In two opinions filed on June 25, 2021, the Iowa Supreme Court clarified the state’s complex employee drug-testing requirements. The opinions shed light on key issues, such as safety-sensitive designations, notice requirements, and compliance standards under Iowa Code section 730.5. Employers with Iowa-specific drug-testing policies should take time to ensure compliance based on this new authority.

Dix v. Casey’s General Stores, Inc.

In January 2016, the employer in this case implemented a new drug-testing policy that called for unannounced random drug testing of employees in safety-sensitive positions. The policy adopted word-for-word the Iowa drug-testing law’s definition of “safety sensitive position.” The policy defined “drug” by referencing the Federal Controlled Substances Act and providing a non-exhaustive list of substances to be tested. The employer distributed the policy to all covered employees, including all warehouse employees, and the employees signed acknowledgements that they read and understood the policy.

In April 2016, amid concerns of drug use by warehouse employees, the employer arranged for a third-party vendor to conduct testing under the new policy. The employer compiled a pool of 184 employees working in a distribution center warehouse based on employees scheduled to be working on the day of testing. A third-party testing vendor selected ninety percent of the employees in the pool for testing, and the remaining 10 percent were deemed “alternates.”

On the day of the testing, the employer ultimately tested 145 employees because the other employees in the pool switched shifts, were approved for leave before the testing occurred, or did not appear for their shifts. The employer did not provide the tested employees with a list of specific drugs to be tested on that day. A trained supervisor and HR employee oversaw the testing, but other untrained employees assisted. The testing took place in the men’s and women’s locker rooms at the warehouse, where employees provided samples in individual bathroom stalls.

Of the tested employees, two were on light duty due to prior work injuries. Their job duties consisted of sorting products returned from stores. Although they worked within the warehouse, they performed their duties exclusively inside a cage-like structure with chain link on all sides. Two other selected employees were on heavy duty, which included operating forklifts and lifting heavy objects.

Three of these employees provided samples, tested positive for marijuana and/or methamphetamines, and were fired. One of the light-duty employees provided insufficient samples and then left, which was deemed a resignation pursuant to the policy. These four employees subsequently sued the employer for alleged violations of section 730.5.

Employers must substantially comply with section 730.5, and doing so may immunize them to non-statutory causes of action

To start its analysis, the Iowa Supreme Court reaffirmed that, when reviewing alleged testing violations, the applicable standard is whether the employer substantially—not strictly—complied with section 730.5. Courts must determine whether the employer’s actions carried out the statute’s intent to ensure accurate testing and to protect employees from unfair and unwarranted discipline. The court recognized that this is a fact-specific determination that varies from case to case.

The court also initially ruled that an employer that tests employees in good faith and based on policies substantially compliant with section 730.5 is immune from non-statutory causes of actions, such as invasion of privacy and wrongful termination. An employee’s exclusive remedy for an alleged violation of section 730.5 is a claim under the same law. Accordingly, the employer was not immune to the plaintiffs’ statutory challenges.

Whether a position is “safety-sensitive” depends on the position’s actual job duties, not its location

The only redressable violation the court found was the employer’s determination of which jobs were “safety sensitive.” Section 730.5 defines “safety-sensitive position” as “a job where an accident could cause loss of human life, serious bodily injury or significant property or environmental damage,” including positions that require supervision of such jobs. The employer argued that, based on its business judgment, all employees working in its warehouse met this definition. The court rejected that argument, however, holding that employers must base their “safety sensitive” designations on the functions of the job an intoxicated person could be performing that would lead to the type of serious accident identified in the statute, not just the environment in which the job is performed. To reach this conclusion, the court analogized Iowa’s drug-testing statute to similar federal requirements for public employees and employees regulated by the U.S. Department of Transportation and considered search-and-seizure standards under the Fourth Amendment.

Applying that standard, the court concluded that the two plaintiffs on light duty at the time of the testing were not in safety-sensitive positions and should not have been subjected to testing. The court stated that “light-duty jobs sorting cigarettes were unlikely to lead to accidents causing serious bodily injury or significant property damage if performed while under the influence of drugs or alcohol.” The court therefore found that the light-duty employees should have never been tested and were aggrieved by losing their jobs.

The court also stated that the Distribution Center warehouse manager was properly included in the pool. Although the manager likely did not meet the “safety sensitive” definition, he was properly included as the immediate supervisor of warehouse employees whose positions were in fact safety sensitive. The manager’s own immediate supervisor—the director of grocery distribution—did not need to be included because section 730.5’s “immediate supervisor” language requires moving up the supervisor ladder only one rung.

Notably, the court emphasized that section 730.5 only distinguishes “safety sensitive” positions to provide an option for employers in selecting the pool of employees subject to unannounced drug testing. The law also allows an employer to subject all employees or all full-time employees to testing. But if the employer elects to test only employees in safety-sensitive positions, under the Iowa Supreme Court’s latest ruling, the determination must be based on the risks associated with the position’s actual job duties, not just the surrounding work environment.

Other alleged violations

The court rejected the plaintiffs’ several remaining arguments, determining that the employer either substantially complied with section 730.5 or that the plaintiffs failed to demonstrate harm from any violations.

Selection pool

Section 730.5(8)(a)(3) requires an employer to identify the pool from which employees are selected for testing and state that the testing pool must include all employees who are scheduled to be at work at the time testing is conducted. The court found that the employer complied with this requirement, despite arguments that its pool included 27 employees not scheduled to be at work and excluded other employees.

The court agreed that the employer had made reasonable efforts to identify employees scheduled to work on the day of testing, holding that “[a]n employer is allowed some room for human error.” The court expressly approved of the “relatively short time period” between when the employer created the list of employees scheduled to work on the day of testing and when the third-party testing vendor created the pool and carried out the testing. That duration was three or four days, but the court noted that it did not decide how long a time period between compiling the list and conducting the selection would result in the employer not being in substantial compliance.

The court did not resolve the plaintiffs’ argument that the employer’s use of an “alternate” pool violated section 730.5’s random selection process requirement because the plaintiffs were not on the alternate list and therefore were not aggrieved by the process regardless of whether it was a violation.

Opportunity to provide information

The employer forbade employees from disclosing any personal medical information at the time of testing, but employees who tested positive were allowed to provide information to the medical review officer (MRO) who confirmed their results. The Iowa Supreme Court held that this process did not violate section 730.5’s requirement that employees be given an opportunity to provide relevant information. The court noted that section 730.5 is ambiguous as to which entity must give the employee an opportunity to provide information and concluded that allowing the MRO to do satisfies the statute because an MRO needs such information to perform their duties of interpreting a positive result prior to providing the result to the employer.

List of tested substances

The court held that the employer substantially complied with Iowa law by including in the policy a definition of “drugs” that listed the substances to be tested. The court noted that the law does not specify when the list must be provided but held that, under the intent of the law, an employer must provide the list “sufficiently contemporaneous to allow the selected employees to provide information about their medical history that would be relevant to the drugs to be tested.” In this instance, the employer distributed the new testing policy to its employees only a couple of months before the testing.  Since its ultimate holding was specific to the facts of this case, the court cautioned that employers should provide a list with each testing to allow employees to make informed decisions about what medical information they need to provide to help interpret any potential positive results.

Testing locations

The court also found that, by testing employees in the warehouse locker rooms and not an outside collection facility, the employer violated the terms of its own policy, which can be a violation of Iowa law also. The employer’s policy stated that testing would occur in a “Collection Facility,” which was defined as “[a] certified collection site such as an occupational health center, a hospital or otherwise identified clinic or facility to which a prospective or current employee may be sent for a drug or alcohol test.”  But because the plaintiffs failed to demonstrate any specific harm from this violation, the court rejected the plaintiffs’ argument for relief on this ground. The court determined that general claims of harm of privacy interests do not establish harm, and that using typical individual bathroom stalls to conduct testing meet the essential objective of providing privacy to employees during the testing process.

Woods v. Charles Gabus Ford, Inc.

In the companion case, the defendant dealership employed the plaintiff as a lube technician. In August 2017, the employee was randomly selected for a drug test. His sample tested positive for methamphetamine. The technician testified that the employee told him he used methamphetamine the weekend before the test, but the employee disputed that testimony. The employee claimed that the technician combined his second sample with another sample that was sitting out and belonged to someone else. Subsequent testing by another vendor and a doctor confirmed the positive result for methamphetamine. The doctor’s staff unsuccessfully attempted to call the employee about the result. After failing to reach the employee, the doctor sent the information to the original testing vendor, who then informed the dealership’s HR director of the result. The dealership fired the employee and, afterward, sent him a letter informing him of the test result and his right to obtain a confirmatory test at his own cost, unless the result of the confirmatory test was negative. The letter did not specify the cost of the confirmatory test. The dealership sent this letter via certified mail without return receipt requested.

The employee sued his employer under section 730.5. On appeal, the Iowa Supreme Court considered the adequacy of the dealership’s notice to the employee following his positive test. The court noted that section 730.5’s notice provisions are designed to ensure accurate testing and to protect employees from unfair and unwarranted discipline. The court applied same substantial compliance standard used in the Casey’s decision.

Section 730.5 requires an employer to provide notice to an employee with a confirmed positive test result, including the fee payable by the employee to the employer for reimbursement of expenses concerning the test. The court first determined that the dealership violated section 730.5’s notice requirements because its notice letter to the employee did not include the cost of undertaking a confirmatory retest. The court initially stated that an employer that omits such information may nonetheless substantially comply with the statutory requirements so long as its notice provides the employee a meaningful opportunity to consider whether to undertake a confirmatory test. But the court decided that completely omitting the required cost of a retest prevents the employee from making a meaningful decision about whether to undertake a confirmatory retest. Notably, the employee testified that he decided against a confirmatory test because he is the sole provider for his children and did not know how much the test would cost.

The court rejected the employee’s second argument that the delivery of the notice was insufficient because there was not a return receipt requested as part of the certified mail delivery. Relying on 2009 precedent, the court stated that an employer must provide formal notice of a positive result in a manner that conveys to the employee the importance of the contents and the need for the employee’s deliberate reflection. The court concluded that this requirement does not extend to the issue of return receipts. The dealership did enough by sending the notice via certified mail, and not requesting return receipt, which still substantially complied with section 730.5.

Because the court found that the dealership violated the statute by omitting the testing cost, the court remanded the case to the district court to determine what, if any, equitable relief was appropriate based on the existing trial record.

Takeaways

Iowa remains one of the more stringent drug-testing states for employers. In light of these recent opinions, employers with drug-testing policies for Iowa employees should review their language and practices to ensure compliance with the many requirements of section 730.5. In particular, employers that have chosen to test only employees in safety-sensitive positions will want to confirm that covered employees actually perform duties that meet the statute’s “safety sensitive” definition. Employers should also confirm that notices to employees of positive test results include the specific costs of any confirmatory retests so that the employee can make an informed decision about whether to request a retest. As the Iowa Supreme Court’s decisions demonstrate, the applicable “substantial compliance” standard grants employers some leeway, but employees aggrieved by violations are entitled to significant equitable relief, potentially including reinstatement, back pay, and front pay.