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Indiana State Labor Laws for Business Owners

Indiana Labor Law Guide

Indiana is often recognized for its pro-business environment, competitive tax structure, and business-friendly policies. It has a diverse economy with strengths in manufacturing, agriculture, technology, and healthcare. The state’s central location and well-developed transportation infrastructure make it an attractive location for manufacturing companies. The state has a reputation for business-friendly regulations and a streamlined permitting process.
Indiana State Labor Laws

Minimum Wage

$7.25

Overtime Wage

$1.5x Regular Wages

Meal Breaks

Not mandated

Rest Breaks

Paid if 20 minutes or less

Minimum Wage Mandates

The minimum wage in the state of Indiana is $7.25 per hour in 2023, the same as the federal minimum wage.

Overtime Rules

Overtime rules in Indiana follow the federal Fair Labor Standards Act (FLSA). The act sets minimum wage, overtime pay eligibility, record keeping, and child labor standards. We have compiled overtime rules for every US state in a separate post.

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Non-exempt employees in Indiana get overtime pay for the hours worked beyond 40 hours in a week. The overtime pay is calculated at 1.5 times the regular hourly pay.

Exempt employees are not eligible for overtime pay. They typically include salaried employees who meet specific criteria related to their job duties and salary.

Meal and Rest Breaks

Indiana does not have specific state laws mandating meal or rest breaks for employees. Therefore, meal and rest break regulations in Indiana generally follow federal guidelines outlined in the Fair Labor Standards Act (FLSA).

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The FLSA does not require employers to provide meal breaks. However, if employers choose to provide meal breaks (typically lasting 30 minutes or more), they are not required to compensate employees during that time, provided the employees are completely relieved of their job duties.

Similarly, the FLSA does not require employers to provide rest breaks. However, if employers choose to provide short breaks (usually 20 minutes or less), they are generally considered compensable work time.

In unionized workplaces, collective bargaining agreements may establish specific provisions regarding meal and rest breaks.

Businesses with young employees also have to comply with the federal child labor laws, which require breaks for young workers.

Paid Leaves and time off rules in the state of Indiana

Indiana does not have specific state laws mandating paid leave for employees. However, there are federal and state laws that may impact paid leave and time off in certain situations.

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  • The federal Family and Medical Leave Act (FMLA) applies to eligible employees in Indiana. FMLA provides eligible employees with up to 12 weeks of unpaid leave in a 12-month period for specific family or medical reasons, including the birth or adoption of a child, the serious health condition of the employee or a family member, or certain military-related events.
  • Indiana does not have a statewide law requiring employers to provide paid sick leave to employees. Some cities in Indiana, such as Indianapolis, have local ordinances that require certain employers to provide paid sick leave to employees. Employers should be aware of and comply with any local ordinances that apply to their business.
  • Many employers in Indiana choose to offer paid time off as part of their benefits package. Employers may have their own policies regarding vacation, personal days, or other types of paid leave.
  • If an employee is temporarily laid off or experiences a reduction in work hours, they may be eligible for unemployment benefits through the Indiana Department of Workforce Development.
  • Collective Bargaining Agreements: For employees covered by collective bargaining agreements, the terms related to paid leave and time off may be outlined in the agreement.
Exempt vs. Non-Exempt Classification

The classification of employees as exempt or non-exempt in the state of Indiana is primarily based on the federal law Fair Labor Standards Act (FLSA). The FLSA sets forth rules regarding minimum wage, overtime pay, and exemptions for certain categories of employees.

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Exempt Employees:

  • Salary Basis Test: Exempt employees are typically paid on a salary basis, meaning they receive a fixed salary that is not subject to reduction based on the quality or quantity of work performed.
  • Salary Level Test: Exempt employees must earn a minimum salary to qualify for exemption. The minimum salary for exemption is $684 per week.
  • Duties Test: Exempt employees must perform specific job duties that fall into one of the FLSA’s exempt categories, such as executive, administrative, professional, or certain computer-related duties.

Non-Exempt Employees:

  • Hourly Pay: Non-exempt employees are typically paid on an hourly basis and are entitled to overtime pay for hours worked beyond 40 hours in a workweek.
  • Overtime Pay: Overtime pay for non-exempt employees is generally calculated at 1.5 times their regular rate of pay for each hour worked beyond 40 hours in a workweek.
  • Employers must keep accurate records of non-exempt employees’ hours worked, wages paid, and other related information.
Equal Pay Act

Indiana does not have its own state-specific Equal Pay Act. Therefore, equal pay provisions in Indiana primarily fall under federal law, specifically the Equal Pay Act of 1963 (EPA), which is a part of the Fair Labor Standards Act (FLSA).

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  • Equitable Work: The EPA prohibits employers from discriminating on the basis of sex by paying employees of one gender less than employees of the opposite gender for equal work.
  • The EPA prohibits retaliation against employees who assert their rights under the Act.
  • Indiana has its own anti-discrimination law, the Indiana Civil Rights Law, which covers various aspects of employment discrimination. While it doesn’t specifically address equal pay, it prohibits discrimination based on race, color, religion, sex, disability, national origin, ancestry, and other protected characteristics.
  • The Indiana Civil Rights Commission is responsible for enforcing the state’s anti-discrimination laws.
  • In addition to the Indiana EPA, employers must also adhere to Title VII of the Civil Rights Act of 1964 that prohibits discrimination based on race, color, religion, and national origin.
Rules for hiring and firing employees in the state of Indiana

Hiring and firing employees in the state of Indiana are subject to various federal and state laws.

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  • Indiana follows the doctrine of at-will employment. Under this, absent a contract stating otherwise, employment relationships can be terminated by either the employer or the employee at any time, with or without cause, and with or without notice.
  • While at-will employment allows for termination without cause, employers cannot terminate employees for illegal reasons, such as discrimination, retaliation, or in violation of public policy.
  • Anti-Discrimination Laws: Employers in Indiana must comply with federal anti-discrimination laws, including Title VII of the Civil Rights Act of 1964, which prohibits discrimination based on race, color, religion, sex, and national origin..
  • Equal Employment Opportunity (EEO Employers should provide equal employment opportunities to all individuals regardless of their protected characteristics, and hiring decisions should be made based on merit and job-related criteria.
  • Background Checks: Employers may conduct background checks on job applicants, but they must comply with federal and state laws, including the Fair Credit Reporting Act (FCRA) and anti-discrimination laws.
  • Work Eligibility Verification: Employers are required to verify the work eligibility of employees through the Form I-9 process in compliance with federal immigration laws.
  • Final Paychecks: Indiana law requires employers to pay an employee’s final paycheck by the next regularly scheduled payday.
  • Unemployment Compensation: If an employee is terminated, they may be eligible for unemployment benefits through the Indiana Department of Workforce Development.
  • Employers may enter into severance agreements with departing employees, outlining terms such as severance pay, benefits continuation, and confidentiality provisions.
  • WARN Act: The federal Worker Adjustment and Retraining Notification (WARN) Act may apply to employers with 100 or more employees, requiring them to provide advance notice of plant closings or mass layoffs.

It is important for employers to remain well-informed about changes in employment laws and to seek guidance from legal professionals to ensure compliance with the latest regulations. It’s advisable to establish clear and meticulously documented employment policies and procedures to aid employers in complying with the labor laws.

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