Wage and hour
What are the main sources of wage and hour laws in your state?
Indiana has two primary sources for wage and hour laws:
- the Wage Payment statute, which governs claims by current employees or those employees who have voluntarily left employment (Ind. Code Ann. § 22-2-5-1); and
- the Wage Claims Statute, which governs claims by employees who have been involuntarily separated or are out of work as a result of a labor dispute (Ind. Code Ann. § 22-2-9-2).
Indiana also has a minimum wage and overtime statute that tracks the requirements of the Fair Labor Standards Act (FLSA). Indiana employers covered by the FLSA are not covered by Indiana’s minimum wage and overtime statutes.
What is the minimum hourly wage?
Indiana’s minimum hourly wage is $7.25. This wage applies to employers having two or more employees in any workweek. Indiana’s minimum hourly wage is the same as the federal minimum hourly wage, and Indiana’s wage increases automatically with the federal wage.
Indiana units of local government are prohibited from enacting ordinances requiring a minimum wage in excess of the state or federal minimum wage (I.C. 22-2-2-10.5).
What are the rules applicable to final pay and deductions from wages?
Indiana’s final-pay rules Indiana employers must pay terminated employees their final wages at the time of separation or no later than their next regularly scheduled payday. This rule does not apply to railroad employees.
Indiana employers must pay employees who voluntarily quit their final wages at the time of separation or no later than their next regularly scheduled payday. If an employee quits and does not provide the employer with their future whereabouts, the employer is not subject to a penalty until either:
- 10 business days have elapsed after the employee has made a demand for wages; or
- the employee has furnished the employer with the employee’s address where the wages may be sent or forwarded.
The following are exempt from Indiana’s final pay rules:
- salaried employees eligible for overtime compensation;
- farmers and those engaged in agriculture and horticulture business; and
- criminal offenders in a facility operated by the Department of Correction.
Indiana’s wage-deduction rules Indiana employers may not fine an employee and deduct the amount from the employee’s wages. However, employers may deduct the amount of an overpayment from an employee’s paycheck, provided that the following conditions are met:
- the employer gives the employee two weeks’ notice before making the deduction;
- the amount of the deduction does not exceed the lesser of 25% of the employee’s disposable earnings for that week or the amount by which the employee’s disposable earnings for that week exceed 30 times the federal minimum hourly wages in effect at the time the earnings are payable.
Indiana employers may deduct additional amounts from an employee’s paycheck when the following three conditions are satisfied:
- the agreement for the deduction is in writing, signed by the employee, by its terms revocable at any time by the employee on written notice, and agreed to in writing by the employer;
- a copy of the deduction agreement is delivered to the employer within 10 days of its execution; and
- the deduction falls in one of the following approved categories:
- premiums on an insurance policy obtained for the employee by the employer;
- contributions to a charitable organization;
- purchase price of bonds, securities, or stock of the employing company;
- labor union dues;
- purchase price of merchandise sold by the employer to the employee;
- amount of loan made to the employee by the employer;
- employee contributions to a hospital service or medical expense plan;
- payment to an employee’s direct deposit account;
- uniform or equipment purchase, rental, or use necessary to fulfill the duties of employment;
- reimbursement for education or employee skills training;
- an advance for payroll or vacation pay; or
- merchandise, goods, or food offered by the employer, for the employee’s benefit, at the written request of the employee.
Hours and overtime
What are the requirements for meal and rest breaks?
Indiana has no requirements for rest breaks, meal breaks, or other breaks for adult employees. However, minor employees who work six or more hours in a shift must be given one or two breaks totalling at least 30 minutes.
Other categories of workers who may be entitled to breaks include:
- public employees;
- contract-carrier drivers; and
- nursing mothers.
What are the maximum hour rules?
Generally, Indiana has no maximum-hour rules governing employment. However, it does have specific maximum-hour laws governing:
- contract-carrier drivers transporting railroad employees (Ind. Code Ann. § 8-9-11-3);
- the employment of children (Ind. Code Ann. § 20-33-3-22 to 29); and
- public utility employees (Ind. Code Ann. § 8-1-8.3-6).
How should overtime be calculated?
Overtime should be calculated by multiplying an employee’s “compensatory time” by the product of a rate not less one-and-a-half times the employee’s “regular rate.” “Compensatory time” means the number of hours an employee work in excess of 40 hours. “Regular rate” means the rate at which an employee is employed and includes “all remuneration for employment paid to, or on behalf of, the employer.”
An employee’s “regular rate” does not include:
- sums paid as gifts or rewards;
- payments made for vacation, holiday, illness, or other similar cause, other reimbursable payments, and other payments which are not made as compensation for an employee’s hours of employment;
- sums paid in recognition of services performed, including end-of-contract bonuses, payments for a good-faith share plan, or talent fees;
- contributions made to old age, retirement, life, accident, or health insurance plans;
- extra compensation for working longer than an eight-hour day;
- extra compensation for working on Saturdays, Sundays, and holidays; or
- any other extra compensation for working outside of established hours.
What exemptions are there from overtime?
The following are exempt from the Indiana Minimum Wage Law overtime requirement:
- under 16s;
- independent contractors;
- individuals performing services not in the course of the employer’s trade or business;
- individuals employed on a commission basis;
- individuals employed by their own parent, spouse, or child;
- individuals performing services for a religious order or volunteers for a religious or charitable organization;
- student nurses or students apprenticing as funeral directors or embalmers;
- interns or resident physicians at duly accredited hospitals;
- students performing services for any school, college, or university in which they are enrolled and are regularly attending classes;
- individuals who are physically or mentally disabled and performing services for certain non-profit organizations;
- insurance producers, insurance solicitors, and outside salesman, who are compensated solely by commission;
- individuals performing services for camping, recreational, or guidance facilities operated by a charitable, religious, or education non-profit;
- individuals engaged in certain agricultural labor;
- individuals employed in executive, administrative, or professional occupations, with the authority to employ or discharge, and who earn $150 or more a week;
- individuals not employed for more than four weeks in any four consecutive three-month periods; and
- individuals covered under the federal Motor Carrier Act 1935.
What payroll and payment records must be maintained?
Indiana employers must furnish each employee a statement of the following:
- hours worked by the employee;
- the wages paid to the employee; and
- a listing of deductions made.
An employer’s wage records must be open to inspection by the commissioner of labor at any reasonable time. An employer that fails to keep payroll and payment records will be subject to penalties.