Indiana — Wage & Hour

Indiana's minimum wage is $7.25 per hour, effective July 24, 2009. Indiana Code § 22-2-2-4 ties the state minimum wage to the federal rate established under the Fair Labor Standards Act. Most Indiana employers and employees are covered by the federal FLSA; the Indiana Minimum Wage Law applies to those not covered under federal law.

Source: Indiana Minimum Wage Law, Indiana Department of Labor

Indiana requires employers to pay overtime at 1.5 times the regular rate for all hours worked over 40 in a workweek. Indiana Code § 22-2-2-4(f), part of the Indiana Minimum Wage Law, mirrors the federal FLSA standard. There is no daily overtime trigger under Indiana law — overtime is calculated solely on a weekly basis. The Indiana statute primarily covers employers not subject to federal overtime rules, though most Indiana employers fall under the FLSA due to its broad interstate-commerce coverage.

Source: Ind. Code § 22-2-2-4

Indiana requires employers to pay final wages to separated employees—whether terminated or resigned—on or before the next regularly scheduled payday the employee would have received had the employee remained employed. Indiana Code § 22-2-9-2 establishes this uniform timing rule; the statute draws no distinction between involuntary discharge and voluntary resignation. An employer who normally pays biweekly on Fridays, for example, must deliver the final paycheck on the next Friday following separation, not sooner and not later.

The next-scheduled-payday standard applies regardless of the reason for separation. If an employer terminates an employee for cause on a Monday and the regular payday for that employee is the following Friday, the final wages are due Friday. If an employee resigns without notice on a Tuesday, the same Friday deadline controls. Indiana law imposes no immediate-payment obligation for terminations, unlike certain other states that require same-day or next-business-day payment when an employer discharges an employee.

What must be included in the final paycheck

The final paycheck must include all earned wages through the last day worked. Under Indiana Code § 22-2-9-2, "wages" means compensation owed to an employee under the terms of employment, and the final-pay obligation extends to any accrued vacation or paid-time-off balance if the employer's policy or contract obligates payout. Indiana law does not mandate vacation or PTO accrual, and employers may lawfully adopt "use it or lose it" forfeiture policies, but once an employer has promised payout—whether in a written handbook, employment contract, or established past practice—that promise is enforceable as wages under the Indiana Wage Payment Statute. By contrast, earned but unused sick leave, severance pay, and discretionary bonuses fall outside the statutory definition of "wages" unless a contract or policy explicitly makes them due on separation.

Remedies for late or withheld final wages

An employer who fails to pay final wages by the next scheduled payday may face both statutory penalties and common-law damages. Indiana Code § 22-2-5-2, effective July 1, 2015, authorizes a court to award the unpaid wages, the employee's reasonable attorney fees, and court costs. If the court finds that the employer's failure to pay was not in good faith—for example, the employer had no colorable dispute over the amount owed—the court must award liquidated damages equal to two times the unpaid amount, in addition to the actual wages due. Employees who were involuntarily separated (laid off or fired) must file a wage claim with the Indiana Department of Labor before filing a civil lawsuit; employees who resigned voluntarily may choose either administrative filing or direct civil action.

No immediate-payment requirement; no extended grace period

Indiana's next-regular-payday rule occupies the middle ground among state final-paycheck laws. Some states require immediate or same-day payment when an employer discharges an employee; Indiana does not. Other states permit a lag of several weeks; Indiana does not. The controlling date is mechanical: the payday that would have applied under the employer's normal payroll cycle. An employer may choose to accelerate final payment—issuing the check on the separation date or mailing it the next business day—but the statute sets the outside deadline at the next scheduled payday, and any delay beyond that point exposes the employer to the penalties and fee-shifting provisions of Indiana Code § 22-2-5-2.

Source: Indiana Department of Labor — Wage & Hour FAQs

Indiana permits employers to pay tipped employees a reduced cash wage of $2.13 per hour and claim a tip credit of up to $5.12 per hour against the state minimum wage obligation, provided the employee's combined cash wage plus tips equals at least $7.25 per hour. Indiana Code § 22-2-2-4(d), enacted as part of the state Minimum Wage Law, authorizes this tip credit for employers subject to the statute—those employing at least two employees in a workweek who are not already covered by the federal Fair Labor Standards Act. The $2.13 cash-wage floor and $5.12 tip-credit ceiling are identical to the federal amounts under 29 U.S.C. § 203(m), and the Indiana statute expressly ties the tipped wage structure to the FLSA's framework by permitting the cash wage to be "not less than the cash wage required to be paid to employees covered under the federal Fair Labor Standards Act."

Most Indiana employers and employees fall under the FLSA due to its broad enterprise and individual employee coverage based on interstate commerce, annual gross sales of $500,000 or more, or engagement in interstate commerce. For those employers, the federal FLSA requirements control. The Indiana statute primarily serves as a backstop for the smaller subset of employers not subject to the FLSA—typically very small, purely intrastate operations—ensuring they too must pay at least the federal-equivalent wage structure if they employ tipped workers.

Tip credit mechanics under Indiana Code § 22-2-2-4(d)

The wage an employer must pay a tipped employee under subsection (d) equals (1) the cash wage paid the employee, which may be as low as $2.13 per hour, plus (2) an additional amount on account of the tips received by the employee equal to the difference between the cash wage and the full minimum wage in effect under subsection (c)—currently $7.25 per hour. The employer is "responsible for supporting the amount of tip credit taken through reported tips by the employees." If an employee's reported tips in a workweek do not bring the employee's total compensation to $7.25 per hour for all hours worked, the employer must pay the difference. Indiana Department of Labor guidance, updated April 7, 2026, states: "Generally, employers must pay tipped employees at least $2.13 per hour if the employer claims a tip credit. If the employee's tips combined with the hourly wage do not equal the minimum wage, the employer must make up the difference."

The statute and Indiana DOL guidance do not specify the period over which the make-whole calculation is performed, whether notice to the employee is required before claiming the tip credit, or what records the employer must maintain beyond the general wage-statement requirement in Indiana Code § 22-2-2-4(i). Employers covered by the FLSA—again, the majority of Indiana employers—must comply with the more detailed federal requirements in 29 U.S.C. § 203(m) and 29 C.F.R. § 531.59, including advance written or oral notice to the employee of the tip-credit provisions, weekly calculation of the make-whole obligation, and retention of records showing tips reported by each employee. An employer subject only to Indiana law and not the FLSA would follow the plain language of Indiana Code § 22-2-2-4(d), which imposes the make-whole duty and the employer's responsibility to substantiate the credit through employee-reported tips but is silent on notice timing and recordkeeping format beyond the general paystub mandate.

Tip pooling, tip retention, and employer participation

Indiana Code § 22-2-2-4(d) does not address whether an employer may require employees to participate in a tip pool, which employees may share in pooled tips, or whether managers or the employer may take a share. The Indiana statute is silent on these operational questions. For employers covered by the FLSA, federal law at 29 C.F.R. § 531.52 and § 531.54 prohibits the employer from keeping any portion of employees' tips "for any purposes, including allowing managers or supervisors to keep any portion of employees' tips, regardless of whether or not the employer takes a tip credit." Employers claiming a tip credit under the FLSA may permit tip pooling only among employees who customarily and regularly receive tips (servers, bartenders, bussers); employers paying the full minimum wage directly may permit broader pools including back-of-house workers, but still cannot share in the pool themselves. Indiana has not enacted parallel state-law restrictions, so an employer subject only to Indiana Code § 22-2-2-4 and not the FLSA operates in a zone where the state statute requires the tip credit not exceed the statutory formula but does not expressly regulate tip retention or pooling arrangements.

Federal overlay for most Indiana employers

Because the FLSA's coverage is so broad—reaching any employee engaged in interstate commerce, producing goods for interstate commerce, or working for an enterprise with annual gross sales of $500,000—the practical compliance floor for the vast majority of Indiana tipped employees is set by federal law, not Indiana Code § 22-2-2-4. The Indiana statute functions as a guarantee that even the narrow slice of employers outside FLSA coverage must pay the same $2.13 / $7.25 structure, with the tip-credit mechanics and make-whole duty, but leaves ancillary questions (notice, tip pooling, dual-job limitations, manager participation) to the employer's discretion or common-law duties unless federal law applies. An Indiana employer with interstate commerce exposure—which includes nearly all restaurants, hotels, and service businesses due to the use of out-of-state suppliers, credit card processing, or customer travel—should assume FLSA compliance obligations govern and consult federal DOL Wage and Hour Division guidance alongside the Indiana statute.

Source: Ind. Code § 22-2-2-4 Source: Indiana Minimum Wage Law, Indiana Department of Labor (updated April 7, 2026)

Indiana requires employers to pay employees at least semimonthly or biweekly, if the employee requests biweekly payment. Indiana Code § 22-2-5-1(a) imposes this minimum frequency on every person, firm, corporation, limited liability company, or association doing business in Indiana, along with their trustees, lessees, or receivers appointed by any court. The statute gives the employee a unilateral right to demand biweekly payment; if the employee makes that request, the employer must comply. If the employee does not request biweekly, the employer may pay semimonthly (twice monthly) or at any shorter interval. Employers may choose to pay weekly or even more frequently, because subsection (a) sets only the minimum permissible frequency—longer intervals (monthly or longer) violate the statute.

"Semimonthly" versus "biweekly"

Semimonthly means twice per calendar month, typically on the 15th and last day of the month or on two other fixed dates each month (for example, the 1st and 16th). Biweekly means every two weeks, producing 26 pay periods per year rather than the 24 that semimonthly generates. The statutory text does not define either term, but industry practice and payroll convention treat semimonthly as tied to the calendar month and biweekly as a rolling 14-day cycle. An employer on a semimonthly schedule may see pay periods of 15 or 16 days in a month; a biweekly employer always works on 14-day periods but the payday floats across the calendar.

Maximum 10-business-day lag between period end and payday

Indiana Code § 22-2-5-1(b), enacted by P.L. 51-2007 and effective July 1, 2007, limits the permissible lag between the end of the pay period and the date wages are actually paid. The statute provides: "Payment shall be made for all wages earned to a date not more than ten (10) business days prior to the date of payment." As used in this chapter, "business day" is defined in Indiana Code § 22-2-5-0.5 as a day other than Saturday, Sunday, or a legal holiday (as defined in Indiana Code § 1-1-9-1).

This 10-business-day rule operates as a ceiling on the payroll-processing lag, not as a requirement that every paycheck cover work performed exactly 10 business days earlier. An employer who pays biweekly on Fridays, for instance, may close the pay period on the prior Sunday (14 calendar days earlier, roughly 10 business days) and issue the check the following Friday. The statute allows the pay period to end up to 10 business days before payday; shorter lags are always permissible. If an employer pays weekly on Fridays for the workweek ending the prior Saturday, the lag is 6 calendar days, well within the 10-business-day limit, and the statute is satisfied. Conversely, an employer who pays monthly on the first of the month for work performed in the prior month would violate subsection (b) if the pay period closed more than 10 business days before the payday. For example, a pay period ending January 31 and paid on February 15 would exceed the 10-business-day limit (11 business days elapsed, excluding weekends and holidays) and violate the statute.

The 2007 amendment clarified that the "ten (10) days" referenced in the statute before amendment meant business days, not calendar days. The General Assembly added Indiana Code § 22-2-5-0.3, effective July 1, 2007, which states: "Having received and considered testimony concerning the customary and usual wage payment practices of employers, it is the intent of the general assembly that the ten (10) day period referenced in section 1 of this chapter, before its amendment by P.L.51-2007, be construed as ten (10) business days." That clarifying section expired on July 1, 2017, after establishing the interpretive rule.

Exemption for certain salaried non-exempt employees

Indiana Code § 22-2-5-1.1, added by P.L. 143-1988, provides: "Salaried employees who are eligible for overtime compensation under the Fair Labor Standards Act (29 U.S.C. 201 et seq.) are specifically exempted from section 1 of this chapter." This narrow exemption applies only to employees who are (1) paid on a salary basis and (2) eligible for FLSA overtime—in other words, salaried non-exempt employees under federal law. These employees are not covered by Indiana's semimonthly-or-biweekly requirement or the 10-business-day lag limit. The exemption does not apply to hourly non-exempt employees, nor does it apply to employees who are exempt from FLSA overtime under the white-collar exemptions in 29 C.F.R. Part 541 (executive, administrative, professional, outside sales, or computer employee exemptions). The practical effect is small: the exemption covers employees paid a fixed salary who nonetheless must receive overtime under the FLSA because they do not meet the duties test for exemption—a relatively uncommon category, though it can include certain lower-level salaried managers or administrative staff who spend more than 50% of their time on non-exempt tasks.

Permissible forms of payment

Indiana Code § 22-2-5-1(a) requires that payment "shall be made in lawful money of the United States, by negotiable check, draft, or money order, or by electronic transfer to the financial institution designated by the employee." Cash, check, money order, or direct deposit to an account chosen by the employee are all permissible. The statute gives the employee the right to designate the financial institution for electronic transfer; an employer may not mandate direct deposit to a particular bank unless the employee agrees. Any employment contract that violates this subsection is void.

No reduction in frequency once established

Indiana Code § 22-2-5-1(b) provides that the statute "does not prevent payments being made at shorter intervals than specified in this subsection, nor repeal any law providing for payments at shorter intervals." This savings clause confirms that employers may pay more often than semimonthly (for example, weekly), and that other statutes or contracts requiring more frequent payment remain enforceable. The statute does not expressly prohibit an employer from reducing pay frequency from weekly to biweekly (or biweekly to semimonthly), so long as the new frequency remains at least semimonthly or biweekly if the employee requests biweekly. As a practical matter, however, reducing frequency after the employee has relied on a more frequent schedule may create contract or promissory-estoppel exposure under Indiana common law, particularly if the employee can show detrimental reliance. The safer practice is to establish frequency at hire and maintain it consistently, reserving changes for new employees or prospective-only policy amendments with notice.

Remedies for failure to comply with pay-frequency rule

An employer who fails to pay wages as provided in Indiana Code § 22-2-5-1 is subject to the remedies in Indiana Code § 22-2-5-2. The employee may recover unpaid wages in any court of competent jurisdiction. The court must award the employee's reasonable attorney fees and court costs. If the court determines that the employer's failure to pay was not in good faith, the court must also award liquidated damages equal to two times the unpaid wages. The statute was amended effective July 1, 2015 (P.L. 193-2015) to replace the old per-diem penalty formula (10% per day, capped at double the wages) with the current good-faith-dependent liquidated-damages scheme. An employer who pays late (for instance, paying monthly rather than semimonthly, or allowing an 11-business-day lag when the statute caps it at 10) has failed to pay "as provided in section 1" and is liable for the unpaid amounts during the non-compliant period, plus fees and potentially double damages.

Intersection with final-paycheck rule

Indiana Code § 22-2-5-1 governs only the timing of regular wage payments during ongoing employment. It does not address final paychecks upon separation. Final-paycheck timing is controlled by Indiana Code § 22-2-9-2, which provides that final wages are due on the next regularly scheduled payday that would have applied had the employee remained employed. The two statutes operate independently: an employer must pay regular wages at least semimonthly (or biweekly if requested) with a maximum 10-business-day lag during employment, and must pay final wages on the next scheduled payday after separation.

Source: Ind. Code § 22-2-5-1 Source: Ind. Code § 22-2-5-0.5 (business day definition) Source: Ind. Code § 22-2-5-1.1 (salaried non-exempt exemption) Source: Ind. Code § 22-2-5-2 (remedies)

Indiana Code § 22-2-2-3 defines which categories of workers are excluded from the statutory definition of "employee" and are therefore exempt from Indiana's minimum wage and overtime requirements. Because most Indiana employers are covered by the federal Fair Labor Standards Act, the Indiana Minimum Wage Law functions primarily as a backstop for smaller, purely intrastate employers not subject to federal law. The Indiana Department of Labor's April 2026 guidance confirms that "there are many exceptions to the overtime pay requirement" and that "most of those exceptions can be found at Indiana Code § 22-2-2-3 (a) – (p)."

Threshold employer exemption: FLSA-covered employers excluded from Indiana law

Indiana Code § 22-2-2-3 defines "employer" to mean any individual, partnership, association, limited liability company, corporation, business trust, the state, or other governmental agency or political subdivision during any workweek in which they have two or more employees. However, the statute explicitly excludes from this definition "any employer who is subject to the minimum wage provisions of the federal Fair Labor Standards Act of 1938, as amended (29 U.S.C. 201-219)." Because the FLSA has broad enterprise coverage (employers with $500,000 or more in annual gross sales) and broad individual coverage (employees engaged in interstate commerce or producing goods for interstate commerce), the vast majority of Indiana employers are subject to the FLSA and therefore not covered by the Indiana Minimum Wage Law at all. The Indiana statute primarily applies to very small, purely local businesses without interstate commerce connections.

Employee-definition exemptions

Indiana Code § 22-2-2-3 provides that the term "employee" does not include certain enumerated categories of workers. The statute lists these exclusions in subsections labeled (a) through (q). The Indiana Department of Labor confirms that most exemptions from the overtime pay requirement can be found in subsections (a) through (p) of this section. However, the complete enumeration of all subsection categories and their specific conditions is not confirmed from primary authority as of 2026-06-01.

The following categories are confirmed as exempt from the employee definition under Indiana Code § 22-2-2-3:

• Independent contractors (subsection (b)): Persons engaged in an independently established trade, occupation, profession, or business who, in performing the services in question, are free from control or direction both under a contract of service and in fact.

• Medical interns and resident physicians (subsection (h)): Persons who have completed a four-year course in a medical school approved by law when employed as interns or resident physicians by any accredited hospital.

• Students (subsection (i)): Students performing services for any school, college, or university in which they are enrolled and are regularly attending classes.

• Persons with disabilities in therapeutic or rehabilitative employment (subsection (j)): Persons with physical or mental disabilities performing services for nonprofit organizations organized primarily for the purpose of providing employment for persons with disabilities or for assisting in their therapy and rehabilitation.

• Commission-only insurance and outside sales workers (subsection (k)): Persons employed as insurance producers, insurance solicitors, and outside salesmen, if all their services are performed for remuneration solely by commission.

• Nonprofit camp and recreational facility workers (subsection (l)): Persons performing services for any camping, recreational, or guidance facilities operated by a charitable, religious, or educational nonprofit organization.

• Executive, administrative, and professional employees (subsection (n)): Those persons employed in executive, administrative, or professional occupations who have the authority to employ or discharge and who earn one hundred fifty dollars ($150) or more a week, and outside salesmen.

• Short-term workers (subsection (o)): Any person not employed for more than four weeks in any four consecutive three-month periods.

• Motor carrier employees (subsection (p)): Any employee with respect to whom the Interstate Commerce Commission has power to establish qualifications and maximum hours of service under the federal Motor Carrier Act of 1935 (49 U.S.C. § 304(3)) or any employee of a carrier subject to Indiana Code § 8-2.1.

• Direct sellers (subsection (q)): A person engaged in services as a direct seller, when (1) the person is in the trade or business of selling, or soliciting the sale of, consumer products or services to any buyer on a buy-sell basis, deposit-commission basis, or similar basis, in any place other than in a permanent retail establishment, or selling in any place other than a permanent retail establishment when substantially all remuneration is directly related to sales or other output rather than hours worked; and (2) the services are performed pursuant to a written contract providing that the person will not be treated as an employee for tax purposes.

Additional exemption categories may be enumerated in subsections (a), (c), (d), (e), (f), (g), and (m), but the specific text of those subsections is not confirmed from primary authority as of 2026-06-01.

Overlap with federal FLSA exemptions

Because Indiana's employer definition excludes FLSA-covered employers, an employer subject to the federal FLSA need not analyze Indiana's exemptions—the federal exemptions control. For employers covered by the FLSA, the white-collar exemptions in 29 C.F.R. Part 541 (executive, administrative, professional, outside sales, computer employee) and other FLSA exemptions govern. Indiana's exemptions operate only for the narrow subset of employers who have two or more employees in a workweek, are not subject to the FLSA, and employ workers in one of the enumerated exempt categories in § 22-2-2-3.

Additional overtime-specific exemptions in Indiana Code § 22-2-2-4

Beyond the employee-definition exemptions in § 22-2-2-3, Indiana Code § 22-2-2-4 contains additional exemptions from the overtime requirement (subsection (k), which mandates 1.5× pay for hours over 40 per workweek). Subsection (v) exempts employees of motion picture theaters from the overtime requirement. Subsection (w) exempts employees of a seasonal amusement or recreational establishment, an organized camp, or a religious or nonprofit educational conference center that is exempt under the federal Fair Labor Standards Act. Subsection (u) permits an employer to employ an employee for up to 10 hours in the aggregate per workweek beyond the 40-hour threshold without paying overtime if the employee is receiving qualifying remedial education (provided to employees who lack a high school diploma or educational attainment at the eighth grade level, designed to provide reading and other basic skills at an eighth grade level or below, and not including job-specific training).

Source: Ind. Code § 22-2-2-3 Source: Ind. Code § 22-2-2-4 Source: Indiana Minimum Wage Law, Indiana Department of Labor (updated April 7, 2026)