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How to Hire Employees In Indiana

Hiring in Indiana for the first time can be challenging, especially with the state's complex employment laws. Whether you're hiring independent contractors, setting up a legal entity, partnering with a PEO, or using an Employer of Record (EOR), it's essential to understand the local employment landscape. Playroll's comprehensive guide is here to help, whether you're onboarding local talent or relocating team members.

Here are four primary ways companies can hire employees in Indiana:

Establishing a local entity: Creating a legal entity in Indiana allows for direct hiring, but it can be costly and time-consuming. However, it gives you full control over employment and reduces risk exposure.
Partnering with an Employer of Record (EOR): An EOR, like Playroll, takes on the legal responsibilities of employment, acting as the employer on your behalf. This option streamlines hiring, payroll, and compliance with Indiana’s labor laws, helping you hire in Indiana without navigating the complex legal landscape yourself.
Working with a Professional Employer Organization (PEO): A PEO, such as Playroll, co-employs your team, managing essential HR functions like payroll, benefits, and compliance. Partnering with a PEO ensures you meet Indiana’s labor regulations while offering competitive employee benefits.
Hiring independent contractors: Hiring independent contractors can be more cost-effective, but Indiana has strict contractor classification rules. Proper classification is essential to avoid penalties for misclassification when hiring in Indiana.

Complying with Indiana specific employment regulations and federal laws is critical to avoiding legal risks and costly fines. Our guide focuses on hiring in Indiana, employment compliance, and how Playroll’s services can support your business as you navigate the complexities of hiring in the state.

Good To Know

Indiana has a diverse population, with a significant portion residing in urban areas like Indianapolis.

The state's economy is bolstered by manufacturing, agriculture, and healthcare industries.

Indiana is a right-to-work state, meaning employees are not required to join a union or pay union dues as a condition of employment.

Indiana follows the at-will employment doctrine, allowing either the employer or employee to terminate employment at any time without cause, barring any contractual agreements.

Key Things to Know About Hiring in Indiana

Labor Laws in Indiana

Working Hours in Indiana

Indiana has specific employment and labor laws governing working hours, designed to protect employees’ rights and ensure fair compensation. Whether you’re hiring local employees or working with an Employer of Record (EOR), it's essential to understand the state's regulations around working hours to ensure compliance.

Standard Workweek and Overtime

Standard Work Hours: The standard workweek in Indiana is 40 hours.
Overtime Regulations: Employees are entitled to overtime pay at 1.5 times their regular rate for hours worked beyond 40 in a workweek.
Certain employees, such as executives, professionals, and administrative workers, may be exempt from overtime provisions.

2. Meal and Rest Breaks

Adult Employees: Indiana law does not require employers to provide meal or rest breaks for employees aged 18 or older. If breaks are provided and last less than 20 minutes, they must be paid.
Minor Employees: Employees under 18 must receive one or two rest breaks totaling at least 30 minutes if scheduled to work six or more consecutive hours.

Minimum Wage in Indiana

As of 2024, the minimum wage in Indiana is $7.25 per hour, aligning with the federal minimum wage.

Tipped Employees: Must be paid a base wage of $2.13 per hour. If their total earnings (base wage plus tips) do not equal the standard minimum wage, employers are required to make up the difference.

Overtime in Indiana

Indiana mandates that non-exempt employees receive overtime pay at 1.5 times their regular hourly rate for hours worked over 40 in a workweek. Exemptions include certain salaried employees in executive, administrative, or professional roles, as defined by the Fair Labor Standards Act (FLSA).

Onboarding New Hires in Indiana

We can help you get your new employee started in Indiana fast, with a minimum onboarding time from just 1-2 working days. Note that the timeline is dependent upon registration with the local authorities, and begins after the employee has submitted all the required information on the Playroll platform.

For non-citizens of the US, a work eligibility assessment may be required, and can add three extra days to the onboarding time. If a follow-up is needed, there may be additional delays.

Please note that payroll cut-off dates can impact the actual first day of employment. Playroll’s payroll cut-off date is the 10th of the month, unless otherwise specified.

Payroll Taxes For Indiana

Payroll taxes in Indiana are deductions employers must take from employees’ wages and remit to the state. These taxes fund various state programs and services, including unemployment benefits and disability insurance. Examples of payroll taxes include:

State Income Tax: Indiana imposes a flat state income tax rate of 3.23% on employees' wages.
County Income Tax: Counties may impose their own income taxes, which vary by county.

Payroll Cycle in Indiana

Indiana law requires employers to pay employees at least semi-monthly or bi-weekly. The specific payday must be established and communicated to employees in advance. Certain industries may have specific regulations, so it's essential to consult state guidelines relevant to your sector.

Looking to grow your team in Indiana?

Stay Compliant: Navigate Indiana’s complex labor laws with ease.

Affordable Solution: Reduce costs with a budget-friendly EOR option.

Top-Tier Benefits: Access competitive Indiana and federal employee benefits for a stronger team.

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Indiana Employment Taxes

Employment taxes and statutory fees affect both your payroll and your employees’ paychecks in Indiana. Understanding the tax obligations for both employers and employees is crucial when operating in Indiana's business landscape.

Employer Tax Contributions

Employers in Indiana are responsible for several employment taxes, including unemployment insurance and workers' compensation.

Employer payroll contributions are generally estimated at an additional 7.65% on top of the employee salary in Indiana.

Employment Tax Type	Tax Rate
Unemployment Insurance	Varies
Workers' Compensation	Varies

Employee Tax Contributions

Employee tax contributions are generally estimated at 7.65% of employee salary in Indiana.

Employee Payroll Tax Contribution	Tax Rate
State Income Tax	3.23%

The tax-related information provided in this guide is intended for general guidance and informational purposes only. Reach out to our dedicated team for insights on remote hiring in Indiana tailored to your needs.

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Benefit Requirements for Employers in Indiana

Indiana employers are required to provide certain benefits, including workers' compensation insurance and unemployment insurance. While the state does not mandate health insurance, employers with 50 or more full-time employees must comply with the federal Affordable Care Act. Offering comprehensive employee benefits can enhance job satisfaction and retention.

Employee Benefits For Indiana

Competitive benefits are essential for attracting and retaining top talent in Iowa. Offering the right package helps employees feel valued and motivated. Our benefits experts understand the local labor market's trends, requirements, and expectations, ensuring your employees feel valued and supported. Common benefits in our Iowa packages include:

Pension or 401(K)
Vision Insurance
Life Insurance
Medical Insurance
Dental Insurance
Health Savings Plan (HSA)
Flexible Spending Account (FSA)

Paid and Unpaid Leave Policies in Indiana

Family and Medical Leave

Under the federal Family and Medical Leave Act (FMLA), eligible Indiana employees are entitled to up to 12 weeks of unpaid leave for qualifying family and medical reasons.

Sick Leave

Indiana does not have a state-mandated sick leave policy. Employers may provide sick leave at their discretion.

Vacation Leave

There is no state requirement for paid or unpaid vacation leave. Employers may establish their own policies.

Voting Leave

Indiana law requires employers to provide employees with up to two hours of paid leave to vote if their work schedule does not allow sufficient time to vote during polling hours.

Jury Duty Leave

Employers must allow employees to take unpaid leave for jury duty service.

It’s Easy To Manage Benefits For Employees In Indiana With Playroll

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Employment Termination Protocols in Indiana

Hiring Employees in Indiana with an employer of record

Discuss how an EOR handles onboarding, including setting up compliant employment contracts, registering for taxes, and managing benefits like Indiana's superannuation system (if applicable).

The employer of record is responsible for:

Employment Compliance: Ensure all employment contracts comply with Indiana's labor laws and regulations, including proper classification of employees.
Payroll Management: Calculate, process, and distribute employee salaries in accordance with Indiana's payroll laws, including deductions for taxes and social security contributions.
Tax Filing and Contributions: Handle the registration, filing, and payment of employer taxes and social security contributions to the relevant authorities.
Employment Contracts: Draft and maintain compliant employment agreements, detailing salary, benefits, working hours, and termination terms in line with Indiana's legal requirements.
Benefits Administration: Provide mandatory employee benefits as required by Indiana's labor laws, such as health insurance, pension contributions, and statutory leave.

Employer of Record for Indiana

Guide to Hiring Employees in Indiana