Employee Termination Laws in Indiana

Every now and again, we’re asked questions regarding Indiana laws regarding employee terminations. Here is an earlier post that should answer those questions………….

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:

  • instances in which there is adequate independent consideration to support an employment contract—for example, if an employee leaves a job with assured permanency and accepts a new job based on promises of the same permanency;
  • a public policy exception where a clear statutory expression of a right or duty is contravened (to date, Indiana courts have recognized this exception in only a few circumstances)—employers cannot terminate employees for exercising rights under the worker’s compensation statute (known as a “Frampton” claim), for serving on a jury or for refusing to commit an illegal act; and
  • instances in which the employer made a promise to the employee and the employee relied on the promise to his or her detriment (i.e., promissory estoppel).

Indiana courts have generally rejected the idea of a handbook as an enforceable employment contract.

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.

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