Iowa Supreme Court Adds Another Exception To The “At-Will” Termination Rule


by Steve Bogue

Bogue, A. Stevenson
sbogue@mcgrathnorth.com
(402) 341-3070

In most states, the general rule is that employees are employed “at-will.” That is, they can be terminated for good reason, bad reason, or no reason at all unless the reason for the termination is unlawful. It is well established that employees are protected because of certain inherent characteristics such as their race, national origin, religion, disability, etc. They are also protected with respect to certain voluntary activities such as engaging in union activity, filing a workers compensation claim, unemployment compensation claim, or protesting a practice by the employer that is unlawful.

In a recent decision, the Iowa Supreme Court added another unlawful reason for terminating an employee. In Berry v. Liberty Holdings, Inc., the Court examined a situation in which a person owned two companies, Liberty and Premier. The Plaintiff was employed by Liberty as a plant manager. He was struck and injured by a truck operated by Premier, the other company owned by the same individual, while on his way home. His injuries were not covered by workers’ compensation. He filed a personal injury lawsuit against Premier which was settled. Several months later, he was terminated.

Plaintiff brought a lawsuit claiming he was terminated because he engaged in the protected activity of bringing a claim for personal injury. The Court initially noted that while Iowa was an at-will employment state, a discharge could not be lawful when it violates public policy. Put another way, the Court stated that the issue was whether the Plaintiff’s activity was an activity protected by a clearly defined public policy. It then concluded that it was a fundamental part of Iowa law that the courts should provide a remedy for a wrong. In fact, a specific section of the Iowa statutes provided a basis upon which the Plaintiff’s lawsuit was brought. The Court found that the Plaintiff’s right to seek a remedy for the injury he suffered was a clearly defined public policy, supported by court precedent, the Iowa Constitution, and Iowa statutes. It also pointed out that it had found in the past that the filing of a workers’ compensation lawsuit against an employee’s own employer was protected, and concluded that the right to file a lawsuit against another employer was also protected under the law.

Although, obviously, the holding in Berry does not apply outside the state of Iowa, it provides a reminder to employers that in determining which employees will be part of a reduction in force, or when reviewing the potential termination of an employee, the employer should review recent actions taken by that employee, including legal actions against the company, or even against other companies or employees.

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