Waterloo's "ban the box" ordinance survives in part—for now

The Iowa Supreme Court ruled on June 18 that part of the city of Waterloo’s “ban the box” ordinance can remain in effect despite a 2017 law prohibiting local governments from regulating “terms or conditions of employment.”

The city adopted the ordinance in November 2019 to address economic racial disparities. Because African Americans are more likely to have a criminal record, they are adversely affected by job applications that require a person to note whether they have ever been arrested or convicted of a crime.

Under Waterloo’s ordinance, employers may not inquire about past convictions, arrests, or pending criminal charges “during the application process,” but may do so after extending “a conditional offer of employment.” The court found that was allowed, because it regulates only “the time when an employer can inquire into a prospective employee’s criminal history,” which is not “a term or condition of employment.”

However, the Iowa Supreme Court held that state law preempts other portions of Waterloo’s ordinance, which prohibit employers from making an “adverse hiring decision” based on an applicant’s criminal history.

DEFINING “TERMS AND CONDITIONS OF EMPLOYMENT”

Republicans enacted the 2017 law primarily to roll back minimum wage increases approved in several counties. But the statute went much further, stating that cities and counties

shall not adopt, enforce, or otherwise administer an ordinance, motion, resolution, or amendment providing for any terms or conditions of employment that exceed or conflict with the requirements of federal or state law relating to a minimum or living wage rate, any form of employment leave, hiring practices, employment benefits, scheduling practices, or other terms or conditions of employment.

The Iowa Association of Business and Industry filed the lawsuit, saying the ordinance illegally constrained the lobby group’s members in Waterloo. A District Court upheld the ordinance, saying the city had acted within its “home rule” authority and that the ordinance does not conflict with state and federal employment law. In addition, citing studies on how criminal history considerations disproportionately affect people of color, the lower court concluded that Waterloo’s ordinance is consistent with state and federal civil rights law.

Iowa ABI appealed, saying the city’s regulations “exceed the regulation of hiring practices under either federal or state law” and are therefore preempted under the law enacted in 2017.

The key legal point came from an amicus curiae brief filed by the NAACP, which argued that limits “on a business’ pre-employment conduct” do not regulate “terms and conditions of employment” and are therefore not subject to the 2017 law. The NAACP also asserted that by prohibiting adverse hiring decisions based on criminal history, the Waterloo ordinance addressed only “a refusal to enter into the employment contract,” which is not a term or condition of employment.

Justice Edward Mansfield wrote for the majority,

Of course, it is true that section 364.3(12)(a) specifically mentions “hiring practices.” Whether a job application includes a question about the applicant’s criminal history might normally be considered a hiring practice. Yet, we need to focus on what is preempted: only ordinances providing for different “terms or conditions of employment.” The term “hiring practices” is sandwiched between two uses of “terms or conditions of employment.” The closing flourish—“or other terms or conditions of employment”—heralds that only attempts to establish different terms or conditions of employment are preempted. Therefore, as we read the text, not all ordinances relating to hiring practices are preempted, only those that provide for hiring practices that amount to different terms or conditions of employment.

The court noted that several other states adopted laws prior to 2017 that more broadly prohibited local governments from regulating the use of criminal histories during the application process. “Iowa could have followed one of these models and did not.”

We think the logical consequence for this case is clear. Ordinance 5522 is preempted to the extent it attempts to establish terms and conditions of employment, including hiring practices that constitute terms and conditions of employment, but not preempted otherwise.

When we review Ordinance 5522, we see that subsections (2), (3), and (4) of section (B) actually set terms and conditions of employment. They do not allow certain employers to turn down persons with certain types of criminal records. However, section (B) and subsection (1) do not provide for terms and conditions of employment. They simply address the timing of the criminal history inquiry.

Chief Justice Susan Christensen and Justices Dana Oxley, Brent Appel, and Thomas Waterman joined the majority opinion. Justice Matthew McDermott recused himself from the case. He was still in private practice in January 2020 when his law partner, Ryan Koopmans of the Belin McCormick firm, filed the lawsuit on behalf of Iowa ABI.

A “PRACTICAL” APPROACH

Iowa ABI argued that the Supreme Court should not consider the NAACP’s points because the city of Waterloo did not raise them in District Court or on appeal. On the contrary, the city “has conceded that Ordinance 5522 regulates hiring practices and that these hiring practices, as that term is used in the statute, are subsumed within the definition of ‘terms and conditions of employment.'”

Justice Christopher McDonald agreed. He wrote in a separate opinion that under a “fair and ordinary meaning of the statute,” all portions of Waterloo’s ordinance are preempted by state law. In McDonald’s view, the NAACP’s position should not factor into the court’s deliberations.

This issue was not presented to the district court. This issue was not decided by the district court. This issue was not raised on appeal by any party to this proceeding. […]

The City’s failure to raise the issue in its briefing constitutes waiver or forfeiture of the issue.

McDonald cited several cases, including one from last month, in which the Iowa Supreme Court declined to consider issues raised in an amicus brief rather than by a party to the lawsuit.

Mansfield acknowledged in the majority opinion, “Normally, we do not allow amici curiae to raise new issues. […] However, we think a practical approach is warranted here.” He cited a case from 2020 in which the Iowa Supreme Court considered an argument expressed only in a friend of the court brief.

Here, likewise, we will credit the City with raising the broad issue of whether Ordinance 5522 can avoid preemption under section 364.3(12)(a), while recognizing that only the NAACP relied on the “terms or conditions of employment” language within section 364.3(12)(a).

This approach is practical because it does not result in any unfairness to ABI. The issues in this case are purely legal. Indeed, ABI took the unusual step of omitting a statement of facts from its opening brief for precisely that reason. Moreover, ABI addressed the question of whether Ordinance 5522 prescribed “terms or conditions of employment” both in its reply brief and at oral argument. Therefore, we have a fully developed adversarial presentation on the issue.

A footnote attached to that passage explained, “The overall issue is still whether the district court’s ruling of no preemption should be sustained. The NAACP is raising a different argument for sustaining that no preemption ruling.”

WHAT’S NEXT?

Waterloo businesses with at least fifteen employees must comply with part of the city’s 2019 ordinance. They cannot “make any inquiry regarding, or to require any person to disclose or reveal, any convictions, arrests, or pending criminal charges during the application process, including but not limited to any interview.”

However, following yesterday’s Iowa Supreme Court ruling, employers in Waterloo may consider a person’s criminal record in hiring decisions.

Waterloo Mayor Quentin Hart hailed the “historic ruling from the Iowa Supreme Court on the Fair Chance Initiative,” saying in a statement,

Our communities are faced with hiring challenges and an overall labor shortage. This decision supports the many existing Waterloo businesses that have already taken steps to create more inclusive hiring practices and provide a framework for struggling employers to meet the employment needs. Our goal is to bring communities together and create effective inclusive environments where residents can be successful.

I expect Republican lawmakers will soon amend state code to prohibit any local government regulation of any aspect of the hiring process. Iowa House Judiciary Committee chair Steve Holt believes Waterloo’s ordinance violated the 2017 law, and Iowa ABI’s executive vice president Nicole Crain said in a statement,

ABI is pleased the Supreme Court determined that local governments cannot exceed state law when it comes to what employers consider when making hiring decisions. But we respectfully disagree with the majority’s ruling that an employment application is not a condition of employment and that employers can’t ask about criminal history on an application. ABI looks forward to working with members of the Iowa Legislature in 2022 to address this decision.

More often than not, Iowa ABI gets what it wants from the Republican-controlled House and Senate.

Also worth noting: GOP lawmakers have already moved to counteract at least three recent Iowa Supreme Court rulings.

In 2019, the legislature approved and Governor Kim Reynolds signed a bill cutting Iowans off from workers’ compensation after “unexplained falls from a level surface onto the same level surface.” The bill was designed to overrule a 2018 majority opinion, also written by Mansfield.

A wide-ranging policing bill enacted this year includes language about “qualified immunity.” The new law rejects a standard the Iowa Supreme Court established in another 2018 majority opinion by Mansfield, in favor of a federal standard giving law enforcement more protections for violating individuals’ constitutional rights. Bleeding Heartland will discuss the implications in a forthcoming post.

On the last day of this year’s legislative session, Republicans approved a state constitutional amendment declaring that the Iowa Constitution does not protect any right to an abortion. That effort seeks to overturn the court’s 2018 majority opinion striking down a 72-hour waiting period for abortions. The constitutional amendment’s wording was influenced by Mansfield’s dissenting opinion in the 2018 Planned Parenthood v. Reynolds case.


Appendix: Full text of Iowa Supreme Court decision and partial concurrence/partial dissent in Iowa ABI v. City of Waterloo:

Top image: Photo by David Wilson of downtown Waterloo available via Wikimedia Commons.

Login or Join to comment and post.