Guide to Indiana employee benefits and HR rules

Is your organization compliant with Indiana's employment laws?

If you have an Indiana-based organization or employ Indiana workers, learning everything you need to know about HR compliance in Indiana is crucial. In this guide, we’ll provide a general overview of Indiana's employment and benefits regulations for small to medium-sized businesses.

Topics covered in this guide include:

• Employment laws in Indiana
• What are employees’ rights in Indiana?
• Required and non-required employee benefits in Indiana
• Health insurance in Indiana
• Wage laws in Indiana

What are employment laws in Indiana?

The federal government sets minimum benefits and HR requirements for employers nationwide. But many states create their own employment laws to offer additional employee protections—and Indiana is no exception.

Before opening or expanding your business in Indiana, you should familiarize yourself with the state’s employment laws.

In Indiana, employers must follow several state-specific laws in addition to federal employment laws, such as:

• At-will employment
  • Indiana is an “at-will” employment state. Indiana employers may hire, terminate, promote, demote, lay off, or suspend employees with or without cause. They can also set work hours and policies at their discretion. However, by law, employers can’t terminate an employee due to discrimination or other illegal factors.
  • Employees who believe their employer fired them illegally can file a complaint.
• Indiana discrimination laws
  • The Indiana Civil Rights Commission prohibits employers with six or more employees from discriminating against job candidates, new hires, and current workers based on race, color, disability, national origin, ancestry, religion, gender, or veteran status.
  • Employees hired by their parent, child, or spouse or who are domestic workers are exempt from discrimination laws. Nonprofit corporations, fraternal, religious, or social clubs, schools, educational or charitable religious organizations, and employers with fewer than six employees are also exempt.
  • Individuals who feel an employer has discriminated against them must file a complaint within 180 days of the action.
• Indiana Blacklisting Law
  • This law prohibits Indiana employers from disclosing untruthful information about an employee's termination.
  • Previous employees who believe their former employer has made untrue statements about them must request any written communication from their former employer to a potential employer within 30 days of applying for a new job.
• New Hire Reporting Program
  • Private employers must file a report with the Indiana New Hire Reporting Center detailing the names, addresses, Social Security numbers, and start dates of all new hires and employees returning to work after a furlough or layoff. Employers must also include their name, address, and federal employer identification number (EIN) in the report.
  • Business owners must submit the report within 20 days of a new hire’s start date or an employee’s return to work.
• Fair Chance Hiring Process
  • To give all candidates a “fair chance” at employment, Indiana employers can’t ask individuals about their criminal history on their initial job application.
  • Employees in childcare facilities, home health agency personnel, employees of personal services agencies, and school teachers are exempt.
• Indiana Right-to-Work Law
  • Indiana is a right-to-work state, meaning no business, labor organization, or individual can require an individual to become or stay a member of a labor organization or pay union dues, fees, assessments, or charitable donations as a condition of new or continued employment.
• COVID-19 vaccine mandate laws
  • This law prohibits Indiana employers from requiring their employees to receive a COVID-19 vaccination without providing exceptions. Employers must allow employees to opt out of receiving the vaccine due to medical reasons, religious beliefs, or employee immunity from a prior COVID-19 infection.
  • Employees must provide their employer with a written exemption statement unless the employer waives this requirement.
  • If an employee claims an exemption, employers can require them to take a COVID-19 test once or twice a week, as long as the test is FDA-approved. The test can’t put an undue burden on the employee and should be the least invasive testing option available.
• Indiana weapon laws
  • Employers may not establish or enforce a policy prohibiting an employee from keeping a firearm or ammunition locked in the employee’s trunk, glove box, or other location within the locked vehicle that is out of plain sight.
• Indiana child labor laws
  • When and how long minors can work in Indiana depends on age. The law also prohibits minors from working in certain hazardous occupations.
  • Employers with five or more minor employees must use the Indiana Youth Employment System (YES) to maintain and report minor-employee information.
• Indiana Smoke-Free Air Law
  • This law prohibits smoking in most businesses and public places, within eight feet of a public entrance to a business or public place, and any vehicle—whether owned, leased, or operated—used for government purposes.
  • Bars and taverns, tobacco retail shops, cigar and hookah bars, state-licensed gaming facilities, licensed horse track facilities, and certain membership clubs are exempt.
• Workplace accommodations for nursing mothers
  • Private and public employers employing 25 or more employees must provide a private location other than a toilet stall where an employee can express breast milk.
  • Employers must also provide a refrigerator or other cold storage device for employees to keep expressed breast milk during their work shift or allow the employee to bring their own cold storage device.

Now that we’ve reviewed a few Indiana-specific laws, we’ll review the state’s employee rights.

What are employees’ rights in Indiana?

Employees in Indiana have many rights under state and federal laws. Regardless of your organization's size, you must know your employees' rights if you have or plan to hire employees in the state.

Some state rights include:

• Fair wages
  • Employers must pay at least the federal minimum wage and follow federal overtime regulations.
• Meal periods and rest breaks
  • All employees younger than 18 who work six or more consecutive hours are entitled to one or two breaks equaling at least 30 minutes.
  • Other than minors, Indiana doesn’t require employers to provide breaks for rest, meals, or any other reasons. However, if the employer chooses to provide them, breaks lasting less than 20 minutes must be paid. Breaks longer than 20 minutes don’t need to be paid if the employee performs no work during it.
• Consolidated Omnibus Budget Reconciliation Act (​COBRA)
  • COBRA is a federal law that allows employees, former employees, spouses, employees’ former spouses, and dependents to maintain their employer-sponsored health insurance coverage after a qualifying event. All employers with 20 or more employees must follow federal COBRA regulations.
• Occupational Safety and Health Administration (OSHA) compliance
  • OSHA is a federal agency that outlines safety and health standards for all employees in the workplace. Employers can’t take disciplinary action against employees who report them for OSHA violations.
  • In addition to the federal OSHA program, the Indiana Occupational Safety and Health Administration (IOSHA) has a few Indiana-specific regulations for private employers.
• Private communication protections
  • The Indiana Wiretapping Law makes it illegal for employers to intercept, share, or use an employee’s computer or telephone communications without one party’s consent.
• Access to personnel files
  • An employee may request to see any or all of their personnel files during employment. But the law doesn’t require the employer to comply with the request.
  • If an employee quits, they may submit a written request to see their personnel file. If the employer terminated them, they can also request an accurate statement of why they were fired.
• Pregnant Workers Fairness Act
  • Organizations with 15 or more employees must make reasonable workplace accommodations for workers who are pregnant or have medical conditions related to childbirth.
  • Employers may not discipline, terminate, or retaliate against an employee for requesting or using an accommodation.

Health insurance in Indiana

The state and federal government don’t require employers in Indiana to offer health insurance to their workers if they have fewer than 50 employees. But federal law requires business owners with 50 or more full-time equivalent employees (FTEs) to provide affordable health insurance with minimum essential coverage (MEC) to satisfy the Affordable Care Act’s (ACA) employer mandate.

However, just because you may have fewer than 50 FTEs doesn’t mean you shouldn’t offer health benefits. Adding a comprehensive health benefit to your benefits package is a great way to attract and retain talented workers.

Traditional group health insurance is a popular option for many U.S. employers. But, rising healthcare costs can make it challenging for small to mid-sized businesses on a budget to afford the costly premiums and annual rate hikes.

Small group health insurance premiums in some Indiana counties can get as high as $736 per month. On the other hand, the average monthly premium for a 50-year-old on a bronze individual health plan can be as low as $416. This makes covering the cost of individual health plans more feasible for many employers than offering a group plan in many parts of Indiana.

Business owners looking to provide an affordable health benefit can take advantage of Indiana’s lower individual plan prices by implementing a health reimbursement arrangement (HRA) or a health stipend.

Health reimbursement arrangement (HRA)

An HRA is an IRS-approved, formal health benefit funded solely by the employer. It allows you to reimburse your employees, tax-free, for their individual health plan premiums and qualifying medical expenses.

Employees can use their HRA to choose and purchase the individual health insurance plan that meets their healthcare needs and budget. Employers save money by not buying a group health plan, setting a fixed monthly allowance, and only reimbursing their employees when they incur an eligible medical expense.

Some HRAs, such as the individual coverage HRA (ICHRA), can satisfy the ACA’s regulations for applicable large employers (ALEs), making an HRA a health benefit that can work for businesses of all sizes.

Thanks to Indiana House Bill 1004, small employers that offer an HRA to their employees in 2024 may be eligible for a tax credit. 

Learn more about each HRA

Health and wellness stipends

With a health stipend, you can give your employees a fixed amount of money to help them pay for their medical expenses and insurance policy premiums. An employee health stipend isn't a formal group health plan, so you can customize your stipend and choose which costs are eligible for reimbursement.

You can offer as much stipend allowance as your benefits budget allows, and employees can purchase the medical items that work for them and their families. This increased flexibility makes stipends a more personalizable option for organizations than group health insurance.

While stipends are taxable for employees, small businesses looking for a benefit that covers more than medical expenses—like mental health counseling, gym memberships, and fitness apps—can do so with a wellness stipend. Offering a health and wellness stipend together gives your employees comprehensive coverage for their overall well-being.

Wage laws in Indiana

Wages in Indiana are subject to various state laws. We've compiled the most important requirements to know below.

Minimum wage

The minimum wage in Indiana is $7.25 an hour, which is also the federal minimum wage. Should the federal minimum wage rate rise in the future, Indiana will raise its minimum wage to match it.

Employers can pay employees younger than 20 a training wage of $4.25 per hour for the first 90 consecutive days of employment. Then, the employer must offer at least the federal minimum wage.

Certain employees, like minors under age 16 and individuals employed by family members, are exempt from minimum wage laws.

Tipped wages

Employers must pay tipped employees a minimum wage of $2.13 per hour. If the employee’s tips don’t equal the state’s minimum hourly rate, the employer must pay the difference to equal $7.25 per hour. If they make more than minimum wage in tips, the employer doesn’t need to pay anything extra.

State law allows tip pools, whether voluntary or mandatory. However, employers may not receive any part of employees’ tips, and they must pool and share the tips among their employees fairly.

Hours worked

Employers must pay employees for all hours worked. Other than that, Indiana employers may determine their own work hours and schedule, including how many hours an employee may work in one shift and how much rest time there must be between work shifts.

No laws dictate how much notice employees must receive when an employer changes their work schedule.

Overtime pay

Indiana's overtime requirements are similar to the federal overtime standards. Employers must pay employees overtime of 1.5 times their regular pay for any hours they work more than 40 in a standard workweek. In Indiana, a workweek is any 168-hour regular repeating period. It doesn’t need to correspond to the calendar week.

Some occupations, such as executives, administrators, outside salespeople, and other professionals, are exempt from overtime pay as long as they make at least $455 per week.

Prevailing wages

State officials repealed The Indiana Common Construction Wage Act, which was the state’s prevailing wage law, on July 1, 2015. Therefore, an Indiana public agency can no longer create or require a wage scale or schedule for a public works contract. This repeal only applies to state projects, not projects using federal funds under the Davis-Bacon and Related Acts.

Pay frequency and methods

Indiana state law requires an employer to pay employees at least semi-monthly. If an employee requests to receive their wages either bi-weekly or semi-monthly, the employer must comply with their preference. The regularly scheduled payday must be no later than ten days after the pay period ends.

Under Indiana law, an employer may pay wages by:

• Cash
• Payable checks
• Direct deposit or wire transfer
  • Employers may not force employees to accept their wages by direct deposit
• Money order

Pay deductions

Employers may make pay deductions in certain situations. To make a deduction, there must be a written agreement signed by both the employer and employee that the employee can revoke at any time with another written agreement. The employee must receive a copy of the agreement within ten days of any deductions made.

Additionally, deductions can’t bring an employee’s gross salary below the state minimum wage.

The following are allowable pay deductions under Indiana law:

• Deductions required by local, state, or federal law
  • This could include deductions for taxes, social security, FICA, Medicare, or any court-ordered deductions
• Premiums for an employer-sponsored insurance policy
• Premiums for a life insurance policy or annuity purchased by the employee
• Charitable contributions
• Purchase price of U.S.-issued bonds or securities
• Purchase price of shares (or fractional interests in shares) in one or more mutual funds
• Purchase price of company stock
• Labor union membership dues
• Purchase price of merchandise, food, or goods sold to the employee
• Payment of an employer loan made to the employee
• Employee contributions to a hospital service or medical expense plan
• Payment to any credit union, nonprofit organization or association of employees
• Payment to an employee’s direct deposit account
• An employee-owned court judgment if the creditor agrees. However, it can’t be a garnishment under Indiana Code 34-25-3.
• Job-specific uniforms or tools as long as the total amount doesn’t exceed the lesser of $2,500 per year or 5% of the employee's weekly disposable income
• Reimbursement for employee education or training, unless provided through a federal, state, or local economic development incentive program
• An advance on payroll or vacation pay
• Overpayment of wages

Pay statements and recordkeeping

Indiana law requires employers to provide each employee with pay statements each pay period indicating their total hours worked, wages, and all deductions. Employees who don’t receive their statements should contact the Indiana Department of Labor.

Employers must keep records with the following information on file for three years:

• Wages and payroll information
  • The employee's name, occupation, address, and sex
  • Date of birth
  • Time the workweek began
  • Hours worked each workday and workweek
  • Regular hourly rate of pay
  • Total daily or weekly wages
  • Total overtime pay per workweek
  • Any pay deductions
  • Total wages per pay period
  • Pay date and pay period
• Workers' Compensation
  • All workplace injuries
  • Reports made to IOSHA and OSHA if an employee goes to the hospital within 24 hours.
  • Employee exposure to potentially toxic material
• Child Labor
  • Work permits for minor employees under the age of 18
• Discrimination
  • Ages of all employees

Notices and posters

All Indiana employers must display the following posters and notices in their workplace:

• Indiana minimum wage law
• Equal employment opportunity
• Unemployment insurance
• Workers’ compensation
• Safety and health protection
• IOSHA
• Smoke-Free Air Law
  • All Indiana employers must post one or more of five types of signs
• Teen work hour restrictions poster
  • Only for employers with minor employees younger than 17

Final pay

When an employee separates from employment—regardless of how they left the company— they must receive their final paycheck within ten business days of the regularly scheduled pay date. If an employee leaves and the employer can’t locate them, they must pay the employee within ten days of them requesting their final paycheck or when the employer receives a current address to send payment.

Employees who don’t receive their final payment may file a wage claim with the Indiana Department of Labor or seek private legal counsel.

Frequently asked questions