UPDATES & ANALYSIS

Iowa Supreme Court: Cities may delay, not ban, criminal background checks on job applicants

by Rox Laird | June 21, 2021

The Iowa Supreme Court on June 18 ruled that a Waterloo city ordinance that bars employers from denying jobs to applicants with criminal records is unenforceable because an Iowa statute prohibits cities from setting terms and conditions of employment that go beyond what state law allows. But the Court said a provision of Waterloo’s ordinance that only delays criminal history checks until a job offer has been made is enforceable because it does not conflict with state law.

Waterloo’s ordinance, as enacted in 2019, prohibits employers from asking applicants about their criminal histories on job applications and from making an adverse hiring decision without a “legitimate business reason” based on an applicant’s record of arrests, pending criminal charges, or criminal records that have been expunged.

The Court held that those provisions of the ordinance are preempted by a state statute that prohibits cities from enacting ordinances setting terms or conditions of employment that exceed or conflict with state or federal law relating to certain hiring practices or employment conditions.

The opinion for the majority was written by Justice Edward Mansfield and joined by Chief Justice Susan Christensen and Justices Thomas Waterman, Brent Appel, and Dana Oxley. Justice Christopher McDonald wrote separately to say he agreed with the Court’s judgment but he dissented on an issue relied upon by the majority that he said was not properly raised by the parties on appeal. Justice Matthew McDermott did not participate in the case.

Waterloo’s ordinance, titled “The Fair Chance Initiative,” was inspired by the “ban the box” movement that protects job applicants from being denied jobs based on their criminal records, which most directly impacts members of minority groups. Waterloo has the highest percentage of African Americans of any city in Iowa, and Black individuals make up 40% to 60% of inmates at the Black Hawk County Jail at any given time, according to the city’s brief filed with the Court.

The Iowa Association of Business and Industry (ABI) argued in its suit challenging the legality of Waterloo’s ordinance that it conflicts with a statute enacted by the Legislature in 2017, Iowa Code Section 364.3(12)(a).

The Court agreed with ABI’s argument, at least in part.

The 2017 statute prohibits cities from adopting “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.“

While the Court said Waterloo’s ordinance is preempted by that 2017 statute for the most part, one provision of the ordinance that is not preempted only delays an employer’s inquiry into an applicant’s criminal history until making a conditional offer of employment, but does not prohibit it.

The statute “preempts ordinances that prescribe different terms or conditions of employment,” the Court said, but “to the extent [that the ordinance] merely delays an inquiry into criminal history, it is not prescribing different terms or conditions of employment.”

As Justice Mansfield explained:

“Of course, it is true that section 364.3(12)(a) specifically mentions ‘hiring practices’,” he wrote on behalf of the majority. “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.”

In his partial dissent, Justice McDonald disagreed with the majority’s conclusion that “terms or conditions of employment” as used in Iowa Code section 364.3(12)(a) does not include the application process and other preemployment hiring practices because that issue was not previously raised by either party in this case.