It is well settled that Indiana is an employment-at-will state, meaning an employer or employee may terminate the employment relationship for any lawful reason.  The Indiana Supreme Court, however, recognizes a limited number of exceptions to employment-at-will.  For example, an employer may not discharge an employee for complying with a subpoena to provide testimony in a judicial or administrative hearing.  Indiana courts have held that terminating an employee under these circumstances violates the state’s public policy.  But does this exception apply when an employee voluntarily testifies in an administrative proceeding rather than being compelled to do so by subpoena or judicial order? 

The answer is no, according to the Indiana Court of Appeals’ decision in Perkins v. Memorial Hospital of South Bend.¹

Plaintiff Forrest Perkins worked as a police officer for Memorial Hospital of South Bend.  On May 12, 2015, Perkins, without the Hospital’s approval, left his shift early to testify at an unemployment benefits appeal hearing on behalf of a former co-worker.  Perkins was told he had been subpoenaed to testify, and was led to believe that he would receive the subpoena during the hearing.  But the administrative law judge never issued a subpoena because the Hospital did not contest the claim.  Perkins’ supervisors learned of the hearing and suspected that he had left work early to provide testimony on behalf of his former co-worker.  Their suspicions were confirmed when they spotted his vehicle parked outside the hearing location.

On June 18, 2015, the Hospital terminated Perkins’ employment for unrelated theft of food from the hospital cafeteria.²  Perkins then filed a lawsuit alleging he was unlawfully discharged in retaliation for having provided testimony during his co-worker’s unemployment hearing.

The trial court granted the Hospital’s motion for summary judgment and dismissed Perkins’ lawsuit.  In doing so, the court accepted as true Perkins’ claim that the Hospital terminated him in retaliation for testifying at the hearing.  Despite concluding the employer had offered a false reason for terminating Perkins’ employment, the court determined that because Perkins never received a subpoena, Indiana law imposed no duty to attend the hearing.  Because Perkins had not been compelled to give testimony, he was not entitled to the protections of public policy exception to the employment-at-will doctrine.

In affirming the trial court’s order, the Indiana Court of Appeals observed that the public policy exception to the at-will-employment doctrine is extremely limited, relying on the Indiana Supreme Court’s decision in Baker v. Tremco Inc.³  In Baker, an employer fired an employee after he refused to participate in his employer’s competitive bidding practices, which the employee incorrectly believed were illegal. The Indiana Supreme Court found the employer’s competitive bidding practices were legal, and the employee’s termination lawful.  “[T]he employee’s mistaken belief about the illegality of the company’s bidding practices . . . did not warrant expansion of the public policy exception to the at-will employment doctrine.”⁴

Likewise, in Perkins, the Indiana Court of Appeals held that Perkins’ “honest belief” that he was legally required to provide testimony was “‘not on par with the rights and obligations’ that have been recognized as warranting an exception to the at-will employment doctrine.”  Accordingly, the court affirmed the trial judge’s decision to dismiss Perkins’ claim for wrongful discharge.

In an unusually adamant dissent, Judge Kirsch concluded “[c]ommon sense tells us that this [opinion] is not good law.”  In support of his conclusion, Judge Kirsch pointed out that there was never a dispute the Hospital terminated Perkins’ employment because he testified at the hearing and noted the strong public policy considerations in having co-workers testify at unemployment compensation hearings regardless of a subpoena.

Despite the dissent’s concerns, the Perkins decision underscores that the exceptions to Indiana’s at-will-employment doctrine will continue to be narrowly construed; Indiana courts appear reticent to expand the strict definitions set forth in case law.  As a practical matter, employers should require that employees provide a subpoena or judicial order if there is a request for leave to provide testimony in an administrative or court proceeding.  If the employee fails to provide such materials and is absent from work, disciplinary action may be taken consistent with company policy and practice.  Employers should be careful not to treat this kind of absence differently than any other unexcused absence to limit the risk of a disparate treatment claim under state of federal law.  An employer’s actions should be transparent, consistent with company policy, and devoid of retaliatory motive.