Iowa — Termination

When employment is suspended or terminated in Iowa, the employer must pay all wages due by the next regular payday. This timing applies whether the employee resigns or is discharged. If commission wages involve a difference between credit paid and actual commission earned, the employer must pay that difference within 30 days of termination. Accrued vacation is due if the employer maintains an agreement or policy establishing pro rata vacation accrual.

Source: Iowa Code § 91A.4

Iowa is an at-will employment state. Under Iowa common law, the employment relationship is terminable by either the employer or the employee "at any time, for any reason, or no reason at all," unless the parties have an employment contract providing otherwise. Berry v. Liberty Holdings, Inc., 803 N.W.2d 106, 109 (Iowa 2011). No statute codifies at-will employment; the doctrine is entirely judge-made.

Public policy exception to at-will employment

Iowa recognizes a narrow common-law tort of wrongful discharge in violation of public policy. To prevail, an employee must prove four elements: (1) the existence of a clearly defined public policy that protects the activity; (2) the policy would be jeopardized if the employee were discharged for engaging in the protected activity; (3) the employee's discharge was motivated by conduct protected under the public policy; and (4) the employer lacked an overriding business justification for the termination. Davis v. Horton, 661 N.W.2d 533, 535–36 (Iowa 2003). The first two elements are questions of law for the court; the third and fourth are suited to the fact finder.

Iowa courts have consistently refused to recognize alleged public policies based in general or vague concepts of socially desirable conduct, internal employment policies, or private interests. Berry, 803 N.W.2d at 110. The public policy must relate to public health, safety, or welfare, and it must be clearly defined and well-recognized—typically grounded in constitutional provisions, statutes, or administrative regulations.

Recognized public policies

Iowa Supreme Court precedent has recognized wrongful-discharge claims based on:

• Filing or testifying in workers' compensation proceedings. The Iowa Code sets forth the public-policy concerns addressed by the workers' compensation law, from which the court has inferred a retaliatory discharge cause of action. Teachout v. Forest City Cmty. Sch. Dist., 584 N.W.2d 296, 300–01 (Iowa 1998) (citing Iowa Code § 85.18).
• Providing truthful testimony in judicial proceedings. Iowa has an established public policy favoring employees who testify truthfully in employment litigation; discharge that could chill another employee's motivation to tell the truth may be wrongful. Fitzgerald v. Salsbury Chem., Inc., 613 N.W.2d 275 (Iowa 2000); Ackerman v. State, 913 N.W.2d 610 (Iowa 2018).
• Refusing to engage in illegal activity. An employee's refusal to violate administrative regulations can serve as a source of public policy giving rise to a wrongful discharge claim. Jasper v. H. Nizam, Inc., 764 N.W.2d 751, 757 (Iowa 2009).
• Demanding wages due under Iowa Code chapter 91A. The Iowa Wage Payment Collection Law plainly articulates a public policy prohibiting the firing of an employee in response to a demand for wages due under an agreement with the employer. Tullis v. Merrill, 584 N.W.2d 236 (Iowa 1998).

The public-policy exception does not limit discharges to statutory mandates; the Iowa Supreme Court may imply a prohibition against termination if the policy basis clearly appears from other sources. Davis, 661 N.W.2d at 536.

Relationship to statutory remedies

When an employee's claim of discrimination falls under the Iowa Civil Rights Act, that Act provides the exclusive remedy, and a common-law wrongful discharge claim is preempted. Mitchell v. Iowa Prot. & Advocacy Servs., Inc., 325 F.3d 1011, 1015 (8th Cir. 2003) (applying Iowa law). Similarly, if the statute on which the public policy is based contains an enforcement scheme, the court will not permit a private right of action based on violation of that statute until the administrative remedies built into the statute have been exhausted.

Source: Berry v. Liberty Holdings, Inc., 803 N.W.2d 106 (Iowa 2011) Source: Davis v. Horton, 661 N.W.2d 533 (Iowa 2003)