How do you calculate overtime pay in Indiana?

Calculating overtime pay in Indiana involves understanding the rules set by both federal and state laws to ensure workers receive fair compensation for extra hours worked.

This guide will break down the steps for calculating overtime pay, explain who is eligible, and cover important exemptions to help employers and employees navigate overtime requirements in Indiana.

Which Overtime Laws Apply in Indiana?

In Indiana, overtime pay requirements are guided by two primary laws:

• Fair Labor Standards Act (FLSA): The FLSA is a federal law that mandates overtime pay for non-exempt employees who work more than 40 hours in a workweek. Under the FLSA, overtime pay must be 1.5 times the employee’s regular rate of pay. This federal regulation ensures that most hourly workers in Indiana are eligible for overtime if they exceed the 40-hour threshold in a week.
• Indiana Code Section 22-2-2-4: This state law complements the FLSA by reinforcing overtime requirements within Indiana. The Indiana Code Section 22-2-2-4 explicitly states that employers in Indiana must provide overtime compensation at a rate of 1.5 times the regular rate for hours worked over 40 in a workweek. This statute aligns state requirements with the FLSA, ensuring consistency in overtime practices across Indiana. It further includes specific conditions under which overtime provisions may be applied or exempted, such as in cases of collective bargaining agreements or specific employee classifications.

How Much is Overtime Pay in Indiana?

In Indiana, overtime pay is 1.5 times the employee’s regular rate of pay for each hour worked beyond 40 hours in a single workweek. The overtime rate is calculated using the employee’s regular rate of pay, which includes hourly wages, salaries, bonuses, and other forms of compensation.

To learn more, check out our guide on Indiana Overtime Laws. 

Who is Eligible for Overtime Pay in Indiana?

Most employees in Indiana are eligible for overtime pay if they:

• Work more than 40 hours in a workweek.
• Are not exempt under the FLSA. This often includes hourly employees and some salaried employees whose jobs do not meet the FLSA exemption criteria.

Check out our guide on Overtime Rights in Indiana.

To calculate overtime for hourly employees in Indiana:

• Determine the regular rate of pay of the hourly employee. It is typically the employee’s standard hourly wage.
• Calculate the employee’s overtime rate based on the regular hourly rate. Multiply the regular hourly rate by 1.5. If an employee’s hourly rate is $15, the overtime rate would be $22.50 ($15 x 1.5).
• Identify the overtime hours worked during the week. All hours worked beyond 40 are counted as overtime hours. If an employee worked a total of 50 hours, the overtime hours of an employee is ten (50 hours – 40 hours).
• Calculate the overtime pay by multiplying the overtime hours by the overtime rate. If the employee’s overtime rate is $22.50, the employee will receive $225 for the ten overtime hours.

Read our guide on Your Rights as an Hourly Employee in Indiana to learn more.

To calculate the overtime pay for non-exempt salaried employees in Indiana:

• Determine the employee’s weekly salary. If the employee’s salary is expressed annually, determine their weekly salary by dividing it by 52 weeks. If the employee earns $40,400 annually, their weekly salary would be $770 ($40,000 ÷ 52).
• Calculate the employee’s regular rate of pay. Divide the weekly salary by the hours the salary is intended to cover, usually 40 hours per week, to get the employee’s regular hourly rate. If the employee’s weekly salary is $770, the employee’s regular pay rate would be $19.25 ($770 ÷ 40).
• Calculate the overtime rate by multiplying the employee’s hourly rate by 1.5. If the employee’s hourly rate is $19.25, the overtime rate is $28.88 ($19.25 x 1.5).
• Identify the overtime hours worked by the employee. All hours worked beyond 40 in a workweek are counted as overtime. If the employee works 50 hours, the overtime hours would be ten (50 hours – 40 hours).
• Calculate the overtime pay by multiplying the overtime hours by the overtime rate. If the employee’s overtime rate is $28.88 and worked ten overtime hours, the employee is entitled to overtime pay of $288.80 ($28.88 x 10).

Check out our guide on Your Rights as a Salaried Employee in Indiana.

To calculate overtime for commission employees in Indiana:

• Calculate the total earnings for the workweek, including both base pay and commissions. For instance, if employees earn $720 in base pay and $100 in commissions, their total earnings would be $820 ($720 + $100).
• Determine the regular hourly rate by dividing the total earnings by the hours worked. If the employee worked 50 hours, the regular hourly rate would be $16.40 ( $820 ÷ 50).
• Calculate the overtime rate by multiplying the regular hourly rate by 0.5. If the regular hourly rate is $16.40, the overtime rate would be $8.20 ($16.40 x 0.5).
• Identify the overtime hours worked. Any hours worked beyond 40 in a workweek are considered overtime. Employees who worked 50 hours would have ten overtime hours (50 – 40).
• Calculate the overtime pay by multiplying the overtime hours by the overtime rate. If the overtime rate is $8.20 and the employee worked ten overtime hours, the overtime pay would be $82 ($8.20 x 10).

To calculate overtime for piece rate employees in Indiana:

• Calculate the total earnings for the workweek. Multiply the number of units completed by the piece rate. If an employee completed 1,500 pieces at $0.50 per piece, the total earnings would be $750 (1,500 x $0.50).
• Determine the regular hourly rate by dividing the total weekly earnings by the total hours worked. If the employee worked 50 hours, the regular hourly rate would be $15 ($750 ÷ 50).
• Calculate the overtime rate by multiplying the regular hourly rate by 0.5. If the regular hourly rate is $15, the overtime rate would be $7.50 ($15 x 0.5).
• Identify the overtime hours worked. Any hours worked over 40 in a workweek count as overtime. If the employee worked 50 hours, that would be ten overtime hours (50 – 40).
• Calculate overtime pay by multiplying the overtime rate by the number of overtime hours worked. If the overtime rate is $7.50 and the employee worked ten overtime hours, the overtime pay would be $75 ($7.50 x 10 hours).

Indiana Code 34-11-2-1 outlines the statute of limitations for filing a claim for unpaid overtime. According to this law, the deadline for filing a claim for unpaid wages, including overtime, is two years from the date the earnings were due. This means that employees must file a claim within two years of when the unpaid overtime is due to seek wage recovery.

In instances where the employer’s violation is found to be willful, the statute of limitations may be extended to three years under federal law, which can be applied alongside Indiana’s statute for unpaid wages.

In Indiana, recordkeeping requirements for overtime wage compliance stipulate that employers must keep and maintain specific payroll records for at least three years for each employee. The required information includes:

• Employee Identification: Full name and, if applicable, employee’s identifying number.
• Employee’s Personal Information: Home address, date of birth, sex, and job title.
• Work Schedule Details: The hour and day of the week when the employee’s work period begins. If all employees start their workweeks at the same time, a single notation can be used for the entire workforce. If work time varies, separate records are required.
• Wages and Compensation: Regular hourly pay rate for weeks when overtime is due, total earnings for daily and weekly straight-time hours, total overtime compensation earned each week, and total additions to or deductions from wages, with detailed records of each item.
• Work Hours: Daily and weekly hours worked.
• Wage Payment Records: Total wages paid each pay period, payment dates, and the pay periods covered.

For employees on a fixed schedule, records can reflect the schedule and a notation certifying the hours worked. Records must reflect the exact hours worked if the schedule is not followed.

Employees who do not work overtime or fall under certain job classifications must keep all the information listed above except for regular hourly rates, overtime compensation, and wage deductions.