November 03, 2022
Processing payroll in Indiana is no simple task. Before Indiana businesses begin paying employees, they need to make sure they are managing compliance with Indiana Payroll Law, including minimum wage, overtime, Indiana payroll taxes, and more.
Indiana Payroll Laws and Processing for 2023
Understanding federal, state, and even local payroll laws in places like Indiana is critical to avoid disputes with employees and hefty fines from the government.
Many businesses in Indiana find they don't have the resources or bandwidth to understand or manage compliance with the legislation. Indiana businesses struggling with payroll should reach out to an Indiana Payroll Company for help.
When it comes to Indiana Payroll Law, businesses need to primarily focus on managing compliance with the following things when processing payroll in the state.
The following article will cover what employers need to know regarding Indiana Wage and Hour laws.
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).
Under Indiana Minimum Wage law, employers do need to manage compliance with 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 for a particular shift had they been making $7.25 per hour with no tips.
If an employee is owed less money due to a tipped wage, then they would have made under minimum wage, 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 and Indiana Overtime Laws. Employers with such employees should make sure they know how to manage FLSA exemptions.
Deductions from Wages and Indiana Payroll Taxes
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.
Payroll Services in Indiana
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.
