employer’s perspective) was the type of evidence the plaintiffs relied upon to prove that the discretion afforded to supervisors resulted in a disparate racial outcome. That evidence was the concept of “implicit bias”.    Plaintiffs presented the testimony of Dr. Anthony Greenwald, a psychology professor at the University of Washington.    Dr. Greenwald coined the term “implicit bias”, which the court characterized as “a state of racial inclination which is manifested without the person’s slightest appreciation that they are acting on it.”   Dr. Greenwald apparently claims that even people who do not intend to discriminate are likely to have implicit bis, and “unthinkingly they may discriminate without recognizing they are doing that.”   Dr. Greenwald opined that most groups who have been tested “showed a 70 percent automatic preference for whites over blacks.”    His opinion is apparently based upon a test called the “Implicit Association Test”, a computer based test that requires a subject to associate a verbal or visual stimulus viewed on a monitor with either “pleasant” or “unpleasant” words. 

Judge Blink rejected Dr. Greenwald’s opinion that implicit bias of supervisors tainted most of the subjective discretionary employment decisions in the State’s executive branch.  It is not clear whether the State challenged the admissibility of Dr. Greenwald’s opinions, and given that the trial was to the court and not a jury such challenge may have been fruitless anyway.   But, this is not the last time employers will see attempts to use so-called implicit bias to prove discrimination, both in class actions and otherwise.    Novel expert testimony is often rejected when it is first tried, but if plaintiff’s lawyers keep trying, they ultimately may find a court that will admit such evidence.   This type of testimony could be particulary damaging in a jury trial.  If employers can be held liable for discrimination based upon the subconscious thoughts of their managers, that the managers themselves don’t know exist, it will turn discrimination litigation completely on its head.  

Implicit bias was really the heart of the plaintiffs’ claim in Pippen, and it will be important for defendants to vigorously oppose the admission of this type of expert testimony in future cases.  Judge Blink’s opinion provides a road map for doing just that.

For additional commentary and analysis of the Pippen case, I recommend the following:

Workplace Class Action Blog

Stephanie Thomas, The Proactive Employer

Nyemaster Blog

Boston Employment Discrimination Blog

Des Moines Register

Wal-Mart v. Dukes, decided by the U.S. Supreme Court in June, could derail a class action race discrimination case against the State of Iowa that has been pending since 2007 (See our posts here and here on the Wal-Mart case).    The Iowa case involves 32 named plaintiffs who claim the State maintained hiring and promotion practices that discriminated against African American applicants and employees.   The suit was certified as a class action in 2010 to include class all African Americans who sought appointment to or held a merit based position in the Executive branch since July 1, 2003.   The class claims could potentially involve up to 6,000 persons in addition to the named plaintiffs. 

The court held a hearing last week concerning the potential application of the Dukes case.  The holding in Dukes that potentially applies to the Iowa case involves the question of “commonality”. That is, are the circumstances of the class members sufficiently common that their discrimination claims can be addressed as a group rather than individually.   In Dukes, the Court held that claims of 1.6 million female employees alleging gender discrimination at thousands of Wal-Mart stores across the United States could not, as a practical matter, be adjudicated as a class.   The essential question in a discrimination claim—“why was I disfavored”-involved too many individual circumstances. 

According to coverage of the hearing in the Des Moines Register,  the Iowa Plaintiffs are trying to overcome the Dukes decision by showing the State of Iowa’s hiring and promotion practices were centralized and applied to each African American applicant and employee.   At Wal-Mart, on the other hand, the evidence showed the hiring and promotion decisions occurred at the store level and therefore were highly decentralized.   The Plaintiffs’ evidence against the State of Iowa relies to a great extent on statistics purporting to show African Americans were less likely to survive an initial round of applicant screening, less likely to be interviewed, and less likely to be hired.

Another important difference in the Iowa case is that it is pending in Iowa state court rather than federal court.   Although similar, Iowa courts and federal courts have two different sets of rules governing these types of proceedings. 

The Dukes case is a powerful weapon for employers defending class actions, and it will be interesting to see whether it will allow the State to avoid a trial in this case.

On January 27, the Iowa House passed HF 681, known as the "Iowa Worker Adjustment Retraining and Notification Act".   

There is already a Federal WARN Act, which requires most employers with 100 or more employees to provide at least 60 days notice to their employees of a mass layoff or plant shutdown.  Failure to file the WARN Act requirements can result in liability for back pay and benefits for each affected employee, for the time of the violation, up to 60 days.

The proposed Iowa law is more stringent than the federal law is some respects, but more lenient in others.    It is more stringent in that is applies to employers with 25 or more employees.   It is more lenient, however, in that is requires only 30 days notice of a mass layoff or shutdown.   In addition, the penalties under the Iowa law are limited to $100 per day for each day of the violation.   There is no private right of action; the law is enforced by the Department of Work Force Development.

The bill has not passed the Iowa Senate, nor has the Governor stated publicly whether he will sign it.   Organized labor is strongly in favor of the bill.  However, given the difficult economic conditions that still exist in the State, and the Governor up for a tough re-election fight, it remains uncertain whether this bill will become law.  We will keep you posted. 

 

On October 30, the Iowa Civil Rights Commission (ICRC)  issued its annual report for 2009.   Once again this year, complaints of employment discrimination constituted the vast majority (85%) of the charges.   The non-employment charges (in the areas of credit, education, housing, and public accommodations) make up the remaining 15% of the charges.

The total number of complaints alleging employment discrimination increased by 13% over the prior year, from 1453 in 2008 to 1644 this year.   The rate of increase in charges filed with the ICRC is comparable to the increase in those filed with the federal EEOC.   Of course, most charges filed with the ICRC that alleged employment discrimination are also cross-filed with the EEOC. 

The category with the largest number of complaints was sex (717), followed by race, (694), disability (562) and age (368).   There were 55 claims of religious discrimination, and six alleging discrimination on the basis of sexual orientation or gender identity.   Despite the publicity relating to the Iowa Supreme Court’s decision legalizing marriage among persons of the same sex, there was no increase in charges in the sexual orientation category. 

The largest increase in the type of claim was retaliation.   Retaliation claims increased 30%, from 435 last year to 567 this year.   Although retaliation is a separate category of complaint, charges alleging retaliation are frequently accompanied by a charge of discrimination.

 

On April 28, 2009, Governor Culver signed into law Senate File 137, entitled an Act "Providing that Wage Discrimination is an Unfair Employment Practice under the Iowa Civil Rights Act and Providing an Enhanced Remedy.”   This law (available here) amends the Iowa Civil Rights Act to expressly provide that pay differentials among employees are unlawful if they are based upon the employee’s age, sex, disability, and several other protected characteristics.   Local media coverage of Governor Culver’s signing can be found here.

You might ask, isn’t pay discrimination already unlawful under the Iowa Civil Rights Act?   The answer is yes, but this amendment appears to be an attempt to make Iowa law consistent with recently enacted federal legislation governing pay discrimination, known as the "Lilly Ledbetter Fair Pay Act of 2009", which was signed into law in January.  It also incorporates provisions of the federal Equal Pay Act, first enacted in 1963.

The law amends the Iowa Civil Rights Act, Iowa Code Chapter 216, in three significant ways:

First, it makes an unfair or discriminatory employment practice to pay an employee in a protected class at a rate less than the rate paid to other employees who are employed within the same establishment for equal work on jobs, the performance of which requires equal skill, effort, and responsibility, which are performed under similar working conditions.  Protected classes under the law include age, race, creed, color, sex, sexual orientation, gender identity, national origin, religion, or disability.

Second, it provides that an unfair or discriminatory practice occurs not only at the time a discriminatory pay decision is implemented, but also each time wages, benefits, or other compensation is paid that results in whole or in part from the discriminatory decision.

Third, it provides an “enhanced” remedy. That is, an employee is entitled to recover two times the wage differential paid to another employee compared to the complainant for the time period of the discrimination, or three times the differential in the case of willful violations.

Iowa Employer should take note of several importance aspects of this law that create potential risk and exposure to employee lawsuits:

First, these Amendments actually provide greater protection than Federal law, which applies only to employers with fifteen or more employees.  The Iowa Civil Rights Act applies if an employer has four or more employees (although family members are not considered employees for this purpose). 

Second, to determine whether pay is discriminatory, the law allows an employee’s pay to be compared not only to others who have similar jobs, but to those whose job functions may be very different , but require "equal skill, effort, and responsibility", or are performed under "similar working conditions".  This provision should cause employers more than ever before to have detailed and accurate job descriptions.  To the extent pay is different among different job categories, employers should develop objective rationales for such differentials.

Third, the fact that each paycheck can constitute a discriminatory practice may lead to litigation over pay decisions that were made years or even decades ago, but which are discovered only recently. 

Finally, the enhanced remedy provides not only additional damages, but also applies to the entire time the employee has been discriminated against.   This is a greater protection than available under the federal law, which limits recovery of back wages to two years. 

Given the enhanced protection provided under the Iowa Civil Rights Act as compared to federal law, employers can expect claims under this law to be filed in State instead of Federal Court.

Just days after the Iowa Supreme Court’s ruling legalizing same sex marriage, at least one media outlet is reporting that Iowa employers are scrambling to determine whether they need to adjust their employment policies to comply with the ruling.  Of immediate concern are employee benefit programs that provide coverage for spouses, and policies governing family and medical leave.

An employee in Iowa is already protected from discrimination based upon sexual orientation or gender identity.  However, that protection did not necessarily require an employer to extend benefits to a same sex partner in the same way it would the spouse of a married employee.   The new ruling could change that requirement.  To the extent an employer grants benefits to the spouse of an employee, spouse may now include a person of the same sex.   It is important to note, however, that many employee benefits are governed by federal law, which is not necessarily impacted by the Iowa Court’s ruling.

Employers should also adjust their practices concerning Family and Medical Leave Act compliance.   An covered employee under FMLA has the right to job protected leave to care for a "spouse" with a serious health condition.    FMLA itself defines "spouse" as "a husband or wife as the case may be".  However, the Department of Labor Regulations interpreting FMLA look to the law of the state where the employee resides to determine whether a person is a "spouse." 

Employers are advised to consult with counsel and with their employee benefit provider when adjusting policies and practices to comply with the Court’s ruling.