Uncharted Waters: New Amendments to Iowa Civil Rights Act and their Impact on Iowa Businesses

Gender Identity Removed from the Iowa Civil Rights Act

The Iowa Civil Rights Act (“ICRA”) is the state law that prohibits discrimination in credit, education, employment, housing, and public accommodations.  In general, the ICRA makes it unlawful for a covered entity to treat someone differently because of their color, creed, gender identity, marital status, mental or physical disability, national origin, race, religion, sex, or sexual orientation.  The ICRA is similar to the federal Civil Rights Act of 1964, but applies to entities that may not be covered under federal law.

SF 418 amended the ICRA by removing “gender identity” as a protected class. Lawmakers introduced an amendment to preserve anti-discrimination protections for gender identity in housing and credit,  but ultimately withdrew the amendment. As a result, the ICRA does not prohibit discrimination in any area on the basis of gender identity. Employers, creditors, landlords, and other covered entities will not face liability under the ICRA if they choose to discriminate on the basis of gender identity.

However, that does not mean employers or any covered entity should discriminate on the basis of gender identity.

First, many employers covered by the federal anti-discrimination statute, Title VII of the Civil Rights Act of 1964 (“Title VII”) could still face liability for discriminating against employees on the basis of gender identity. Title VII makes discrimination “because of sex” unlawful.  In the decades since Title VII became law, the U.S. Supreme Court has ruled that discrimination “because of sex” includes treating any employee differently if they do not conform to a stereotype about how a person of that sex should behave. In other words, it is unlawful to penalize a female employee who does not conform to the employer’s expectation for how women should behave. In that example, the employer is subjecting the employee to a condition that solely on her status as a woman: the different treatment is “because of” her sex.  The Supreme Court has also made clear this rule applies to all sexes and prohibitions on sex discrimination protects men as well as women.  In 2020, the Supreme Court applied these principles to other sex-based differences: gender identity and sexual orientation. The Court held that discrimination on the basis of sexual orientation or gender identity is a form of sex discrimination made unlawful by Title VII.  Employers covered by Title VII (usually, 15 or more employees) should be aware that gender identity discrimination is unlawful under federal law.

Second, while the ICRA may not protect employees from discrimination on the basis of gender identity, other provisions of Iowa law might. Iowa law provides that “Every person in this state is entitled to the opportunity for employment on equal terms with every other person.”  The ICRA and other statutes—including Iowa’s occupational health and safety law and wage payment law—likewise prohibit employers from retaliating against any employee who engaged in certain protected conduct. Additionally, the Iowa Constitution’s broad guarantee of individual rights could prohibit discrimination on the basis of an individual because of their gender identity.  In any event, the substantial changes to the ICRA and other provisions of the Iowa Code (as explained further below) will likely generate litigation and require judicial resolution. Employers seeking to avoid unnecessary litigation risk should commit to prohibiting discrimination on the basis of any class protected by state and federal law, including gender identity.

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Gender Dysphoria as a Disability & Separate Accommodations

While SF 418 stripped gender identity from the ICRA’s protected classes, it made provision for transgender Iowans in other respects. Section 1 of SF 418 creates a new provision of the Iowa Code that states: “A person born with a medically verifiable diagnosis of disorder or difference of sex development shall be provided the legal protections and accommodations afforded under the federal Americans with Disabilities Act of 1990 and applicable state law.”  While discrimination on the basis of an individual’s gender identity may not be prohibited by the ICRA, this section provides that employers could face liability for failing to accommodate or discriminating against an employee because of a “medically verifiable diagnosis of disorder or difference of sex development.”

This provision raises several questions. First, SF 418 does not define “disorder or difference of sex development.” In order to be covered by disability-related protections under the ICRA and the Americans with Disabilities Act (“ADA”), an individual generally needs to show they have, or are regarded as having, a disability that “substantially limits one or more major life activity.”  This provision of SF 418 seems to eliminate the requirement that an individual establish they have a “substantial disability” or are “substantially limit[ed]” because the law requires such individual “be provided the legal protections and accommodations afforded” under the ADA and ICRA, provided the individual has a “disorder or difference of sex development.” Secondly, and because Iowa is the first state in the nation to remove a protected class from its civil rights law, it is unclear whether federal courts will interpret the ADA in the way SF 418 directs.

Relatedly, SF 418 includes language stating: “Separate accommodations are not inherently unequal.”  This language, which is included in a section that affects the interpretation of the entire Iowa Code, ostensibly affects the accommodations and services Iowa entities currently provide to individuals with or without disabilities. While some provisions of state law relate to “equal access” to employment opportunities, this language could be read to relegate individuals to separate, but equal, employment opportunities without violating state law. Employers should be aware the Supreme Court of the United States has flatly rejected “separate, but equal” as a defense to discrimination and segregation.

When an accommodation may or may not be required for a transgender employee under SF 418 is ultimately a question that will be answered through court rulings and litigation. Laws like Title VII and the ICRA set the “floor” for what an employer must legally provide. Employers that seek to avoid such proceedings should, as recommended above, continue to prohibit discrimination on any basis protected by state and federal laws, which may mean going above the “floor” set by state law.

Other Changes to Employment Practices

SF 418 created new definitions relating to sex and gender that could have implications to other employment practices. For example, Section 1 of SF 418 adds this definition: “‘Sex’, when used to classify or describe a natural person, means the state of being either male or female as observed or clinically verified at birth.” This language introduces new hurdles to any individual seeking to prove they have faced discrimination or harassment on the basis of sex and complicates how employers and other entities tasked with eliminating sex discrimination can respond.

This change narrows what is discrimination or harassment on the basis of sex. Under previous law, an individual claiming sex discrimination needed to show, for example, she is a woman and experienced an adverse employment action that was motivated by her being a woman. Because “sex” was not defined in the ICRA, discrimination “because of sex” included not only straightforward adverse actions because of animosity for a person’s sex, but also discrimination based on sex-stereotypes, sexual harassment claims, and pay discrimination. By narrowing the definition of “sex” to relate to “the state of being either male or female as observed or clinically verified at birth,” SF 418 could implicitly legalize some forms of discrimination when the action does not relate to the observed or clinical differences between the sexes at birth. This provision affects the entirety of the Iowa Code.  The implications will affect areas well beyond the ICRA. Again, courts and litigants will have to resolve these statutory questions.

Next steps and best practices

The provisions of SF 418 will take effect on July 1, 2025. Business owners and employers in Iowa should work with legal counsel to carefully consider SF 418’s implications on current or planned employment policie.