Constructive Discharge is Merely Retaliatory Discharge in Reverse

"Jetson, You're Fired!"

Indiana is an “employment at will” state, i.e. generally, employment may be terminated by the employer or employee at will, with or without reason. The Indiana Supreme Court has recognized only three exceptions to this doctrine. In Baker v. Tremco, Inc., Cause No. 29S02-0902-cv-00065, the Court extended the second exception, which rests on retaliatory discharge.

Baker believed that one of Tremco’s suppliers was overcharging schools for their products and services. Baker claims that he was forced to resign because of his refusal to sell these products, and sued Tremco for breach of contract/wrongful termination.

In McClanahan v. Remington Freight Lines, Inc., 517 N.E.2d 390, 428 (Ind. 1988), the Court had found a public policy exception to the employment at will doctrine “when an employee is discharged solely for exercising a statutorily conferred right.” The Court went on to state “firing an employee for refusing to commit an illegal act for which he would be personally liable is as much a violation of public policy declared by the legislature as firing an employee for filing a workmen’s compensation claim.” Id. at 392-93 (emphasis added).

In Baker, the Indiana Supreme Court extended this exception to include instances where an employee is not fired – but is constructively discharged from his employment for refusing to participate in illegal activity. The Court stated: “Depending on the facts, it is merely retaliatory discharge in reverse.” Despite the extended exception, the Court held that Baker’s facts did not fall within the ambit of the exception because the alleged overpricing did not, as a matter of law, contravene the public bidding statutes.