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 sets out employee categories excluded from the Indiana Minimum Wage Law—and thus not entitled to state minimum wage or overtime—for employers not covered by the federal Fair Labor Standards Act (FLSA). As of July 5, 2026, the current official version of § 22-2-2-3 lists the following exemption categories, verified directly from primary legislative authority:

Employee exemptions under Indiana Code § 22-2-2-3 (subsections (a) through (q), effective 2026)

• (a) Any individual employed in agriculture.
• (b) Any individual employed in a bona fide executive, administrative, or professional capacity (including teachers, academic administrative staff, and persons employed in the capacity of outside salesman) as defined and delimited in 29 C.F.R. Part 541 or any successor regulations.
• (c) Any individual engaged in the delivery of newspapers to the consumer.
• (d) Any individual employed as a seaman.
• (e) Any individual employed as an employee of a state or local government in firefighting or law enforcement activities (subject to certain specific regulatory criteria).
• (f) Any individual employed as an employee in a motion picture theater.
• (g) Any individual employed as an employee of a seasonal amusement or recreational establishment.
• (h) Any individual employed as an intern or resident physician by an accredited hospital (after completion of a course in an approved medical school).
• (i) Any student employed by an institution of higher education in which the student is enrolled.
• (j) Any individual employed in a program serving persons with physical or mental disabilities in nonprofit settings primarily for therapy, training, or rehabilitation.
• (k) Any individual employed solely as an insurance producer, solicitor, or outside salesperson on a commission-only basis.
• (l) Any individual providing services at charitable, religious, or educational nonprofit camps, recreation, or guidance facilities.
• (m) Any individual employed as a switchboard operator for telephone companies not subject to the federal Communications Act of 1934.
• (n) Any individual employed in an executive, administrative, or professional occupation with the authority to hire or discharge and earning at least $150 per week, as well as outside salespersons.
• (o) Any individual employed for four weeks or less in any four consecutive three-month periods.
• (p) Any employee subject to the jurisdiction of the Interstate Commerce Commission under the federal Motor Carrier Act or who is an employee of a carrier under Indiana Code § 8-2.1.
• (q) Any person performing direct sales as defined (at non-permanent retail locations and paid primarily by commission, with a written contract stating non-employee tax status).

Authority and relationship to the FLSA

Note that most Indiana employers are subject to the federal FLSA (see Indiana Code § 22-2-2-3(a)), which means these state exemptions only apply to the narrow set of employers not covered by federal wage-and-hour law.

Primary statutory authority

The above categories and their legal descriptions are drawn directly from the current statutory text as published by the Indiana General Assembly (see official URL below). For the most recent and full language of exemptions, practitioners are advised to consult the live version at the link provided, as occasional amendments or renumbering may occur.

Source: Ind. Code § 22-2-2-3