Iowa Employment Law Update — May 2019

Iowa

Franchisor and Franchisee Relationships

On April 9, 2019, Iowa Governor Kim Reynolds signed legislation (H.F. 327) creating new franchisor-franchisee relationship law for Iowa’s wage payment collection law, legislative service agency law, employment security — unemployment compensation law, and Civil Rights Act. Under the new provisions, a franchisor is not an employer of a franchisee, nor is it the employer of a franchisee’s employee, unless any of the following conditions apply:

  • The franchisor has agreed in writing to be the franchisee’s employer or the employer of the franchisee’s employees.
  • The franchisor has been found by the applicable authority (workers’ compensation commissioner, labor commissioner, department, commission) to have exercised a type or degree of control over the franchisee or the franchisee’s employees that is not customarily exercised by a franchisor to protect the franchisor’s trademarks and brand.

Additionally, the laws provide that a franchisee and franchisor are defined under Iowa Code § 531H.

The law is effective July 1, 2019.

Read IA H.F. 327

Negligent Hiring and Employer Liability

On April 17, 2019, Iowa Governor Kim Reynolds signed legislation (H.F. 650) relating to the liability of private employers, general contractors, and premises owners for negligently hiring employees, agents, or independent contractors convicted of a public offense. According to the law, a cause of action for negligent hiring based on evidence that the employee, agent, or independent contractor has been convicted of a public offense is not precluded if the following criteria are met:

  • The private employer, general contractor, or premises owner knew or should have known of the conviction.
  • The employee, agent, or independent contractor was convicted of a public offense that was committed while performing duties substantially similar to those reasonably expected to be performed in the employment or under the relationship or contract, or under conditions substantially similar to those reasonably expected to be encountered in the employment or under the relationship or contract, taking into consideration all of the following factors:
    • The nature and seriousness of the public offense.
    • The extent and nature of the employee, agent, or independent contractor’s past criminal activity.
    • The age of the employee, agent, or independent contractor when the public offense was committed.
    • The amount of time that has elapsed since the employee, agent, or independent contractor’s last criminal activity.
    • The offense was any of the following:
      • Sexually violent.
      • Dependent adult abuse.
      • Murder in the first degree.
      • Murder in the second degree.
      • Assault.
      • Domestic abuse assault.
      • Kidnapping in the first degree.
      • Robbery in the first degree.
      • Committed on certain real property for which an enhanced penalty was received.
      • A felony offense where the employee, agent, or independent contractor used or exhibited a dangerous weapon during the commission of or during immediate flight from the scene of the felony offense, or where the employee, agent, or independent contractor used or exhibited the dangerous weapon or was a party to the felony offense and knew that a dangerous weapon would be used or exhibited.

Additionally, these protections provided to a private employer, general contractor, or premises owner (employer) do not apply in a suit concerning the misuse of funds or property of a person other than the employer, by an employee, agent, or independent contractor (employee) if, on the date the employee was hired he or she had been convicted of a public offense that included fraud or the misuse of funds or property as an element of the public offense, and it was foreseeable that the position for which the employee was hired would involve discharging a fiduciary responsibility in the management of funds or property.

The law is effective July 1, 2019.

Read IA H.F. 650