With it coming from a small-business employer who already is obviously prone to shady and deceptive things, I'd assume it comes down to a constructive dismissal via intentionally lowering work satisfaction per your first guess.

...which makes me hope she found this Q&A online and works somewhere like CA that imposes good-faith requirements on at-will employment.

I'm fairly sure letting someone go over refusing to commit what's arguably low-level fraud (blatantly lying about whether fulfillment has already occurred in the course of a commercial transaction) might be treated as a bad-faith termination. In such cases the state can be very employee-friendly, especially if considering it as an official termination then puts the employer on the wrong side of other rules re: other employee protections, final paychecks, etc. The religious aspect would just be icing on the cake.

You know that awful practice where instead of breaking up with someone, you just act horrible until they break up with you?

That’s “managing out”.

The most charitable version of "managing out" is the process of collecting up all the paperwork to cover your ass legally when you want to terminate someone. In tech that normally means putting someone on PIP (Performance Improvement Plan) with the eventual goal of them failing to meet the plan requirements and then you can terminate them and go, "We gave them a plan and they didn't meet our requirements."

People will tell you, well they could turn things around with the PIP and then we won't have to terminate them, but the term "managing out" makes it really difficult to believe that that's the desired end state. Normally those plans are set up for the person to fail or to make them miserable enough to part ways.