Iowa Supreme Court Expands Public Policy Exception to At-Will Employment

The Iowa Supreme Court's decision today in Dorshkind v. Oak Park Place of Dubuque II, L.L.C., No. 11-2100 (August 2, 2013), expands Iowa's public policy exception to the doctrine of at-will employment.  In Dorshkind, the Court allowed the jury verdict in favor of the plaintiff on a wrongful termination claim to stand where the employee's discharge resulted from an internal complaint she made to an assisted living facility concerning forged training documents.

Writing for the majority, Justice Wiggins wrote, "whistleblowing is an exception to the at-will employment doctrine if the public policy of this state requires protection of the public by ensuring ‘infractions of rules, regulations, or the law pertaining to public health, safety, and the general welfare' are properly reported."  In reaching its decision that the discharge violated a well-recognized and clearly-defined public policy, the majority eliminated the distinction between internal and external reporting that existed in its previous decisions and explained the public-policy concerns were the same regardless of whether an internal or external complaint is made.

Chief Justice Cady, in a special concurrence, explained the majority's decision does not apply to complaints about an employer's legitimate business practices.  The Chief Justice also noted that while the statute at issue protected only external whistleblowing, the public policy impacted (providing the elderly who reside in assisted living facilities a safe and dignified environment) was important enough to imply protection for internal whistleblowing.

In a strong dissent, Justice Mansfield, joined by Justices Waterman and Zager, criticized the majority's decision as "ill-advisedly broadening" the scope of the public policy wrongful termination tort.  The dissent pointed out the key difference between the majority's decision in present case and its prior decisions allowing a public policy claim to proceed on the basis of whistleblowing activity was that until Dorshkind, the Iowa Supreme Court only recognized an exception where "the employee's conduct (i.e., reporting) [was] the subject of a well-defined and well-recognized public policy, not merely that the employee reported on something that was the subject of such a policy."  

The dissent noted the statute and regulations at issue recognized external complaints made to the Department of Inspections and Appeals and expressly protected individuals making such complaints, but pointed to the absence of any legislative reference to internal reporting.

The dissent recognized the majority's decision will impact the cost of doing business in Iowa, and explained that an employer could put itself at risk of litigation if it discharges an employee who previously spoke to a co-employee about a violation of a law or regulation that relates to health, safety or welfare.

All Justices concurred with the majority's decision to set aside the punitive damages verdict since the particular ground for discharge had not been recognized as being in violation of public policy prior to the discharge.

It is likely the number of public policy wrongful discharge claims will increase in Iowa as a result of the Iowa Supreme Court's expansion of the tort in Dorshkind.