Discipline and termination

State procedures

Are there state-specific laws on the procedures employers must follow with regard to discipline and grievance procedures?

None for private sector employers.

At-will or notice

At-will status and/or notice period?

If a contract for employment contains no definite or ascertainable term of employment, then the employment is at-will and is presumptively terminable at any time, with or without cause, by either party, or by mutual agreement.

Employment is strongly presumed to be at-will, and Indiana courts have not been inclined to adopt exceptions to the employment-at-will doctrine. For instance, general expressions of public policy in statutes do not support new exceptions to the employment-at-will doctrine. In addition, Indiana courts have declined to recognize an implied covenant of good faith and fair dealing in the at-will employment context.

What restrictions apply to the above?

Indiana courts have recognized three general exceptions to the employ­ment-at-will doctrine:

  • Public policy:  Indiana recognizes an exception to the at-will doctrine if termination would contravene public policy. Indiana courts have defined this to mean that an employer cannot terminate an employee in retaliation for exercising a statutorily protected right, such as filing a workers’ compensation claim (a Frampton claim);
  • Promissory estoppel:  Situations in which the employer makes a promise and the employee relies on that promise to his or her detriment; or
  • Refusing to perform an illegal act:  An employee may not be discharged for refusing to commit an illegal act.

 

Indiana courts have generally rejected the idea of a handbook as an enforceable employment contract. Nonetheless, specific language preserving the at-will nature of the employment relationship should be included in employee handbooks.

Final paychecks

Are there state-specific rules on when final paychecks are due after termination?

Indiana employers must pay terminated employees their final wages at the time of separation or no later than their next regularly scheduled payday. This rule does not apply to railroad employees.

Unless there is a clear, written policy to the contrary, “wages” due after termination include accrued, but unused, vacation time, sick time, paid time off, and other similar paid time.

 

The authors would like to thank Margaret Foss, Shantale Davis and Julia Ware, summer associates at Ogletree (Indianapolis), for their contributions to the chapter.