01State adopts federal rate; cities cannot override
Indiana's minimum wage is $7.25/hr — the federal floor — and has been unchanged since July 24, 2009. The Indiana Minimum Wage Law of 1965 (Ind. Code Title 22, Article 2, Chapter 2) covers employers with 2 or more employees who are not subject to federal FLSA. Because FLSA covers virtually all employers engaged in interstate commerce or with $500,000+ annual gross sales, most Indiana workers are governed by FLSA rather than state law.
Tipped workers earn $2.13/hr cash + up to $5.12 tip credit ($7.25 - $2.13), with total compensation including tips required to reach $7.25. Workers earning more than $30/month in tips qualify as tipped employees (federal threshold). Indiana follows federal tip credit framework with no state-specific 80/20 rule.
State preemption under Ind. Code § 22-2-2-10.5 (effective 2011) prohibits local governments from establishing higher minimum wage rates than state or federal. Limited exception: local governments retain authority to set wage rates in contracts to which they are a party, including prevailing wage requirements for government contractors. No Indiana cities have enacted local minimum wage ordinances since the preemption law took effect.
Federal $684/week ($35,568/year) exempt threshold applies. Indiana does not set a higher state-specific exempt threshold. The DOL's attempted 2024 increase to $1,128/week was vacated by the Eastern District of Texas in November 2024, leaving the federal $684 in place. Indiana tracks federal exempt classifications and duties tests under FLSA.
Youth wages: workers under 20 may be paid $4.25/hr for the first 90 consecutive days of employment (federal training wage). Full-time high school or college students may be paid 85% of state minimum wage ($6.16/hr) for up to 20 hours/week at certain employers (work-study programs, retail/service establishments) under Indiana DOL certification.
Read the full Indiana $7.25 federal floor + state preemption guide →
02Bad-faith wage withholding triggers 2× liquidated damages plus attorney fees
The Indiana Wage Payment Act (Ind. Code § 22-2-5) governs all wage payment obligations. Section 22-2-5-1 requires regular payment 'at least semimonthly or biweekly.' Section 22-2-5-2 establishes the remedies for failure to pay: 'Every such person, firm, corporation, limited liability company, or association who shall fail to make payment of wages to any such employee shall, as liquidated damages for such failure, pay to such employee for each day that the amount due to him or her remains unpaid ten percent (10%) of the amount due to him or her in addition thereto, not exceeding double the amount of wages due, and said damages may be recovered in any court having jurisdiction of a suit to recover the amount due to such employee.'
The 10%-per-day liquidated damages framework caps at 2× the unpaid amount (effectively trebling to 3× total when combined with the underlying wages). The cap is reached in 20 days of nonpayment. Beyond the cap, additional time does not increase liquidated damages but accumulates exposure for attorney fees and additional court costs.
Good faith defense: under § 22-2-5-2, the trebling applies when the employer's failure was 'not in good faith.' Honest disagreement about the amount owed, documented dispute resolution efforts, or reasonable employer mistake may support good-faith defense. Pattern violations, ignorance after notice, and systematic noncompliance defeat good-faith defense. The Indiana Supreme Court has applied the framework strictly, with workers regularly recovering full treble damages plus attorney fees.
Coverage extends to all wages: hourly pay, salary, commissions earned under commission agreements, nondiscretionary bonuses, accrued vacation under written policy, severance under contract. Earned wages cannot be forfeited at termination unless the employer has explicit written forfeiture authority and the worker's separation circumstances meet the criteria. The framework is similar to NC's NCWHA promised wages framework but with more aggressive damages.
Statute of limitations: 3 years for state wage claims under Ind. Code § 22-2-9. Federal FLSA: 2 years (3 years for willful). The state SOL provides longer reach-back than federal. Plaintiff attorneys typically pair WPA claims (state, 3-year SOL, treble damages) with FLSA claims (2-3 year SOL, double damages) to maximize recovery. Class action exposure when patterns affect multiple workers — Indiana courts have certified wage classes routinely.
Read the full Indiana indiana wage payment act + treble damages guide →
03Ind. Code § 22-2-2-4 weekly OT; SB 243 state tax deduction effective 2026
Indiana Code § 22-2-2-4 establishes the state overtime requirement: employers must pay nonexempt workers 1.5× regular rate for all hours worked over 40 in a workweek. Coverage under the Indiana Minimum Wage Law extends to 'every employer who employs two (2) or more employees during a workweek.' But the statute also excludes employers covered by the federal FLSA — meaning Indiana law primarily covers small or strictly local employers below FLSA's $500,000 gross sales threshold.
For FLSA-covered employers (the majority), federal law governs. Federal $684/week exempt threshold; standard FLSA exemptions (executive, administrative, professional, computer, outside sales, highly compensated employee); federal regular rate calculation under 29 CFR Part 778. Workers with state OT claims pursue them through US DOL Wage and Hour Division or private litigation in federal court applying federal standards.
Many Ind. Code § 22-2-2-3 exemptions parallel federal FLSA exemptions (executive, administrative, professional). Some are unique to Indiana: agricultural workers; certain newspaper carriers; certain seasonal amusement workers; outside salespersons; certain camp counselors. Most exemptions track federal definitions but must be analyzed independently when state law provides separate or additional carve-outs.
SB 243 — State OT Tax Deduction (effective 2026 tax year): Indiana Senate Bill 243 passed the Senate 47-1 and the House 77-19 in February 2026. The bill creates a state income tax deduction for the premium portion of overtime pay, aligning with the federal One Big Beautiful Bill Act framework under IRC § 225. Workers may deduct up to $12,500/year (single) or $25,000/year (joint) of overtime premiums from Indiana taxable income for tax years 2025-2028.
The deductible amount is the 'premium portion' — one-third of total OT pay (the 0.5× component of the 1.5× rate). For example, a worker earning $9,000 in total overtime at time-and-a-half deducts $3,000. The deduction does not affect employer wage payment obligations — it only affects worker income tax. Employers must still pay the full 1.5× regular rate; the deduction operates at the worker's individual tax filing.
Read the full Indiana state overtime + sb 243 tax deduction guide →
04Anti-discrimination protections for 6+ employee employers
The Indiana Civil Rights Law (Ind. Code § 22-9-1 et seq.) is the state's primary employment discrimination statute. Coverage extends to employers with 6 or more employees — broader than federal Title VII's 15-employee threshold for race/color/religion/sex/national origin discrimination. Workers at smaller Indiana employers (6-14 employees) have state-level protections that wouldn't apply under federal Title VII alone.
Protected categories under § 22-9-1-3: race, religion, color, sex, disability, national origin, ancestry, age (40+ under § 22-9-2), and military service or status. Notable absences: sexual orientation and gender identity are NOT explicitly protected categories at the state level. However, federal Bostock v. Clayton County (2020) extended Title VII's 'sex' protection to cover sexual orientation and gender identity, which applies in Indiana regardless of state statute.
Enforcement: Indiana Civil Rights Commission (ICRC) investigates complaints, issues findings, and may pursue mediation, conciliation, or administrative hearings. Workers may file with ICRC within 180 days of the alleged discriminatory act. Under work-share agreements, ICRC complaints often satisfy parallel EEOC filing requirements (federal Title VII).
Pregnancy accommodation: Indiana Code § 22-9-12 (effective 2025) requires employers with 15+ employees to provide reasonable accommodations for pregnancy, childbirth, and related medical conditions, similar to the federal Pregnant Workers Fairness Act (PWFA). Accommodations may include modified job duties, additional breaks, time off for medical appointments. Anti-retaliation provisions apply.
Indiana Equal Pay framework: Indiana does not have a state-specific Equal Pay Act. Equal pay claims are pursued under federal Equal Pay Act (29 USC § 206(d)) which is part of FLSA. The federal EPA prohibits sex-based pay disparities for equal work. Indiana also follows federal Lilly Ledbetter Fair Pay Act (2009) framework on accrual of pay discrimination claims.
05Up to 10 working days unpaid leave for service member family members
Indiana's Military Family Leave Act under Ind. Code § 22-2-13 (effective July 1, 2008) provides up to 10 working days of unpaid leave per calendar year for workers whose spouse, parent, grandparent, child, or sibling is a member of the armed forces and has received deployment orders. Coverage extends to employers with 50 or more employees in Indiana, similar to federal FMLA's coverage threshold.
Eligible workers: must have been employed by the employer for at least 12 months and worked at least 1,500 hours in the preceding 12 months. The eligibility threshold is similar but slightly higher than federal FMLA's 1,250-hour requirement.
Qualifying uses: covers leave during the period the family member is on covered active duty or has been notified of an impending call to active duty. Specific qualifying activities: (1) attending official military events; (2) attending farewell or arrival ceremonies; (3) attending counseling provided by Department of Defense; (4) addressing legal matters arising from deployment; (5) attending events sponsored by military service organizations.
Documentation: workers must provide notice and documentation of the family member's active-duty status. Active-duty orders, deployment notifications, or military service records satisfy the documentation requirement. Workers must provide at least 30 days' advance notice for foreseeable leave; less notice acceptable for unforeseeable circumstances.
Job protection: workers returning from MFLA leave are entitled to reinstatement to the same or equivalent position with same pay, benefits, and seniority. Anti-retaliation provisions apply. The framework runs parallel to federal FMLA — workers may use both federal FMLA (for service member injury care) and state MFLA (for deployment-related leave) sequentially or concurrently as circumstances require.
Read the full Indiana military family leave act (50+ employees) guide →
06Federal FMLA only; state preemption blocks city PSL ordinances
Indiana has no statewide paid sick leave law. Workers in IN generally rely on: (1) federal FMLA (12 weeks unpaid, job-protected at 50+ employee employers); (2) Indiana Military Family Leave Act (10 working days unpaid for 50+ employee employers, family of active-duty service members); (3) any voluntary employer-provided PSL or PTO; (4) narrow state-specific unpaid leaves (jury duty, voting).
State preemption under Ind. Code § 22-2-2-10.5 blocks local PSL ordinances. Indianapolis, Fort Wayne, Evansville, South Bend, Bloomington — none can enact paid sick leave laws even through municipal action. The preemption framework has been in effect since 2011 and was last challenged unsuccessfully in 2017.
Federal FMLA framework: covers IN employers with 50+ employees within 75 miles. Workers eligible after 12 months of employment and 1,250 hours worked in the preceding 12 months. Up to 12 weeks of unpaid, job-protected leave per 12-month period for: birth/bonding with new child; care for spouse, child, or parent with serious health condition; worker's own serious health condition; qualifying military exigency. Up to 26 weeks for caring for covered service member with serious injury or illness.
Indiana-specific unpaid leaves: Military Family Leave (Ind. Code § 22-2-13): 10 working days, family of active-duty service members, 50+ employee employers. Jury Duty (Ind. Code § 35-37-2): workers cannot be discharged or required to use PTO for jury service. Voting Leave: not specifically required by state statute but most employers provide reasonable time off. Witness Leave: workers subpoenaed to appear as witnesses cannot be retaliated against.
PFML legislation has been introduced in the IN General Assembly multiple times since 2020. Bills have not advanced beyond committee. Given current political alignment and state preemption framework, PFML enactment in IN is unlikely in the 2026-2027 timeframe. Operators should not anticipate state PFML in near-term planning. Voluntary employer-provided PFML through private insurance or self-funded programs remains the only structured paid leave option for IN employers.
07Prevailing wage requirements for state-funded construction
Indiana's Common Construction Wage Act (formerly Ind. Code § 5-16-7) was repealed effective July 1, 2015. Pre-repeal, the CCWA required state-funded public construction projects (state, county, municipal, school district) with a contract value over $350,000 to pay prevailing wages established by local committees of contractors and labor representatives.
Post-repeal effects: public construction projects funded solely by Indiana state, county, municipal, or school district sources are no longer subject to state-mandated prevailing wage requirements. Standard Indiana minimum wage ($7.25) applies, plus any specific contract terms requiring higher wages or benefits.
Federal Davis-Bacon Act (40 USC § 3141 et seq.) continues to apply on federal-funded construction projects in Indiana: federal highway construction; federal building projects; federal-assisted projects under Davis-Bacon Related Acts (water/sewer infrastructure with federal grant funding, transportation infrastructure, certain housing projects). Federal prevailing wage rates are determined by US DOL Wage and Hour Division and published in regional wage decisions.
Hybrid funding scenarios: projects with both federal and state funding components are typically subject to Davis-Bacon if any meaningful federal share applies (often 25%+ federal share triggers full Davis-Bacon coverage). Project labor agreements (PLAs) on hybrid-funded projects may impose prevailing wage requirements through contract terms regardless of statutory minimums.
Multi-state contractors operating in IN should: (1) track funding source per project (federal, federal-assisted, state-only, private); (2) configure wage rates per Davis-Bacon wage decision when applicable; (3) maintain certified payroll records under Davis-Bacon framework (WH-347 forms); (4) coordinate with subcontractors on prevailing wage compliance. The post-2015 simplification at the state level shifts complexity to federal compliance for projects with federal funding.
08Multi-factor common law test; IWPA anti-retaliation framework
Indiana applies a multi-factor common law test for IC classification, structurally similar to the IRS framework under Rev. Rul. 87-41. Factors evaluated: behavioral control (instructions on how work is performed, training provided); financial control (method of payment, who provides tools and equipment, opportunity for profit or loss, unreimbursed business expenses); relationship type (written contracts, employee benefits, permanence of relationship, regular business of the employer).
The multi-factor test is more permissive than ABC test states. Workers can be classified as IC in Indiana even when the work is part of the employer's regular business — provided control is properly limited and other factors support IC classification. Right of control is typically weighted heavily but not exclusively.
Misclassification consequences: unemployment insurance back-contributions plus penalties (Indiana Department of Workforce Development); workers' compensation premium back-payment plus exposure for any injuries during misclassified period (Indiana Workers' Compensation Board); federal IRS Form SS-8 reclassification with Section 3509 employment tax penalties; potential wage exposure under FLSA and Indiana Wage Payment Act if workers should have received minimum wage and OT.
Construction industry concentration: Indiana has been an active enforcement jurisdiction for construction misclassification, particularly in residential and commercial construction. The Indiana Joint Enforcement effort (DOL + DWD + WCB) targets 'sham' subcontractor patterns where general contractors push work through pass-through 'subcontractor' shells to avoid wage, UI, and WC obligations.
Anti-retaliation framework under IWPA: Ind. Code § 22-2-9 prohibits employer retaliation against workers for filing wage complaints with Indiana DOL or pursuing civil actions under WPA. Workers may pursue civil action for reinstatement, back wages, and other equitable relief. Combined with federal anti-retaliation provisions under FLSA, FMLA, OSHA, and Title VII, the framework provides substantial protection — but the state-level enforcement track is less aggressive than CA, NY, NJ, MA.
Read the full Indiana ic classification + anti-retaliation guide →