2024 Iowa Labor & Employment Year End Review

Kansas City, Mo. (April 1, 2025) - Key developments in Iowa labor and employment law last year are having an impact on employers in 2025.

Iowa Supreme Court Establishes High Bar for Employment Discrimination Claims in Uncommon Reversal of Jury Verdict

In a significant development for Iowa employment law practice, the Iowa Supreme Court took the extraordinary step of overturning a jury verdict in a wage discrimination and retaliation case. In Selden v. Des Moines Area Community College, the Court held that neither temporal proximity between protected activity and adverse action nor differences in starting salaries across time periods are sufficient by themselves to sustain a claim for discrimination where an employer presents unrebutted evidence of legitimate, non-discriminatory reasons for its actions. 2 N.W.3d 437 (Iowa 2024).

The wage discrimination claim arose from a stark pay disparity discovered by Sandra Selden, who was hired as an Application Support Analyst 2 at Des Moines Area Community College (“DMACC”) in 2013 at a salary of $70,000. In 2019, Selden learned that Bryan Tjaden, a male colleague with the same job title, earned $108,681 annually. When Selden raised concerns about pay equity, DMACC responded that Tjaden had fifteen years more seniority and had been hired at a higher initial rate due to his strong technical background. Selden, 2 N.W.3d at 439-40.

DMACC presented evidence that market conditions for IT personnel were particularly demanding in 1998, when Tjaden was hired, due to Y2K concerns. A labor economist testified about the contrast between these conditions and the post-recession market of 2013, when Selden was hired. The Court found this combination of market evidence and documentation of Tjaden's experience conclusively established gender-neutral reasons for the pay differential. Id. at 445-46.

For employers and practitioners, the decision's significance lies in the Court's clear message about the power of well-documented, gender-neutral employment practices. The Court's willingness to overturn such a substantial jury verdict demonstrates that even sympathetic claims cannot survive without evidence specifically undermining an employer's showing of legitimate, non-discriminatory reasons for its actions.

Employers should prioritize documenting market conditions and applicant qualifications during hiring, consistently applying objective qualification requirements, and maintaining gender-neutral policies. Well-documented, consistently applied employment practices provide a strong defense against discrimination claims, even in cases that may appear sympathetic to juries.

Iowa Supreme Court Rejects Mixed-Method Credits in Workers' Compensation Benefits, Creating Clearer Framework for Successive Injury Calculations

In its February 2024 decision in Loew v. Menard, Inc., the Iowa Supreme Court provided guidance on the application of workers' compensation credits for successive injuries. See generally 2 N.W.3d 880 (Iowa 2024). Writing for a unanimous court, Justice McDonald resolved a longstanding question about how employers should calculate credits when an employee's initial injury was compensated through industrial disability but the subsequent injury must be compensated through functional impairment. The Court's ruling effectively ends the practice of comparing industrial disability payments to functional impairment ratings when determining credits under Iowa’s workers’ compensation laws. See Iowa Code § 85.34(7) (2018).

Justin Loew suffered successive workplace injuries at Menards, with a 2015 back injury resulting in a 20% functional impairment rating compensated through a 30% industrial disability determination, followed by a 2018 injury that increased his functional impairment by 8%. The Commissioner had denied additional compensation by comparing these different types of measurements, reasoning that the prior 30% industrial disability payment exceeded the current 28% functional impairment.

This decision has immediate practical implications for Iowa employers and insurers. When calculating credits for successive injuries, employers must now compare only like measurements—functional impairment can only offset functional impairment, and industrial disability can only offset industrial disability. As the Court explained, attempting to mix these measurements would be akin to determining "whether a particular line is longer than a particular rock is heavy." Id. at 882 (quoting Bendix Autolite Corp. v. Midwesco Enters., Inc., 486 U.S. 888, 897 (1988) (Scalia, J., concurring)). The Court emphasized that this interpretation aligns with the legislative purpose of section 85.34(7) to "prevent all double recoveries and all double reductions in workers' compensation benefits for permanent partial disability." Id. at 887 (quoting 2004 Iowa Acts 1st Extraordinary Sess. ch. 1001, § 20).

When handling claims involving successive injuries, employers should maintain separate tracking for functional impairment and industrial disability payments, as these can no longer be offset against each other. Employers should also review any pending cases involving successive injuries to ensure compliance with this new interpretation, as the decision applies retroactively to cases still in the appeals process.

Iowa Legislature Substantially Restructures Work-Based Learning Framework

Senate File 2411, signed by Governor Reynolds on May 16, 2024, overhauled Iowa's workforce development framework with several key changes affecting employers. The law repealed two established programs—the Regional Industry Sector Partnerships and the Statewide Work-Based Learning Intermediary Network—with all unencumbered funds reverting to the state's general fund effective July 1, 2024.

At the center of the new framework is the Workforce Opportunity Fund, established within the Department of Workforce Development with initial funding of up to $30 million from the Unemployment Compensation Reserve Fund. The Fund will support training and infrastructure related to workforce development, with permitted uses including equipment purchases, instructional materials, stipends, and other training-related costs.

The legislation also modernizes Iowa's definition of "work-based learning" to encompass a broader range of activities. Under the new definition, qualifying programs must include:

Sustained project-based learning in partnership with employers
Simulated work experiences aligned with industry-recognized credentials
High-quality pre-apprenticeships aligned to apprenticeship programs
Student learner programs
Internships
Apprenticeships

This expanded definition provides greater flexibility in structuring workforce development initiatives while ensuring alignment with recognized credentials and industry standards. Organizations must carefully review their existing programs to ensure compliance with these new definitions and requirements.

The Department of Workforce Development will distribute funds only to workforce programs located within Iowa, emphasizing the legislature's focus on developing in-state workforce capabilities. The five-year sunset provision suggests the legislature intends to evaluate the program's effectiveness, making it important to document program outcomes and maintain detailed records.

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

Author:

Andrew McLeese, Associate

Editors:

Blake M. Edwards, Partner

Alan L. Rupe, Managing Partner - Wichita and Kansas City