June 18, 2014

What Employers Need to Know About Indiana's New Service Letter Law

Indiana Governor Mike Pence signed House Bill 1005 into law on March 25, 2014. The digest for this bill was titled "Government reduction," and it covered an assortment of topics. Practically buried at the end was a small but significant change to Indiana Code § 22-6-3-1 and 2 (also referred to as Indiana's "Service Letter Law"). 

For many years, Indiana's Service Letter Law has required employers, upon a qualifying written request, to provide current or former employees with a letter that includes, among other things: (1) the nature and character of service rendered by the employee; (2) the duration of service; and (3) a truthful statement of the "cause" for the employee's resignation or discharge. The Attorney General was authorized to bring suit against employers who failed to comply, and violations constituted a Class C infraction. The law often posed a challenge to employers, who generally have good reasons to limit and carefully tailor any statements made regarding a former employee's discharge.

The new law, effective July 1, 2014, eliminates much of the information that employers were required to provide in response to qualifying requests. Going forward, service letters must still meet certain form requirements, but substantively need only state "whether the employee quit or was involuntarily discharged." In other words, employers no longer need to include the nature, character or duration of service or a statement of the reason for separation. Additionally, a violation will no longer constitute a Class C infraction; the law is now silent as to penalties.

These revisions are clearly good news to Indiana employers, who now need to provide less information than before in response to qualifying requests. However, the law continues to present risk in certain situations because it still requires employers to characterize the employee's separation as a resignation or a discharge. That very issue can be a hot point of debate in employment-related litigation. Therefore, employers should carefully consider each request for a service letter on a case-by-case basis. More broadly, employers should review their policies and protocols for responding to requests for information about current or former employees (regardless of who makes the request) to ensure consistency, legal compliance and minimal legal exposure.  

If you have questions about your organization's practice, policy or procedure with respect to service letter requests, please contact a Faegre Baker Daniels employment lawyer.

The Faegre Baker Daniels website uses cookies to make your browsing experience as useful as possible. In order to have the full site experience, keep cookies enabled on your web browser. By browsing our site with cookies enabled, you are agreeing to their use. Review Faegre Baker Daniels' cookies information for more details.