by Scott Holland, on Jan 4, 2023 8:15:00 AM
Employers in Indiana must ensure compliance with a standard set of labor laws and employment legislation. Proper compliance with Indiana labor laws will span federal legislation and regulations as well as those specifically issued by the State of Indiana.
This article will help guide Indiana employers through state compliance. However, for additional assistance, employers should consider contacting an Indiana Payroll & HR company for help.
Indiana Labor Law Compliance Overview
Businesses in Indiana must maintain compliance with several different labor law areas including:
- Hiring
- Wage & Hour
- Child Labor
- Employee Benefits
- Leave Laws
- Workplace Health & Safety
- Discrimination
- Workers’ Compensation
- Unemployment Insurance
- Recordkeeping and Posting Requirements
While some areas are governed by federal law more than others, it is important for Indiana employers to know which areas have state laws, and which defer to federal.
Indiana Hiring Laws
Indiana employers have two primary responsibilities to keep in mind when it comes to hiring new employees. These are new hire reporting and arrests and convictions.
New Hire Reporting in Indiana
Indiana requires private employers to submit information regarding newly hired employees, as well as certain employees who are returning to work, to the Indiana New Hire Reporting Center.
Generally, Indiana employers must submit the following information within 20 days of the date of hire or reemployment:
- Employee's Name
- Employee's Address
- Employee's Social Security Number
- Employee's Date of Hire
- Employer's Name
- Employer’s Address
- Employer’s Federal Identification Number
How to Submit New Hire Reporting Information in Indiana
Employers can report new hires through the Indiana New Hire Reporting Center or may create their own electronic new hire reports as long the required information is included.
Alternatively, employers can submit one of the following paper reports:
- New Hire Reporting Form
- Form W-4
Indiana Criminal Records Access
Indiana private employers need to be aware of the rules and regulations regarding arrest and conviction records, and access to them.
Generally, employers in Indiana are prohibited from using arrest and conviction records for the following:
- Any purpose other than those stated in the request for the records
- Any purposes that would deny any civil right of the person who is the subject of the record
- An employer may not ask an employee, contract employee, or applicant whether the person's criminal records have been sealed or restricted
- To generally discriminate against any person because of a conviction or arrest record expunged or sealed under the law
- From inquiring about criminal record history that has been expunged during any application for employment, license, or other right or privilege.
To request a criminal records check, employers should contact the Indiana State Police Department's Central Records Division. Or contact an Indiana HR company for help with background checks and compliance.
Indiana Wage & Hour Laws
One of the larger areas of compliance for employers throughout the state, Indiana wage and hour laws cover the following topics:
Employers need to be aware of these requirements in order to successfully process Indiana payroll.
Indiana Minimum Wage
Currently, Indiana minimum wage is $7.25 per hour, the same as the federal minimum wage.
Indiana also has a minimum wage for tipped employees of $2.13 per hour. However, if the tips paid to the employee plus the wage do not equal the minimum wage, then the employer must make up the difference.
Indiana also allows for a training wage of $4.25 per hour. It can be used for employees under the age of 20 only, and only for the first 90 consecutive calendar days of employment.
Overtime Rules in Indiana
Employees are entitled to overtime pay of 1.5 times their normal hourly rate for all hours worked over 40 in a week. Generally, most Indiana employees are covered by the overtime provisions of the Fair Labor Standards Act (FLSA), however, those not covered under federal law may still be covered by the Indiana Minimum Wage Law.
Permissible Deductions from Wages
Generally, employers may make the following deductions from wages in Indiana:
- 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
- Contributions of the employee to a hospital service or medical expense plan
- Payment to an employee's direct deposit account
- Uniform or equipment purchase necessary to fulfill the duties of employment provided that the total amount of wages assigned may not exceed the lesser of: (A) $2,500 per year ($48.08 weekly); or (B) 5% of the employee's weekly disposable earnings
- Reimbursement for education or employee skills training, unless the education or employee skills training was provided through an economic development incentive from a federal, state, or local program
- An advance for payroll or vacation pay
- Merchandise, goods, or food offered by the employer, for the employee's benefit, use, or consumption, at the written request of the employee
In order to make a deduction, employers must also ensure that the agreement for the deduction is in writing, signed by the employee, by its terms revocable at any time by the employee upon written notice, and agreed to in writing by the employer.
A copy of the deduction agreement must be delivered to the employer within ten days of its execution as well.
Indiana Final Pay Requirements
Indiana rules regarding final pay require that employees receive final pay on the next regularly scheduled payday.
However, Indiana has no laws regarding the payment of unused benefits. That said, employers should follow any written or oral company policies that may require them to do so.
Wage Payment Timing and Pay Period Requirement
Employers in Indiana are generally required to pay wages to employees at least semi-monthly, or bi-weekly if requested by an employee, and must make wage payments within 10 business days of a pay period.
Meal and Rest Breaks
Indiana does not require private employers to provide employees with meal or rest breaks. However, there are some exceptions for minors.
Indiana Child Labor Laws
Child labor can be one of the trickiest areas of labor law compliance, as there are several federal and state laws protecting employed minors. Where the two intersect, the law providing the most protection applies.
Indiana Youth Employment Registration System
Employers in Indiana with five or more minor employees must use the Indiana Youth Employment System (YES) to track and report minor-employee information.
However, any work permits that were issued for minor employees before July 1st, 2021 (the creation of YES) must be kept for two years (July 1st, 2023 latest).
Child Labor Restrictions in Indiana
Indiana employers need to be aware of restrictions for minors on the following items:
- Restrictions on Time & Hours Worked
- Restrictions on Breaks
- Restrictions on Duties Performed
Restrictions may also vary depending on the age of the minor.
Indiana Employee Benefits Laws
Indiana has no laws regarding employee benefits or the continuation of benefits. However, employers with 20 or more employees may be subject to federal COBRA law.
Indiana Leave Laws
While some states may have an overly-complicated set of leave laws across multiple localities, Indiana Leave Laws only generally cover the following types of employee absence or leave:
- Jury Duty Leave
- Indiana Civil Air Patrol Leave
- Indiana Emergency Response Leave
- Family and Medical Leave in Indiana
- Military Family Leave
Important to note as well is Indiana currently has no comprehensive paid leave law, meaning that paid time off (PTO) is not required in Indiana. Keep in mind that even though PTO is not required, employers still must adhere to the policies included in the employee handbook that's provided to employees.
Jury Duty Leave
While Indiana does not require paid Jury Duty Leave, it does prohibit employers from taking adverse action against an employee for serving jury duty.
Employers are required to give employees unpaid time off for jury duty service. However, employees must notify the employer of the jury summons within a reasonable period after he or she has received the summon.
Employers also may not require an employee to use any type of accrued leave for time spent on a jury.
Indiana Civil Air Patrol Leave
Indiana employers may not discipline an employee who is a Civil Air Patrol member for being absent from or leaving work to engage in an emergency service operation that began:
- Before the employee was scheduled to start work; or
- After the employee reported to work if the employee obtained authorization from his or her supervisor before leaving
Indiana Emergency Response Leave
An employer may not discipline an employee who is a volunteer firefighter or member of a volunteer medical services association for being absent from or leaving work due to:
- Response to a fire or emergency call that was received before the employee was scheduled to start work;
- Response to a fire or emergency call during work hours, if the employee obtained authorization from his or her supervisor before leaving; or
- An injury that occurred while the employee was engaged in emergency firefighting or other emergency response.
Family and Medical Leave in Indiana
Indiana has no comprehensive family and medical leave law requiring private employers to provide leave rights greater than those required by the federal Family and Medical Leave Act (FMLA). However, companies throughout Indiana must STILL comply with FMLA laws.
Military Family Leave
Indiana Military Leave applies to employers with at least 50 employees. Under the law, employers must grant eligible employees up to 10 days of unpaid leave per calendar year during one or more of the following periods:
- During the 30 days before active duty orders are in effect
- During a period in which the person ordered to active duty is on leave while active duty orders are in effect
- During the 30 days after the active duty orders are terminated
Eligible employees include:
- Has been employed by an employer for at least 12 months;
- Has worked at least 1,500 hours during the 12-month period immediately preceding the day the leave begins; and
- Is the spouse, parent, grandparent, child, or sibling of a person who is ordered to active duty (full-time service on active duty orders in the U.S. Armed Forces or the National Guard for a period that exceeds 89 consecutive calendar days).
Indiana Workplace Health & Safety Laws
Indiana is one of many states that has an Occupational Safety and Health Administration (OSHA)-approved job safety and health program. States with such a program operate it themselves rather than states without one, which are subject to federal OSHA.
Indiana OSHA
The Indiana Occupational Safety and Health Administration (IOSHA) covers most private-sector employers in the state. The U.S. Occupational Safety and Health Administration (OSHA) has jurisdiction over certain employers not covered by IOSHA.
IOSHA generally adopts the same standards as federal OSHA, with a few local emphasis programs, or in other words unique areas of OSHA compliance for Indiana.
Indiana Smoke-Free Air Law
Indiana’s Smoke Free-Air Law prohibits smoking in the following places:
- Most places of employment
- Most public places
- Restaurants
- The area within (8) eight feet of a public entrance to a public place or a place of employment
- Any vehicle owned, leased, or operated by the state if the vehicle is being used for a governmental function
Exceptions include:
- Bars and taverns
- Tobacco retail shops
- Cigar bars
- Hookah bars
- State-licensed gaming facilities
- Licensed horse track facilities
- Membership clubs, that meet certain criteria
Indiana employers should be aware of which category their business falls under, and the standards that apply.
Indiana Discrimination Laws
Indiana employers are subject to federal discrimination laws as well as the guidelines, standards, and protections put into place by the Indiana Civil Rights Commission.
According to Indiana discrimination law, employers with 6 or more employees may not discriminate against an employee or potential new hire as a result of:
- Disability
- National origin
- Ancestry
- Race
- Color
- Religion
- Gender
- Status as a veteran
Anyone who feels that their rights under Indiana discrimination law have been violated must file a complaint within 180 days of the discriminatory act.
Exceptions to Indiana Discrimination Law
Aside from employers with less than 6 employees, there are some business and employee types who are exempt from Indiana discrimination protections.
Employees who are exempt from Indiana Law include:
- Someone who is employed by their parent, child, or spouse
- Someone hired for domestic service, such as a housekeeper or babysitter
Businesses that are exempt from Indiana Law include:
- Nonprofit corporations or associations organized exclusively for fraternal or religious purposes
- Any school, educational, or charitable religious institution owned or conducted by or affiliated with a church or religious institution
- Any exclusively social club, corporation, or association that is not organized for profit.
Indiana Workers’ Compensation
Workers' compensation provides benefits to employees who are injured on the job, or otherwise are unable to work due to a workplace accident or incident.
Generally, employers in Indiana need to be aware of the following rules regarding workers' compensation:
- Employees that have been injured while at work should report the injury immediately to their supervisor, employer, or designated representative
- Employees are covered from the first day they work
- Employees must submit claims within 30 days of an incident or risk being denied
- Compensation is 2/3 the average weekly wage over the past 52 weeks
- Employers may not fire an employee for filing a workers' compensation claim
Employers can find more information regarding Indiana workers’ compensation on the Worker's Compensation Board of Indiana website.
Unemployment Insurance Requirements in Indiana
Indiana Unemployment is funded via employer contributions rather than a tax on employee payroll. The program pays benefits to workers who are unemployed through no fault of their own.
When it comes to employer responsibilities, Indiana employers can use the new Uplink Insurance System Portal for things such as:
- Applying for new account status
- Reviewing and managing their account information in detail
- Access help screens and navigation aids to assist them in using the system
- File reports and make payments online
- Receive correspondences and notices before they are received in the mail
To become an employer in Indiana, employers can find registration requirements within the tax and unemployment registrations by state list.
Indiana Recordkeeping and Posting Requirements
Like employers in any state, the list of posting and recordkeeping requirements is not short for Indiana employers.
Employers struggling with posting compliance may want to consider a labor law poster subscription service that provides updates whenever labor laws change.
Indiana Recordkeeping Requirements
Indiana employers are required to keep records for the following things:
- Wages/Hours/Payroll
- Name
- Address
- Occupation
- Daily/weekly hours worked
- Wages paid each pay period
- Safety and Health/Workers' Compensation
- All disablements caused by occupational disease, fatal or otherwise
- Report to IOSHA/OSHA anytime an employee is hospitalized within 24 hours
- Does not include employees taken in for testing or observation only
- Accurate records of employee exposures to potentially toxic material or harmful physical agents
- Employees may access records pertaining to hazardous substance exposures
- Child Labor
- Job permits for workers under the age of 18
- Discrimination
- Records of the ages of its employees
Posting Requirements in Indiana
The following posters are required for all employers in Indiana:
- Indiana minimum wage law poster
- Equal employment opportunity is the law poster
- Unemployment insurance notice
- Workers’ compensation notice
- Safety and health protection poster
- Smoke-Free Air Law
- All public places and places of employment must post one or more of five types of signs
- Teen work hour restrictions poster
- Only for employers with employees who are aged 14, 15, 16 or 17
Final Thoughts on Indiana Business Compliance
Operating a business in any state while maintaining proper compliance can be a challenge, and while Indiana may have fewer regulations than some states, it is no different.
Businesses and employers in Indiana that are struggling to maintain proper compliance may want to consider reaching out to an Indiana HR and payroll provider for help. Solutions such as payroll software and HR consulting services can be of great benefit for employers struggling with streamlining back office processes and Indiana business compliance.
If you are in need of an Indiana payroll and HR company in your area, contact us or get connected with a provider today.
Guest Author: Scott Holland
Scott Holland is the Executive Vice President at TruPay, an Indiana human capital management solutions company serving medium and large employee-size organizations throughout the United States. Scott earned a B.S. from Bethel College, majoring in accounting and business administration. He is a member of the AICPA and Indiana CPA Society and has been invited to speak at the Independent Payroll Provider’s Association (IPPA) tax and operations conference.
