Employee Discipline: Indiana
Federal law and guidance on this subject should be reviewed together with this section.
Authors: Stuart R. Buttrick, Susan W. Kline and Ryann Ricchio, Faegre Baker Daniels LLP
- Employers must refrain from disciplining employees based on protected leave. See Attendance.
- Employers must refrain from disciplining employees based on protected characteristics or conduct. See Indiana Antidiscrimination Laws.
- While Indiana employers may terminate an employee with or without cause under state law, employers cannot dismiss an employee based on a protected characteristic or conduct. See Employment At-Will.
- Indiana law protects employees who engage in protected activities from retaliation. See Retaliation and Whistleblower Protections.
- Indiana law requires an employer to issue a former employee a termination letter upon the former employee's written request. See Termination Letter.
- Indiana law requires employers to provide smoke free workplaces. See Smoke Free Workplace Law.
- Indiana law makes it unlawful for an employer to condition terms of employment, including compensation, benefits or discharge, on an employee's use of tobacco products outside of work. See Smokers' Rights.
- E-cigarettes are banned in certain Indiana municipalities. See E-Cigarettes.
- Employers may not threaten employees regarding their political activities. See Political Activities.
- Employers may not condition the terms of employment on an employee's joining or paying dues to a labor organization. See Right to Work.
- Indiana allows employees to carry and store firearms in the trunk glove compartment or out of plain sight in the employee's locked vehicle. See Firearms.
- Indiana employers may require job applicants and employees to submit to drug testing. See Drug Testing.
- Indiana law regulates medical testing. See Medical Testing.
- Indiana law regulates employee HIV testing. See HIV Testing.
- Indiana law allows an employer to sue an employee for breach of duty of loyalty. See Workplace Theft; Breach of Duty of Loyalty.
- Employers cannot deduct the value of lost or stolen property from an employee's wages. See Workplace Theft; Wage Deductions.
- Indiana law allows an employer to sue an employee for misappropriation of trade secrets. See Trade Secrets.
- Although disfavored, properly drafted noncompete agreements are enforceable in Indiana. See Noncompete Agreements.
- Localities including Bloomington, Fort Wayne, and Indianapolis-Marion County have requirements pertaining to employee discipline. See Local Requirements.
Employers must refrain from disciplining employees for absences due to protected leave.
Employees are entitled to leave for military reserve training and military duty. Upon completion of training or service, an employee is entitled to reemployment if the employee is still qualified for his or her position and he or she:
- Left a position other than a temporary position;
- Gave notice of the dates of his or her leave 90 days prior to departure; and
- Provides evidence of satisfactory completion of training or duty.
Employees are entitled to up to 15 days of military leave per calendar year, unless the employee is a member of the National Guard of any state, in which case the employee is entitled to leave for the entire duration he or she is on active state duty. +2016 Bill Text IN H.B. 1373. The leave can be unpaid. Aggrieved employees may sue the employer for damages.
Employees who are the spouse, parent, grandparent, child or sibling of a military individual may be entitled to up to 10 days of unpaid leave. The employee must have worked for at least one year, and completed 1,500 hours of work during that year. If the employee takes leave, he or she is entitled to restoration to the same or an equivalent position with respect to seniority, pay and benefits. +Burns Ind. Code Ann. § 22-2-13-1 through +Burns Ind. Code Ann. § 22-2-13-16.
Family military leave applies only to employers with 50 or more employees that have been employed for at least 20 calendar workweeks.
See USERRA: Indiana.
Indiana law prohibits employers from discharging, threatening or withholding benefits from an employee because the employee:
- Serves as a juror;
- Receives a notice to report;
- Responds to the notice; or
- Attends court for prospective jury duty.
Employers are also prohibited from requiring the employee to use annual, vacation or sick leave for time the employee is away from work.
Employers that discharge employees in violation of the statute may be liable for lost wages and reasonable attorney fees. Employers may also be guilty of a misdemeanor and subject to imprisonment for up to 180 days and/or civil fines up to $1,000. An employee can also seek reinstatement.
An aggrieved employee must bring his or her claim within 90 days of the violation.
See Jury Duty: Indiana.
Indiana law prohibits employers from discharging, threatening or withholding benefits from an employee because the employee receives a subpoena or serves as a witness in a criminal proceeding. +Burns Ind. Code Ann. § 35-44-3-11.1. Employers that violate the statute may be guilty of a misdemeanor and subject to imprisonment for up to 180 days and/or civil fines up to $1,000. +Burns Ind. Code Ann. § 35-50-3-3.
An employee can also seek reinstatement.
Emergency Service Volunteer Leave
Employers may not discharge or discipline an employee for being absent or late to work as a result of volunteering for emergency services, including firefighting. +Burns Ind. Code Ann. § 10-14-3-19 ; +Burns Ind. Code Ann. § 36-8-12-0.1 through +Burns Ind. Code Ann. § 36-8-12-19).
Employers also cannot discipline an employee who is absent from work because he or she is recovering from an injury incurred during the employee's volunteer service. Employees have six months from the date of injury before the employer can take action.
The leave can be unpaid. However, the employee may use any vacation, person or compensatory time off to cover his or her time away from work.
Employers can require the employee to do the following:
- Give notice of the need for time away from work; and
- Provide a written statement from an appropriate person with the volunteer service as proof of the employee's service.
An employer that employs 25 or more employees must provide a private location, other than a toilet stall, where an employee can express her breast milk. +Burns Ind. Code Ann. § 22-2-14-2. If reasonably possible, the employer must also provide a refrigerator or other cold storage space for keeping expressed breast milk.
Public employers must provide an employee a reasonable paid break to express breast milk for the employee's child. +Burns Ind. Code Ann. § 5-10-6-2. The employer can require that the break run concurrently with any break time already provided to the employee.
Except in cases of willful misconduct, gross negligence or bad faith, employers are protected from liability for harm resulting from allowing an employee to express or store expressed breast milk. +Burns Ind. Code Ann. § 22-2-14-2.
Indiana's Antidiscrimination Laws
Indiana's antidiscrimination laws, such as the Indiana Civil Rights Law (ICRL), Age Discrimination Act, and Employment Discrimination Against Disabled Persons Act, prohibit employers from discriminating against or refusing to hire an individual on the basis of the following protected characteristics:
- Age, ages 40 to 75;
- National origin;
- Firearm or ammunitions possession; and
- Tobacco use.
See +Burns Ind. Code Ann. § 22-9-1-0.1 through +Burns Ind. Code Ann. § 22-9-1-18 ; +Burns Ind. Code Ann. § 22-9-2-1 through +Burns Ind. Code Ann. § 22-9-2-11 ; +Burns Ind. Code Ann. § 22-9-5-1 through +Burns Ind. Code Ann. § 22-9-5-27.
Employers cannot make employment decisions, including whether or not to discipline an employee, based on these protected characteristics.
Indiana is an employment at will state, meaning either the employer or employee can terminate the employment at any time for any reason, unless there is an employment contract in place that changes the at-will relationship to something other than at will.
There are some exceptions to the employment at will doctrine in Indiana. For example, an employer cannot fire an employee for exercising his or her rights under the following Indiana laws:
- Occupational safety and health laws. +Burns Ind. Code Ann. § 22-8-1.1-38.1;
- Workers' compensation laws; or
- Equal employment laws addressing protected categories, including:
Retaliation and Whistleblower Protections
Indiana law protects employees who have engaged in protected activities from retaliation.
Indiana courts recognize a public policy exception to the at-will employment doctrine in two circumstances. See, Frampton v. Cen. Ind. Gas Co., +260 Ind. 249 (1973); McClanahan v. Remington Freight Lines, +517 N.E.2d 390 (Ind. 1988). A discharged employee may have a wrongful discharge claim against an employer if:
- The employer discharged the employee for the employee's refusal to commit an unlawful act for which the employee could be held personally liable; or
- The employer discharged the employee for exercising the employee's statutorily conferred rights.
Indiana courts interpret the latter exception narrowly. Baker v. Tremco Inc., +917 N.E.2d 650 (Ind. 2009). Indiana courts have only recognized an employee's filing a workers' compensation claim as a protected activity under the "statutory rights" public policy exception. Frampton v. Cen. Ind. Gas Co., +260 Ind. 249 (1973). However, some federal district courts in Indiana have applied the exception more broadly. Employers should take caution when discharging an employee for exercising rights conferred by statute.
Indiana statutory law also protects employees of public contractors who engage in whistleblowing. +Burns Ind. Code Ann. § 22-5-3-3.
Other statutes with anti-retaliation protections include:
- Indiana Civil Rights Law. See Employee Management > EEO - Retaliation: Indiana;
- Indiana's Age Discrimination Act. +Burns Ind. Code Ann. § 22-9-2-1;
- Indiana's Occupational Health and Safety Law. See +Burns Ind. Code Ann. § 22-8-1.1-38.1; and
- Indiana's Minimum Wage Law. +Burns Ind. Code Ann. § 22-2-2-11(a)(1).
Effective July 1, 2015, Indiana employees who file for a protective order will have certain protections against termination of their employment. +2015 Bill Text IN H.B. 1159. Specifically, an employee may not be discharged:
- Because he or she filed for a protective order for his/her protection, regardless of whether the order has been granted; or
- For the actions of the individual against whom the employee has filed for a protective order.
However, an employer may change certain terms and conditions of an employee's employment as long as the employee agrees to the changes. For example, an employer may change an employee's:
- Employment location;
- Compensation and benefits; or
- Other terms or conditions of employment.
Burns Ind. Code Ann. § 22-5-7.
Effective July 1, 2015, if the Indiana Department of Workforce Development makes an unemployment insurance overpayment to an employee, the agency may collect this overpayment through payroll withholdings required by the employer. +2015 Bill Text IN H.B. 1186. Prior to withholding, the Department must provide a notice to the individual who is subject to withholding with specific statutorily mandated information. Employers who fail to withhold income as required, or knowingly misrepresent income of an employee, will be liable to the Department for the amount that they failed to withhold from the employee's income, and may also be ordered to pay punitive damages to the Department of up to $1,000 per pay period that the employer failed to withhold or knowingly misrepresented the employee's income. Indiana employers may not use income withholdings as the basis for discharging, otherwise taking disciplinary action against an employee, or refusing to hire an applicant.
Burns Ind. Code Ann. § 22-4-13.3.
Indiana law requires an employer to issue a former employee a termination letter upon the former employee's written request. +Burns Ind. Code Ann. § 22-6-3-1. For specific information, see Employee Communications: Indiana.
Smoke-Free Workplace Law
Effective July 1, 2012, Indiana law prohibits smoking in public places, enclosed areas of employment, and within eight feet of any public entrance to a public place or place of employment. A place of employment does not include a private vehicle.
Some types of businesses will be exempt from the smoking ban, including:
- Horse racing facilities;
- Gambling facilities;
- Satellite facilities;
- Bars; and
+Burns Ind. Code Ann. § 7.1-5-12-4. The law requires employers to:
- Inform employees of the smoking prohibition;
- Remove ash trays and other smoking paraphernalia that is not for retail sale;
- Post conspicuous signs at public entrances that state, "State Law Prohibits Smoking Within 8 Feet of This Entrance" or other similar language; and
- Refrain from retaliating against employees or prospective employees for exercising their rights under the law or for reporting violations of the law.
Employers may wish to enforce their non-smoking policies by appropriately disciplining employees who violate the policy.
Although there is no statewide e-cigarette ban in Indiana, employers may be subject to local laws. See Local Requirements.
Indiana makes it unlawful for an employer to condition terms of employment, including compensation, benefits or discharge, on an employee's use of tobacco products outside of work. +Burns Ind. Code Ann. § 22-5-4-4.
Employers may, however, offer financial incentives intended to reduce tobacco use. These incentives are related to the health benefits the employer provides to employees.
Churches and religious organizations are exempt from the law.
Employees have a private right of action against employers who violate the law and may seek the following remedies:
- Injunctive relief;
- Costs; and
- Reasonable attorney fees.
Indiana employers may not threaten or otherwise influence employees in their political activities or views. +Burns Ind. Code Ann. § 3-14-3-21. Specifically, an employer may not include any coercive or threatening political arguments in paychecks or communicate threats through workplace notices (e.g., notifying employees that wages will be reduced or the plant will be closed if a particular candidate is elected).
Violations of these protections are punishable as a Level 6 felony under Indiana elections laws.
Right to Work
An employer cannot:
- Condition employment or continuation of employment on an employee's payment of dues, fees, assessments or other charges of any kind or amount to a labor organization;
- Require an employee to become or remain a member of a labor organization; or
- Require an individual to pay to a charity or third-party an amount that is equivalent to or a pro rata part of dues, fees, assessments or other charges required of members of labor organizations.
An employer may be guilty of a misdemeanor if it violates the law. Aggrieved employees have a private right of action and can seek the following remedies:
- Actual and consequential damages;
- Liquidated damages up to $1000;
- Reasonable attorney fees;
- Litigation expenses; and
Indiana allows employees to carry and store firearms in the trunk, glove compartment or out of plain sight in the employee's locked vehicle. +Burns Ind. Code Ann. § 34-28-7-2.
An employer may prohibit an employee from carrying a firearm on the employer's property or in the course of the employee's duties. +Burns Ind. Code Ann. § 34-28-8-9. However, the employer may not prevent the employee from keeping the gun in the employee's locked vehicle while it is parked on the employer's premises. +Burns Ind. Code Ann. § 34-28-7-2.
The employer cannot inquire into or require an employee to disclose whether the employee possesses or transports a firearm. +Burns Ind. Code Ann. § 34-28-8-6. Neither can an employer condition the terms of employment on an employee's firearm possession status or on the employee's agreement to forego his or her rights under the law.
Employers should ensure workplace weapons policies, including any discipline policies, do not have the effect of restricting or prohibiting an employee from lawfully transporting a firearm in his or her vehicle.
Indiana employers may require job applicants to submit to drug testing. For example, the Indiana Civil Rights Law (ICRL) should not be construed to encourage, prohibit, restrict or authorize an employer to test a job applicant for illegal drug use or from making an employment decision based on the results of a drug test. +910 IAC 3-3-15.
To minimize exposure to discrimination lawsuits under state and federal law, employers should similarly test all applicants for the same job and should test applicants only after making a conditional offer of employment. Employers should not selectively discipline employees that test positive for drugs, but should, instead, apply discipline policies consistently.
An employer may require employees to undergo medical examinations. +910 IAC 3-3-11.
An employer may require job applicants to have medical examinations after the applicant has received a conditional offer of employment. +910 IAC 3-3-11. Employers may condition an applicant's offer of employment on the medical examination if all applicants in the same job category are subject to the same requirement.
The medical examination need not be job related or consistent with business necessity unless it has the effect of screening out employees with disabilities. The Indiana Civil Rights Commission requires employers to administer tests to job applicants and employees with disabilities in a manner that will accurately reflect the skills, aptitude or whatever quality the test purports to measure. +910 IAC 3-3-8.
If an employee refuses to undergo medical testing, the employer may discipline the employee. The employer should make sure that any such discipline is done in a nondiscriminatory manner and the required medical exam is consistent with business necessity.
Indiana prohibits the use of screening or confirmatory tests for HIV without the informed consent of the individual to be tested, which includes a fair explanation of the procedures to be followed.
Employers should note that consent may be withdrawn at any time. State law also protects the confidentiality of medical information, including AIDS tests. +Burns Ind. Code Ann. § 16-41-6-1 through+Burns Ind. Code Ann. § 16-41-6-13.
Breach of Duty of Loyalty
Indiana recognizes the existence of an implied duty of loyalty in employment relationships, including employment at will relationships. Kopka, Landau & Pinkus v. Hansen, +874 N.E.2d 1065 (Ind. App. 2007).
Employees owe their employer a duty of loyalty and therefore cannot compete with the employer or self-deal. For example, an employee cannot use the employer's confidential information for the purpose of starting a rival corporation or to make personal investments.
Indiana law only allows employers to make certain deductions if they are agreed to in a writing signed by the employee and the employer, and the agreement is revocable at any time by the employee.
Permissible deductions include, among other things:
- Premiums on insurance policies;
- Payments to the employee's direct deposit account; and
- Labor union dues.
Indiana law does not permit an employer to resort to self-help by deducting the value of stolen or lost property from the employee's wages.
Indiana's Uniform Trade Secrets Act allows employers to file claims against individuals who misappropriate the employer's trade secrets, including former employees and competitors. +Burns Ind. Code Ann. § 24-2-3-1.
A trade secret can be a formula, pattern, compilation, program, device, method, technique or process that:
- Derives economic value from not being generally known or readily ascertainable; and
- Is the subject of reasonable efforts to maintain its secrecy.
The employer can seek a number of court remedies:
- An injunction;
- Actual and punitive damages; and
- Any unjust enrichment to the violating party.
The employer must bring a trade secret claim within three years after the misappropriation is discovered or could have been discovered through reasonable efforts.
Indiana recognizes and enforces noncompete agreements, although they are disfavored as a restraint on trade. Employers may require prospective employees to complete a noncompete agreement as a condition of employment. To ensure the validity of the agreement if litigation should arise, an employer should ensure the terms of the agreement are reasonable.
Indiana courts determine reasonableness by examining whether:
- The employer has asserted a legitimate interest that may be protected by a covenant; and
- The scope of the agreement is reasonable in terms of time, geography and types of activity prohibited.
Gleeson v. Preferred Sourcing, LLC, +883 N.E.2d 164, 172 (Ind. Ct. App. 2008).
Whether a noncompete agreement is reasonable will depend on the facts of the case. An example of a legitimate protectable interest includes maintaining the secrecy of confidential information, such as customer lists and pricing information.
Courts have found 18-month and two-year agreements to be reasonable with respect to time. As for geographical reasonableness, courts have looked to the areas in which the employer conducts business or solicits new business, as well as the area where the employee worked.
Indiana courts have adopted the blue pencil doctrine, which allows a court to strike unreasonable terms from an otherwise valid noncompete agreement instead of rendering the entire agreement invalid. To protect themselves, employers should abstain from drafting overbroad noncompete agreements.
The Bloomington Antidiscrimination Ordinance prohibits employers with six or more employees from discriminating against job applicants or employees on the basis of sexual orientation and gender identity. Charitable organizations and religious institutions are exempt from the provision. Bloomington Municipal Code § 2.21.030(10).
Fort Wayne Discrimination
Fort Wayne's Antidiscrimination Ordinance prohibits employers with six or more employees from discriminating against job applicants or employees on the basis of sexual orientation. Charitable organizations and religious institutions are exempt from the provision. City of Fort Wayne Code of Ordinances § 93.016.
Indianapolis-Marion County Discrimination
The Indianapolis-Marion County Antidiscrimination Ordinance prohibits employers with six or more employees from discriminating against job applicants or employees on the basis of sexual orientation and gender identity. Charitable organizations and religious institutions are exempt from the provision. Indianapolis-Marion County, Code of Ordinances § 581-103.
Indianapolis-Marion County Non-Smoking Areas Ordinance
E-cigarettes are banned in Indianapolis-Marion County as part of the area's Non-Smoking Areas Ordinance. +Indianapolis - Marion County, Indiana Code of Ordinances Sec. 616-102. Employers may wish to enforce any internal e-cigarette bans by appropriately disciplining employees who violate the policy.
South Bend Discrimination
South Bend's Antidiscrimination Ordinance prohibits employers with six or more employees from discriminating against job applicants or employees on the basis of sexual orientation and gender identity. Charitable organizations and religious institutions are exempt from the provision. South Bend Municipal Code § 2-127.1.
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