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Iowa taxpayers' tab for state harassment deals grows

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Iowa may pay $4M to victims of sex harassment by ex-director

In this undated file photo from a video, former Finance Authority Dave Jamison speaks during an interview. 

State Auditor Rob Sand and other Democrats have suggested Iowa seek reimbursement from former state employees implicated in high-dollar sexual harassment and discrimination settlements, but lawyers are stymied about how that would happen and whether it would be worth it.

The State Appeal Board last week approved $4.15 million in settlements for Beth Mahaffey and Ashley Jared, who alleged they were sexually harassed and assaulted by their former boss, David Jamison, who led the Iowa Finance Authority from 2011 until he was fired in 2018. An independent investigation concluded Jamison did harass the women.

Sand, who serves on the State Appeal Board, said Tuesday the state should consider its options for collecting from Jamison, who Gov. Kim Reynold fired almost a year ago after hearing sexual harassment allegations against him.

Reynolds said she understands Iowans’ frustration over the public picking up the tab.

“It is not unreasonable, I think, that we should hold those bad actors accountable,” she said Friday during a taping of the “Iowa Press” public affairs program. “But sometimes it’s just not that simple. There are reasons you can or shouldn’t or can’t and that’s why we have representation, and we’ll defer to what they recommend.”

The Iowa Attorney General’s Office is talking with Reynolds’ staff about ways this could be done — but it’s not a clear or common path.

“We are analyzing this question, so at this point I am reluctant to speculate on what mechanisms we have or what fixes we’d recommend,” said Lynn Hicks, spokesman for the office. “You may be aware of (Iowa Code Section) 669.21 and .22, which allows restitution from an employee in tort claims and actions in federal court. But the IFA-related settlement is neither.”

Millions paid

The tally of recent legal settlements involving alleged sexual harassment, gender discrimination and retaliation by state employees is more than $14 million.

Iowa Finance Authority Director Debi Durham said Thursday the $4.15 million in settlements to Mahaffey and Jared will be paid not from the tax-supported state general fund but rather from a “reserve and revolving loan fund established over the last 40 years through the Authority’s earnings on loan investments paid by private entities.” The state authority assists affordable housing programs.

At a time when agencies are competing for Iowa’s limited budget to pay for schools, roads, mental health services and other needs, leaders say it’s hard to see public money going to settle legal cases against state employees who misbehave on the job.

Iowa Senate Democrats made this point in 2017 when the state agreed to pay $1.75 million to former Republican Senate caucus employee Kirsten Anderson, who said she was fired in 2013 after complaining about sexual harassment. Senate Democratic Leader Janet Petersen, of Des Moines, said at the time her party was looking at possible legislation to shield taxpayers from having to pay for others’ bad behavior.

But that proposal didn’t go anywhere, perhaps because Democrats were in the minority in the Legislature and perhaps, according to attorneys The Gazette interviewed, because it’s not a good idea.

“I understand why you would want to hold individuals accountable. Why should the entire state be penalized because one person is acting badly?” said Jill Zwagerman, a Des Moines civil rights and employment lawyer. “On the flip side, it becomes very challenging for the person being discriminated against if the state can pass it off on employees for recovery. We need to make sure the victim is made whole.”

Zwagerman and law partner Tom Newkirk represented Jane Meyer and Tracey Griesbaum, former University of Iowa athletics employees who won a combined $6.5 million gender discrimination settlement from the school in 2017.

Worth it?

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Phil Klinger, a lawyer with Klinger, Robinson & Ford in Cedar Rapids, said the state theoretically could sue Jamison in an attempt to recover all or part of the settlement cost.

“The first question is, ‘Does the guy have any money?’ Is it worth it?” asked Klinger, who has practiced law since 1968.

An administrative law judge ruled in June that Jamison was not entitled to unemployment insurance payments because he was fired for “job-related misconduct.”

He did get $3,185 in payments between April 8 and June 2, before the state opposed his eligibility. His gross state salary in fiscal 2017 was $131,391.

Suing a former employee to recover the state’s settlement costs could take years, run up legal fees and raise the question of whether Mahaffey and Jared would be willing to testify at the trial, Klinger said.

“If the state goes after him, they have to prove their case. You can’t just say, 'Hey, you owe me money,’” he said.

Zwagerman said it’s appropriate for the state to pay settlements because it ensures the alleged victims will get full compensation and pressures state agencies to be vigilant of employees who break the rules.

“The state is a huge employer and there will always be a couple of bad apples,” she said. “The idea is you have the policies and procedures in place, and people training on them.”

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