Indiana Court of Appeals Reaffirms Indiana’s Commitment to the Employment-at-Will Doctrine

In Indiana, employees are considered “at-will” in the absence of an agreement to the contrary, such as a collective bargaining agreement or an individual employment contract. This means that employers may change their employees’ terms and conditions of employment, including terminating them, for any reason (good or bad) or no reason, unless such reason is illegal—such as, for example, discrimination prohibited by state or federal law. In just about any workplace other than a unionized one, employers do not need “just cause” to terminate their employees.

The Indiana courts have created two exceptions to the employment-at-will doctrine where: (1) the employee is fired for exercising a statutory right or duty (for example, filing a workers’ compensation claim); and (2) the employee is discharged for refusing to commit an illegal act for which the employee can be criminally prosecuted. These exceptions have been strictly construed, and the Indiana courts have gone out of their way not to apply them.

The recent case of Perkins v. Memorial Hospital of South Bend is a good example of the Indiana courts’ reluctance to apply exceptions to the employment-at-will doctrine. In Perkins, the employee alleged he was fired for testifying at a co-worker’s unemployment hearing. The employee believed he had been subpoenaed, although no subpoena was actually issued. The Court of Appeals accepted the employee’s allegations as true, but in a 2-1 decision dismissed the employee’s wrongful discharge claim because employees do not have a statutory right to testify at unemployment hearings. The dissent in Perkins noted the importance of co-worker testimony at unemployment hearings and said, “Common sense tells us this is not good law.”

Unless Perkins is overruled by the full Court of Appeals or the Indiana Supreme Court, or legislatively changed by the General Assembly (which is unlikely), the upshot of Perkins is that employers can legally fire their employees for testifying at unemployment hearings. One can hardly imagine a stronger disincentive for employees to testify at unemployment hearings.

As Perkins demonstrates, non-union employees in Indiana have very little protection against unfair termination. For this reason alone (among many others), all employees should support their union or, if they don’t have one, jump at the chance to form a union in their workplace if presented with the opportunity.