Hiring Employees in Indiana

Classifying Your Workers Correctly

Your company must correctly determine whether a worker in Indiana is an employee or an independent contractor using federal IRS common‑law control tests and applicable state guidance. You should assess behavioral control, financial control, and the overall nature of the relationship, including whether the work is integral to your core business.

Indiana generally follows federal rules for exempt vs nonexempt status under the Fair Labor Standards Act, so you need to apply salary level, salary basis, and duties tests before treating someone as overtime‑exempt. Misclassification can lead to back wages, unpaid overtime, tax liabilities, interest, and civil penalties, and you may also face claims for unpaid unemployment and workers’ compensation premiums.

If you are unsure, you should review federal guidance and resources such as https://www.playroll.com/blog/employee-misclassification-guide and consider obtaining legal or tax advice before finalizing classifications.

Verify Employee Work Eligibility

When you hire in Indiana, you must complete federal Form I‑9 for every employee within 3 business days of their start date to verify identity and work authorization. You must examine original acceptable documents from the employee – such as a U.S. passport, permanent resident card, or a combination of a driver’s license and Social Security card – and keep I‑9s for the longer of 3 years after hire or 1 year after termination.

Indiana does not require all private employers to use E‑Verify, but certain state and public contractors may be subject to E‑Verify obligations under their contracts. You should store I‑9 records separately from personnel files, maintain consistent procedures for all hires, and be careful to avoid document abuse or discrimination based on citizenship or national origin.

Create an Employee Onboarding Process

Your onboarding process in Indiana should include a written offer letter outlining pay rate, pay schedule, position, and at‑will status, followed by collecting federal Form W‑4 and Indiana Form WH‑4 for state income tax withholding. You should also gather direct deposit details if the employee opts in, provide your employee handbook, obtain signed acknowledgments of key policies, and issue any required safety or wage notices that apply to your industry.

To stay organized, you will want a repeatable checklist that covers eligibility verification, tax forms, benefits enrollment, and required training so every Indiana hire is treated consistently. As you scale, having clear onboarding workflows also helps you understand and control the full cost of hiring each employee, from wages to taxes and benefits.

Pay Frequency & Methods

Indiana law generally requires you to pay employees at least semimonthly or biweekly, with paydays scheduled no later than 10 business days after the end of the pay period. If you terminate an employee, you must issue their final paycheck on the next regular payday, and late or missed payments can trigger wage claims, penalties, and attorney’s fees.

Payment Methods (How You Can Pay)

You can choose from several payment methods in Indiana, but you must ensure employees receive their full wages on time and get an accurate wage statement each pay period.

• Payroll Check: You may pay by paper check as long as it is payable at full face value in U.S. dollars and employees can access funds without fees.
• Cash: You can pay wages in cash, but you must provide a written statement of hours, rates, and deductions each pay period to stay compliant.
• Direct Deposit (EFT): You may use direct deposit if you obtain the employee’s voluntary authorization and offer at least one alternative method for those who do not consent.
• Paycards: You can pay by payroll card if employees have fee‑free access to their full wages at least once per pay period and receive clear disclosures about any card fees.
• Outsourced Payroll: You may outsource payroll to a third‑party provider, but your company remains legally responsible for accurate wage payments, tax withholding, and timely filings.

When choosing methods, you should consider employee preferences, banking access, and recordkeeping needs so your Indiana payroll runs smoothly and remains fully auditable.

When you hire employees in Indiana, you must withhold and remit federal and state payroll taxes and pay certain employer contributions. You will need to register with the Indiana Department of Revenue and the Indiana Department of Workforce Development before running payroll.

Employer Tax Contributions

As an Indiana employer, you are responsible for paying federal Social Security and Medicare taxes, federal unemployment tax, and state unemployment insurance, along with any local obligations that may apply. You must obtain the appropriate state tax accounts, file returns on schedule, and keep detailed payroll records to support your filings.

Employee Payroll Tax Contributions

Your Indiana employees fund part of their own tax obligations through payroll withholding, which you must calculate and remit on their behalf. This includes federal income tax, FICA contributions, and Indiana state and local income taxes where applicable.

Minimum Wage in Indiana

Indiana’s minimum wage is currently aligned with the federal rate of $7.25 per hour for most nonexempt employees. You must also comply with federal and state rules on tipped employees, youth wages, and any applicable exemptions, and you should monitor for future legislative changes that could raise the state minimum.

Working Hours in Indiana

Indiana does not set a daily maximum for adult employees, but you must pay at least the minimum wage for all hours worked and follow federal rules on recordkeeping and compensable time. Special scheduling and hour restrictions apply to minors, so if you hire workers under 18 you need to comply with Indiana’s child labor laws on permitted hours and required breaks.

Overtime in Indiana

Indiana follows federal Fair Labor Standards Act rules, requiring you to pay at least 1.5 times the regular rate for all hours worked over 40 in a workweek by nonexempt employees. You should clearly define your workweek in writing, track all hours worked, and ensure that any bonuses or differentials that must be included in the regular rate are properly factored into overtime calculations.

Indiana does not mandate most private‑sector fringe benefits, but offering health insurance, retirement plans, and paid time off can make your company more competitive in attracting talent. If you average 50 or more full‑time employees nationwide, you must comply with the federal Affordable Care Act’s employer shared‑responsibility rules for health coverage.

Mandatory Leave Policies in Indiana

Paid Time Off in Indiana

Indiana does not require you to offer paid vacation or general PTO, but once you adopt a policy or include PTO in an employment contract, you must follow your written terms. You should clearly state how PTO accrues, whether there is a cap, and whether unused time is paid out at termination, as Indiana courts often look to your policy language to resolve disputes.

Many Indiana employers use PTO banks that combine vacation and sick time to simplify administration and improve flexibility for employees. Whatever structure you choose, make sure accruals and balances are accurately tracked in your payroll or HR system.

Maternity & Paternity Leave in Indiana

Indiana does not have a separate statewide paid parental leave program for private employers, so maternity and paternity leave are typically provided through federal FMLA and your own policies. If you have 50 or more employees and the employee is eligible, FMLA can provide up to 12 weeks of unpaid, job‑protected leave for birth, adoption, or foster placement.

You should also consider your obligations under federal pregnancy discrimination and disability laws, which may require reasonable accommodations for pregnancy‑related limitations. Many employers choose to offer some amount of paid parental leave or allow employees to use accrued PTO to remain partially or fully paid during bonding leave.

Sick Leave in Indiana

Indiana does not mandate paid sick leave for private‑sector employees, but you may voluntarily provide paid or unpaid sick time through your policies. If you do, you should define eligible uses – such as the employee’s own illness, family care, or medical appointments – and specify any documentation requirements.

Even without a state paid sick leave law, you must comply with federal FMLA, disability laws, and any applicable company‑specific commitments. Clear communication about how sick leave interacts with PTO, short‑term disability, and remote‑work options will help employees understand their choices when they are ill.

Military Leave in Indiana

Your company must comply with the federal Uniformed Services Employment and Reemployment Rights Act (USERRA), which protects Indiana employees who perform covered military service. This includes granting unpaid leave for service, preserving benefits as required, and reinstating employees to their jobs or comparable positions upon timely return.

Indiana law also provides additional protections for members of the Indiana National Guard and certain state military forces. You should train managers not to retaliate against employees for military obligations and document your procedures for handling orders, leave, and reemployment.

Jury Duty in Indiana

In Indiana, you must allow employees time off to serve on a jury and may not discipline or terminate them for fulfilling this civic duty. State law does not require you to pay employees for time spent on jury service, but many employers choose to provide some paid time or allow use of PTO to support employees.

You can request proof of jury service, such as a summons or attendance slip, and you should update schedules in advance when possible to minimize disruption. Your policy should explain whether pay is provided and how employees should report jury duty to their supervisors.

Voting Leave in Indiana

Indiana law does not generally require private employers to provide paid or unpaid time off to vote, but you should avoid scheduling practices that effectively prevent employees from accessing the polls. Encouraging early voting or flexible scheduling on election days can help your workforce participate in elections without disrupting operations.

Because some contracts or internal policies may promise voting leave, you should review your handbook and any collective bargaining agreements to ensure you meet your own commitments. Clear communication before major elections can reduce confusion and last‑minute scheduling issues.

Bereavement Leave in Indiana

Indiana does not mandate bereavement leave for private‑sector employees, so any entitlement to time off after a death in the family will come from your company policy or employment agreements. Many employers offer between 1 and 5 days of paid or unpaid leave depending on the relationship to the deceased.

To avoid inconsistent treatment, you should define eligibility, duration, and documentation requirements in writing and train managers on how to apply the policy. Providing compassionate flexibility during bereavement can support employee well‑being and loyalty, even when not legally required.

Termination Process

Indiana is an at‑will employment state, meaning you can generally terminate employment at any time for any lawful reason, provided you do not violate anti‑discrimination, retaliation, or contract laws. You should document performance or misconduct issues, conduct a final meeting, and collect company property while ensuring final wages and benefits are handled correctly.

Notice Period

Indiana law does not require you to give advance notice of termination to individual employees, unless a contract or collective bargaining agreement provides otherwise. However, federal WARN Act rules may require 60 days’ notice for certain large layoffs or plant closings if you meet the employee‑count and impact thresholds.

Severance

Severance pay is not required under Indiana law, but you may choose to offer it in exchange for a release of claims or as part of a standard separation package. If you adopt a severance policy or include severance terms in contracts, you must follow those terms consistently and ensure any release agreements comply with federal and state requirements.