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Indiana Payroll Processing: What Companies Need to Know

November 03, 2022

Indiana businesses have less to worry about regarding compliance than some states, however, if there is one area of compliance where Indiana is like the rest it's payroll. Here is everything employers need to know regarding Indiana payroll processing.

Indiana Payroll Processing: What Companies Need to Know

Indiana Payroll Laws

When it comes to Indiana Payroll Law, businesses need to primarily focus on managing compliance with the following things:

  • Minimum Wage
  • Overtime
  • Deductions from Wage
  • Final Pay
  • Wage Payment Timing

Indiana Minimum Wage

Indiana minimum wage is currently $7.25 per hour, equivalent to the federal minimum wage outlined in the Fair Labor Standards Act (FLSA). Indiana does have special wage laws for specific employees, so it is important to be aware of whether or not these regulations apply to your business.

Tipped Employees in Indiana

Employers are allowed to pay employees who receive tips a wage of $2.13 per hour. However, an employee's wages and tips must equal or exceed what they would have been paid working "X" many hours for $7.25 per hour. If not, the employer must make up the difference. 

Training Wages

Employers may also pay any employees, under the age of 20, $4.25 per hour for the first 90 consecutive days of employment.

Indiana Overtime

Employees in Indiana are entitled to overtime pay of 1.5 times their normal hourly rate for all hours worked over 40 in a week. Most employers in Indiana are covered under the FLSA in regard to overtime. Those that aren't may still be covered under Indiana minimum wage law.

Deductions from Wages in Indiana

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 purchases 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 from an employee's wages in Indiana, an employer must also ensure that there is an agreement with the employee, in writing, and signed by the employee and employer. The agreement must be revocable as well and delivered to the employer within ten days of its execution.

Final Pay in Indiana

Upon termination, employers in Indiana must pay employees on the next regularly scheduled payday. Indiana does not have any laws regarding the payment of unused benefits. 

Wage Payment Timing in Indiana

Indiana employers generally need to pay wages to employees at least semi-monthly. Employers may pay employees biweekly if the employee requests. Lastly, all wage payments within ten business days of a pay period.

Indiana Payroll Solutions

Employers in Indiana that are struggling with processing payroll on their own may want to consider reaching out to an Indiana payroll provider for help. To learn more about our Indiana payroll solution, contact us today. 

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