Salaried employees are individuals who receive a predetermined fixed amount of compensation at regular intervals, such as weekly or less frequently. These employees are subject to specific regulations that govern their working conditions.
The aim of this article is to present a summary of the relevant laws and regulations that define the rights and obligations of both salaried employees and their employers in Indiana. It will address different aspects, including payment procedures, break and leave privileges, and the categorization of exempt and non-exempt employees.
This article covers:
- Payment of Wages for Salaried Employees in Indiana
- Salaried Employees Eligibility for Overtime for Indiana
- Pay for Working Overtime for Indiana Salaried Employees
- Exceptions to Overtime Exemptions for Indiana Salaried Employees
- Violation of Salaried Employees Wages Payment in Indiana
- Male and Female Salaried Employees in Indiana
- Leave Entitlements for Salaried Employees in Indiana
- Break Entitlements for Salaried Employees in Indiana
- Deductions from Exempt Employees’ Salary in Indiana
- Termination of Employment for Salaried Employees in Indiana
Indiana employers are legally mandated to compensate their employees at least bi-monthly. Additionally, they are required to schedule regular paydays within a maximum of ten days following the conclusion of a pay period for which wages are owed.
In the realm of state civil service, all employees are categorized into two groups when determining their eligibility for extra pay due to additional work hours:
- Exempt: This category includes employees in executive, administrative, or professional roles as outlined in 29 CFR Part 541. These employees are not subject to federal minimum wage and overtime compensation laws.
- Overtime-eligible: This group comprises employees not engaged in executive, administrative, or professional roles as defined in 29 CFR Part 541. They fall under the coverage of federal minimum wage and overtime compensation laws. These individuals are also referred to as non-exempt employees.
Any hours worked within the range of 37.5 to 40.0 hours during a given calendar week should be compensated at the employee’s standard hourly wage. This is referred to as the regular rate.
For any hours worked beyond 40 hours within a calendar week, the payment should be calculated at a rate of one-and-a-half (1.5) times the employee’s standard hourly wage. This is termed as the premium rate.
Numerous employers attempt to evade overtime compensation by providing their employees with a fixed salary, despite these employees working beyond 40 hours per week. In these instances, employees, if non-exempt, still hold the right to receive overtime pay.
The calculation for overtime wages involves dividing the weekly salary by 40 (or a bi-monthly salary by 80) to establish the standard hourly rate, followed by multiplying this rate by 1.5 to determine the overtime rate.
It’s worth noting that although salaried employees usually don’t have to keep detailed records of their working hours, there are scenarios, such as when calculating overtime, where tracking overtime hours can be advantageous. Timesheet templates can also be employed to ensure precise documentation of overtime hours, and specialized overtime compliance software is available to ensure compliance with labor laws.
In line with the federal FLSA overtime regulations, Indiana incorporates distinct exemptions and special cases concerning overtime stipulations. In essence, employees earning a minimum of $684 per week may not be eligible for overtime compensation if they fall within particular categories, including:
- Executives and Administrative staff
- Computer workers
- Outside salespersons
- Staff at seasonal amusement and recreation establishments
- Commissioned workers
- Taxi drivers
When an employer fails to make timely payment of wages or withholds wages in Indiana, specific actions are triggered as per law enforced effective from July 1, 2015. The owed wages must be paid, a reasonable fee for the employee’s attorney must be covered by the employer, and court costs are required to be paid.
In situations where a court determines that the failure to pay the employee was not in good faith, the court shall order the employee to be paid an amount equal to two times the owed wages as liquidated damages.
Federally, according to the Equal Pay Act (EPA), both men and women have the right to receive equal compensation for performing equivalent tasks.
The Equal Pay Law in Indiana applies to public and private employers with two or more employees, excluding those covered by the federal Fair Labor Standards Act. Employers are prohibited from paying lower wages to employees of one sex compared to employees of the opposite sex for equivalent work requiring equal skill, effort, and responsibility under similar working conditions within the same workplace. Exceptions include seniority, merit, production or quality differentials, and factors other than gender. Violating the law cannot lead to reducing an employee’s wage rate to comply. The law is outlined in Indiana Code Ann. § 22-2-2-4.
Salaried employees in Indiana have access to different types of leave. For instance, Indiana workers can take unpaid time off for jury duty, and they should inform their employer in advance about this need. The Family and Medical Leave Act of 1993 provides up to 12 weeks of unpaid leave for significant life events like health issues or caring for a sick family member. Adopting or fostering a child also qualifies for this leave, with job protection guaranteed. Family Military Leave allows employees to take up to 10 days of unpaid leave if they have a family member serving in the military, under certain eligibility conditions.
In Indiana, the state adheres to federal regulations regarding employee breaks during the workday. According to these federal laws, employers are not obligated to provide rest or meal breaks. However, if employers choose to offer breaks as a workplace benefit, they must compensate for all breaks lasting less than 20 minutes.
Regarding Indiana’s regulations for meal breaks, they primarily pertain to minors. These rules specify that employees under the age of 18 who work continuously for six hours or more must be granted one or two breaks totaling at least 30 minutes. As a result, other employees might not be entitled to meal breaks as per Indiana law.
Employees in Indiana can choose to have wages deducted from their pay (wage assignment) for various purposes, including obtaining work-related uniforms or necessary equipment. The assigned amount must not surpass either $2,500 annually or 5% of the employee’s weekly disposable earnings, whichever is lower.
Additionally, employees can use wage assignments for reimbursing educational or skills training costs, unless these expenses were covered by an economic development incentive from a federal, state, or local program. Employees can also opt for a payroll or vacation advance or request merchandise, goods, or food from the employer for personal use or consumption.
However, it’s important to emphasize that federal law prohibits deductions that would lower an employee’s wages below the minimum wage or infringe on overtime compensation as mandated by the Fair Labor Standards Act.
Indiana adheres to the “employment-at-will” principle, allowing either the employer or the employee to end the work arrangement without cause or notice. Upon termination, the employer must issue the final payment on the upcoming regular payday. If the employee’s departure results in their whereabouts being unknown to the employer, the employer must either fulfill the final payment demand within ten days or wait until they receive an address for sending the wages.
Learn more about Indiana Labor Laws through our detailed guide.
Important Cautionary Note
When making this guide we have tried to make it accurate but we do not give any guarantee that the information provided is correct or up-to-date. We therefore strongly advise you seek advice from qualified professionals before acting on any information provided in this guide. We do not accept any liability for any damages or risks incurred for use of this guide.