CASE - Jasper v. H. Nizam, Inc., 764 N.W.2d 751 (Iowa 2009)

FACT SUMMARY

Jasper was hired as the director of Kid University (KU), a child care facility in Johnston, Iowa. She was paid an hourly wage, and there were no specific terms of employment. A short time after Jasper started her employment, the husband and wife owners of KU announced that the facility would need to cut staff in order to reduce overhead. Jasper complained that any staff cuts would place KU in jeopardy of violating state administrative regulations related to the minimum ratios between staff and children. The issue of the staff-children ratio was the source of considerable tension between Jasper and KU's owners. The owners insisted that Jasper find a way to cut staff expenses, and Jasper continued to assert that the current staffing was necessary for compliance with state regulations. The owners eventually proposed that Jasper and her assistant director begin to work in the classroom to help reduce staffing costs. However, Jasper protested any job responsibility change and asserted that the staffing ratio would still not be compliant with state regulations. Soon thereafter, KU terminated Jasper from her employment at the facility.

Jasper brought a wrongful-discharge suit against KU and its owners, claiming that her firing was based on her refusal to violate the staff-children ratio and that such a termination was a violation of public policy. The trial court found in favor of KU because Jasper was an employee at-will and had not demonstrated that KU violated "well-recognized and clearly defined public policy." The trial court held that the public policy exception could not apply because the staff-children ratio was an administrative rule and was not mandated by statute. The court of appeals reversed and found in Jasper's favor, holding that, even absent a statute, a clear public policy existed that child care centers be adequately staffed.

SYNOPSIS OF DECISION AND OPINION

The Iowa Supreme Court ruled in favor of Jasper and held that administrative regulations are a reliable source of public policy because of the strong similarities between statutes and administrative regulations. The court noted that administrative regulations are a means for the legislature to deal with the array of complex and technical problems it faces. The administrative regulations in this case were a direction by the legislature to the Department of Human Services to establish rules concerning proper staff-to-child ratios as a means of ensuring the health, safety, and welfare of children in child care facilities. Any termination that was a result of Jasper's insistence that the ratio be maintained was a violation of public policy and an exception to the employment-at-will doctrine rule.

WORDS OF THE COURT: Public Policy Exception

"We adhere to the common-law employment-at-will doctrine in Iowa. However, we joined the parade of other states twenty years ago in adopting the public-policy exception to the employment-at-will doctrine. In doing so, we recognized a cause of action in Iowa for wrongful discharge from employment when the reasons contravene public policy. ... Without question, the protection of children is a matter of fundamental public interest. These factors satisfy the goal that the [child-staff ratio] regulation affects the public interest. ... We conclude that the particular administrative rule at issue in this case supports a clear and well-defined public policy that gives rise for [a lawsuit based on] wrongful discharge."

Case Questions

1. KU pointed out that there was no evidence that it actually violated the regulation during Jasper's period of employment. Shouldn't an employer have to "act" before any public policy concerns justify an exception to the employment-at-will rule?

2. Does the court's ruling mean that all state administrative regulations are now the source of public policy considerations?