The Iowa Supreme Court recently issued important decisions concerning Iowa’s private sector drug-free workplaces statute, Iowa Code section 730.5, a complex statute that contains numerous application pitfalls for employers. The most consequential case is Dix v. Casey’s General Stores, Inc.

About the case

In Dix, four employees in safety-sensitive positions at a Casey’s General Stores’ distribution warehouse lost their jobs following random drug testing. At the time of the drug testing, two of the employees were on light-duty working in what was known as “the cage,” an area of the warehouse surrounded by chain-link fencing on all sides. The other two employees operated forklifts and had duties that included lifting heavy objects.

Three of the employees tested positive and were terminated. The fourth employee failed to provide a sufficient sample and left the premises, which Casey’s considered a voluntary resignation. All four employees then brought actions against Casey’s, claiming the company had violated Iowa’s drug-testing statute. The arguments on appeal included:

• Whether the law requires strict or substantial compliance by Iowa employers
• When are employers entitled to statutory immunity under the statute
• The scope of safety-sensitive positions
• Employees’ right to present information relevant to the test
• When in the testing process are employers required to provide a list of drugs to be tested

Iowa’s drug-free workplace statute requires substantial, not strict, compliance by employers

Iowa Code section 730.5 is a lengthy statute with extensive requirements and exceptions that Iowa employers, for those who choose to implement workplace drug testing, must carefully navigate to avoid liability. The Iowa Supreme Court has previously determined that portions of the statute require only substantial, not strict, employer compliance. With Dix, the court made a point to clarify that this same standard should be applied to the entirety of section 730.5.

Substantial compliance is “compliance in respect to essential matters necessary to assure the reasonable objectives of the statute.” While the substantial compliance standard does provide wiggle room for error by Iowa employers, the standard still does not provide a clear line for employers to know when an error still constitutes substantial compliance.

Courts will be left to make factual determinations as to whether failure to comply fully with each relevant provision of the statute still upholds the key goals and purposes of the law so as to save the employer from liability. To reduce the risk of litigation or liability, employers should still make all efforts to carefully comply with 730.5.

Employer immunity narrowly limited

Iowa’s workplace drug-testing statute includes a provision that offers immunity to employers if they meet certain statutory requirements. Casey’s sought a broad application of this immunity provision, arguing that once an employer establishes and initiates a drug test according to 730.5, any action by an employee under the statute should be barred if the employer, in good faith, “takes action after an employee tests positive or refuses to submit to a test.”

The Dix Court disagreed with Casey’s, finding this application of the statute would allow employers to escape liability even if they had not complied with the statute’s requirements. Instead, the Court found that the immunity provision protects employers from causes of action, such as invasion of privacy or wrongful termination, that fall outside of 730.5.

Employers must focus on job functions when classifying safety-sensitive positions

Employers may conduct unannounced, suspicionless drug testing on employees designated in a pool for safety-sensitive positions at a particular worksite. According to the statute, such positions include jobs “wherein an accident could cause loss of human life, serious bodily injury, or significant property or environmental damage.”

Two of the plaintiffs who worked in “the cage” at the warehouse argued they were improperly placed in the pool of safety-sensitive positions. Casey’s countered that it, as the employer, should have the discretion to decide what positions were “safety-sensitive” based on its business judgment.

The majority of the Iowa Supreme Court found the employees in “the cage” were not properly classified as holding safety-sensitive positions, and therefore should not have been part of the pool that was tested. The majority argued that the specific functions of an employee’s job should be analyzed to determine the risk of harm posed by an employee using drugs or alcohol on the job. In Dix, the Court felt Casey’s improperly focused on the environment where the job was performed and not the job functions when classifying the employees.

Selecting employees for testing

The plaintiffs challenged the selection process utilized by Casey’s to determine which employees would be tested, specifically how the employee pool for testing was identified and the use of a random selection process. The plaintiffs argued Casey’s included employees in the pool who were not scheduled to work on the day of testing and excluded employees that should have been included in the pool.

Casey’s selection process was conducted by a third-party vendor that received a list of employees scheduled to work on the testing date. Between the time the list was provided and the testing occurred, more than 20 employees had either switched shifts, were approved for leave, or called in sick on the day of testing. The court held that the shift changes and inadvertent exclusion of a handful of employees constituted substantial compliance by Casey’s, as requiring perfection in the selection process would be nearly impossible for employers to comply with.

Employees’ right to a list of drugs to be tested and the opportunity to provide additional information

On the date of testing, Casey’s told employees to not disclose personal medical information at that time. Section 730.5 provides that employees must be given the opportunity to provide any information that may be considered relevant to the test, such as identifying prescription drugs they may be taking.

While Casey’s told employees to not disclose such information during the testing, employees who tested positive were not denied the opportunity to provide such information at a later time. The court held that this was satisfactory, as the statute does not include a requirement as to when an employee must be given the opportunity to provide information, only that such opportunity is provided.

The plaintiffs also argued that Casey’s failed to provide a list of drugs to be tested. This is true. However, Casey’s had updated its drug testing policy less than three months before the testing at issue. The amended policy, which included a list of drugs to be tested, was provided to all employees at that time. Again, the court found that this constituted substantial compliance. However, the court made a careful point to caution employers as to the timing of providing the required list to employees, suggesting that the safest route was to provide a list at the time of testing.

The big picture

While the Dix decision eases the burdens of 730.5 for employers by requiring substantial, instead of strict, compliance, employers should continue to approach Iowa’s workplace drug-testing statute with caution.

Iowa employers implementing a drug-testing policy should review:

• The law to ensure compliance, particularly before performing any drug tests
• Existing policies and the communication of those policies to employees
• Job functions when classifying safety-sensitive positions