Compliance Watch:

What are my rights as an hourly employee in Indiana?

Indiana, with its vibrant mix of industries, from manufacturing to services, offers a plethora of opportunities for those entering the job market. A significant portion of the workforce in the Hoosier State, including young professionals and seasoned workers, is comprised of hourly employees. But what does hourly employment truly entail in this Midwestern gem?

Hourly employment, in its simplest form, refers to a system where employees are compensated for each hour they work, as opposed to receiving a set salary. This form of payment ensures that workers are paid for the exact amount of time they put in. In Indiana, this approach is especially common in sectors like retail, hospitality, construction, and certain manufacturing jobs.

The allure of hourly employment for many lies in its directness. Work an hour and get paid for an hour. It provides a clear transaction between effort and compensation. This can be particularly appealing to those who value flexibility. Many hourly roles offer varying shifts, allowing employees to work during times that best suit their schedules or to take on multiple jobs.

However, with this flexibility can come unpredictability. Hours can fluctuate based on the needs of the employer, which might lead to periods of both feast and famine. It’s crucial for hourly workers to be aware of their rights. The state, in tandem with federal guidelines, has established regulations to ensure fair wages, overtime pay, and suitable working conditions for all.

Here’s a table outlining the key differences between hourly and salaried employees in Indiana based on the standards prevalent as of October 2023:

As of October 2023, Indiana does not have a specific state law that sets a maximum limit on the number of hours an adult can work in a week for private jobs. Instead, Indiana defers to the federal Fair Labor Standards Act (FLSA) for guidelines on work hours and overtime provisions.

Under the FLSA, there is no maximum limit to the number of hours an adult can work in a week for non-minor workers in the private sector, as long as they are compensated appropriately. If an employee works more than 40 hours in a workweek, they are typically entitled to overtime pay, which is at least one and a half times their regular rate, unless they are classified as exempt. This means while there’s no legal cap on the number of hours an adult can work in a week, employers can limit hours or ensure proper compensation for extended work hours.

However, certain industries or professions might have specific regulations or union agreements that can affect work hours. For instance, truck drivers, nurses, and other professionals might be subject to regulations that limit the number of consecutive hours they can work to ensure public safety and worker well-being. Additionally, minors (those under 18) do have restrictions on the number of hours they can work, both daily and weekly, especially during school weeks.

As of October 2023, hourly employees in Indiana are entitled to a minimum wage of $7.25 an hour. This rate mirrors the federal minimum wage, ensuring that workers in the state are paid at least the same base hourly rate as those in many other parts of the United States.

Indiana businesses/companies with two or more employees are mandated to comply with this wage requirement. This means that, regardless of the size of the company, as long as they employ two or more individuals, they are bound by law to offer this minimum compensation.

It’s noteworthy to mention that Indiana’s minimum wage has remained unchanged since 2008. In that year, the state increased the wage by $0.60, aligning it with the federal rate. This static state, spanning over a decade, indicates that the state has chosen to rely on federal guidance for its wage floor, rather than periodically adjusting it in response to local economic conditions.

Like many other states around the country, in Indiana, the guidelines for overtime hours and pay largely follow the federal FLSA. Overtime in Indiana, as with many other states, kicks in after an employee works more than 40 hours in a single workweek.

When an employee exceeds this 40-hour threshold in a workweek, they qualify for overtime pay. This means that for every hour worked beyond the standard 40 hours, they should be compensated at a rate of one and a half times their regular hourly wage. This elevated rate is commonly referred to as “time and a half.” For example, if an employee’s standard hourly wage is $10, their overtime rate would be $15 per hour for every hour worked beyond the 40 hours.

It’s crucial to understand that overtime calculations are based on a weekly, not daily, basis. This means that even if an employee works more than 8 hours in a single day, they are not automatically entitled to overtime pay unless their total hours for the week exceed 40.

However, there are exceptions to the overtime rule. Certain professions and job categories are exempt from the FLSA’s overtime provisions. Common exemptions include certain salaried professionals, administrators, and executives. It’s recommended for workers and employers to be familiar with these exemptions to ensure that they comply with the law.

In Indiana, labor laws regarding meal and rest breaks are relatively straightforward, but it’s important to understand the specifics to ensure employees are treated fairly.

For hourly employees in Indiana:

• Meal Breaks: Indiana labor laws do not specifically mandate employers to provide meal or lunch breaks to their employees. However, if employers choose to give a break, and that break is less than 20 minutes, the break must be compensated. If the break is 20 minutes or longer and the employee is completely relieved from duty, then it is not required to be paid.
• Rest Breaks: There is no specific state requirement in Indiana that mandates rest breaks. Yet, as per federal guidelines, short breaks ( lasting 5 to 20 minutes) are common in the workplace and are considered compensable working time. Therefore, they should be included in the sum of hours worked during the workweek and considered in determining if overtime was worked.
• Minors: The regulations are stricter when it comes to minors. Employees under the age of 18 are entitled to a rest or meal break of at least 30 minutes after six consecutive hours of work.

Even if the state does not mandate specific breaks, many employers opt to provide them as a part of company policy or to promote employee well-being. Furthermore, certain collective bargaining agreements or contractual obligations might stipulate additional break requirements.

Always keep in mind that while state laws might not mandate certain breaks, federal laws or industry-specific regulations might play a role. As such, both employers and employees should be familiar with state and federal regulations regarding breaks and work hours.

In Indiana, a blend of state and federal laws outlines the rights of hourly employees regarding time off and leaves. These regulations ensure that workers have access to essential breaks. Here’s a concise overview of the primary laws governing time off for hourly workers in the state.

• Family and Medical Leave Act (FMLA): Under the Family and Medical Leave Act, eligible employees can take up to 12 weeks of unpaid leave in a 12-month period for specific medical and family-related reasons. These reasons include personal or family illness, pregnancy, adoption, and the care of a newborn or newly adopted child. To be eligible, employees must have worked for their employer for at least 12 months and clocked in a minimum of 1,250 hours during that period. The employer must also have 50 or more employees for the law to apply. While the leave is unpaid, employees can generally return to their same or an equivalent job after the leave.
• Indiana Military Family Leave Act: Specific to Indiana, the Indiana Military Family Leave Act allows eligible employees to take up to 10 days of unpaid leave if they have a close family member (spouse, parent, grandparent, child, or sibling) who is called to active duty or is undergoing a military deployment. Employees must have worked for the employer for at least 12 months and at a worksite where the employer employs at least 50 employees to be eligible.
• Pregnancy Accommodation Law: Indiana has a pregnancy accommodation law that requires employers to provide reasonable accommodations to employees with pregnancy-related conditions, unless doing so would pose an undue hardship to the employer. This law is designed to ensure that pregnant employees or those affected by childbirth-related conditions are treated fairly and provided with necessary accommodations to allow them to continue working.
• Workers’ Compensation: If an employee in Indiana gets injured or falls ill due to work activities, they may be eligible for workers’ compensation. This system provides medical benefits and, in some cases, wage replacement for workers who suffer from job-related injuries or illnesses. While not a “leave” in the traditional sense, it is a form of time off governed by law.

It’s essential to note that while Indiana doesn’t have a state-specific paid family and medical leave law or paid sick leave law, many employers offer paid time off as part of their benefits packages. This can vary based on the employer, industry, and specific job role. Always consult company policy or an HR representative for details related to specific employment situations.

Central to understanding pay deductions for hourly employees in Indiana is the Indiana Wage Payment and Wage Claims Act. This vital act governs the manner, timing, and frequency of wage payments, along with clearly defining permissible and impermissible wage deductions

Permissible Deductions

• Taxes and Withholdings: As with all states, Indiana employers are required to withhold federal and state income taxes. This also includes Social Security and Medicare taxes.
• Court-ordered Deductions: These deductions might include responsibilities like child support, alimony payments, or wage garnishments arising from other outstanding debts. Employers are legally obligated to make these deductions if presented with a clear court order
• Union Dues: If an hourly employee in Indiana  is part of a recognized union and there’s a binding agreement in place, union dues can be deducted directly from their paycheck.
• Benefit Contributions: Deductions related to employee contributions for essential benefits such as health insurance, retirement plans, or life insurance are typically permissible in Indiana  if the employee has voluntarily enrolled or expressly consented to such benefits plans.
• Repayment of Loans or Advances: If an employee has taken a loan, the employer can deduct amounts to repay this, as long as there’s a written agreement between the two parties.

Impermissible Deductions

• Uniforms and Equipment: Employers generally cannot deduct costs for uniforms, tools, or other equipment that is necessary for the employee to perform their job unless there’s a written agreement and the deduction does not dip the employee’s wage below the minimum wage.
• Shortages or Damages: Deductions for cash register shortages, lost property, or damages typically cannot be taken from an employee’s paycheck unless the employee has willingly consented in writing with the employer after the shortage or damage has occurred.
• Training Costs: Employers cannot pass on the costs of training to employees.
• Miscellaneous Deductions: Any deduction that is not specifically sanctioned under Indiana state law  or is not a direct benefit to the hourly employee is generally impermissible.

It’s essential to note that even with permissible deductions, the amount deducted cannot result in the employee receiving less than the minimum wage for the hours they’ve worked. Furthermore, any concerns about wage deductions can be addressed to the Indiana Department of Labor. Both employers and employees should stay informed about their rights and responsibilities to ensure compliance with state laws and to foster fair employment practices.

In Indiana, hourly employees are entitled to various benefits to ensure that they are compensated fairly and are provided with a safe and equitable working environment.

• Minimum Wage: Hourly employees in Indiana are entitled to receive the federal minimum wage, which is set at $7.25 per hour. Some exceptions apply, such as for tipped employees, but the majority of workers should receive at least this amount for every hour worked.
• Overtime Pay: Indiana abides by the federal (FLSA) regarding overtime. This means that any hourly employee who works over 40 hours in a week is entitled to one and a half times their regular hourly rate for every additional hour worked.
• Breaks: While Indiana does not have a state-specific law mandating meal or rest breaks, if employers provide short breaks (less than 20 minutes), these should be paid. Breaks that are 20 minutes or longer can be unpaid as long as the employee is relieved of all duties.
• Wage Payment: The Indiana Wage Payment and Wage Claims Act diligently ensures that employees are paid at regular, predetermined intervals and also meticulously sets clear guidelines for both permissible and impermissible deductions from their wages.
• Child Labor: Indiana has specific, stringent regulations in place to protect minors in the workforce. These comprehensive laws not only limit the hours they can work but also restrict the types of jobs they can undertake, thereby ensuring the employees’ safety and overall well-being.

The state of Indiana has laid out various laws and regulations designed to protect hourly employees, ensuring they are treated fairly, ethically, and safely in the workplace.

• Wage Claims: The Indiana Wage Payment and Wage Claims Act, a piece of legislation, not only governs how wages are systematically paid but also provides a robust mechanism for employees to make claims if they earnestly believe they haven’t been compensated correctly
• Anti-Retaliation: Employees are protected from retaliation if they file a wage claim, report violations, or actively engage in activities that are protected under the law. This means employers cannot unjustly punish or terminate an employee for asserting their rights.
• Safety Regulations: The Indiana Occupational Safety and Health Act (IOSHA) firmly ensures that employers maintain a safe working environment. This includes adhering to industry-specific safety guidelines and providing necessary training to employees.
• Equal Employment Opportunity: Indiana law prohibits discrimination based on race, religion, color, sex, disability, national origin, or ancestry. This ensures that all hourly employees are given equal opportunities and are not subjected to discriminatory practices.
• Whistleblower Protection: Hourly employees in Indiana are staunchly protected if they report violations or illegal activities occurring within the company. Employers cannot retaliate or take adverse actions against an employee for being a principled whistleblower.

Indiana, like many states in the country, largely adheres to the employment-at-will doctrine. This foundational principle means that, barring a contract or other explicit agreement, either the employer or the employee can terminate the employment relationship at any time, for any reason, or for no reason at all, as long as the reason is not illegal. However, there are specific stringent protections in place to ensure that terminations are not discriminatory or retaliatory.

• Employment-at-Will Doctrine: The fundamental principle governing termination in Indiana is the widely accepted employment-at-will doctrine. In essence, unless there’s an employment contract or collective bargaining agreement that states otherwise, either party—employer or employee—can decisively end the employment relationship without notice.
• Discrimination Protections: Under both Indiana state law and overarching federal law, employers are strictly prohibited from terminating an employee based on protected characteristics. This includes race, religion, color, sex, disability, national origin, or ancestry.
• Retaliation Protections: Employers in Indiana are expressly not allowed to terminate an employee in retaliation for certain protected activities. For instance, if an employee diligently files a wage claim, reports workplace safety issues, or blows the whistle on illegal activities within the company, they are unequivocally protected from termination for those actions.
• Final Paycheck: After termination, the state of Indiana stringently mandates that the final paycheck, including any owed vacation or PTO (if the company’s policy expressly provides payment for unused time), be provided by the next regular payday. This can be either through the usual pay channels or dispatched by mail if specifically requested by the departing employee.
• Notice Requirements: Indiana does not have a law that mandates employers provide notice before termination (unless there’s an employment contract that stipulates otherwise). However, for mass layoffs or plant closings, employers might be subject to the federal Worker Adjustment and Retraining Notification (WARN) Act, which does have specific notice requirements.

While Indiana largely operates under the employment-at-will doctrine, there are clear boundaries and protections to ensure that hourly employees are not terminated for discriminatory or retaliatory reasons. As with all employment matters, both employers and employees should be aware of their rights and obligations to ensure a fair and just workplace.

Severance pay, often provided to hourly (and salaried) employees upon termination of employment, is not mandated by the majority of state laws, including those in Indiana. However, there are nuances and considerations employers and employees should be aware of.

• No Statutory Requirement: Indiana law does not expressly require employers to provide severance pay to hourly employees upon termination, whether it’s due to unexpected layoffs, resignations, or any other reason. In essence, the decision to provide severance is largely at the discretion of the employer, unless there is an existing contract or agreement in place.
• Employer Policies and Agreements: Even though there’s no legal mandate, many employers in Indiana still opt to offer severance pay to the hourly employees.  This can be due to company policy, precedent, or an effort to maintain positive employer-employee relations. If an employer has a written policy or has traditionally provided severance pay to terminated employees, they might be obligated to continue the practice to avoid potential legal complications. Additionally, collective bargaining agreements, which are often negotiated between unions and employers, may include clauses about severance pay. If an hourly employee is covered under such an agreement, the provisions regarding severance pay must be followed.
• Considerations for Employers: While severance pay can be an additional cost for employers, there are many benefits to offering it. For example, providing severance can boost company morale, as employees may feel more secure knowing they will receive some financial cushion if they are let go. It can also serve as a protective measure for employers. In some cases, severance packages are offered in exchange for a signed release or waiver, where the departing employee agrees not to sue the employer for wrongful termination or related claims.

While Indiana doesn’t legally mandate severance pay for hourly employees, the practice is shaped by company policies, historical precedent, and individual agreements. Both employers and employees are encouraged to familiarize themselves with any written agreements, company handbooks, or policies to understand their rights and obligations related to severance pay.