Indiana Labor Laws for Salaried Employees: Overtime, Pay, and Deductions

Indiana labor laws for salaried employees combine the federal Fair Labor Standards Act with Indiana’s own wage-payment statutes, and being paid a salary does not, by itself, decide whether you are owed overtime, whether your pay can be docked, or when your final check must arrive. The classification that controls most of these questions is exempt versus non-exempt, and it turns on what you actually do, how much you earn, and how your pay is structured, not your job title.

Are You Owed Overtime

Every salaried worker in Indiana is either exempt or non-exempt. Non-exempt salaried employees are entitled to overtime for any hours worked past 40 in a workweek. Exempt employees are not. Indiana does not layer its own overtime rule on top of the FLSA for most employers; the state minimum wage statute excludes businesses already covered by federal law, so the federal tests do the work.¹

To lawfully treat you as exempt, your employer has to satisfy three separate tests. Failing any one of them makes you non-exempt.²

Salary Basis

You must receive a fixed, predetermined amount each pay period that does not go up or down based on hours worked or quality of output. If you perform any work in a given week, you are owed your full salary for that week.³

Salary Level

You must earn at least $684 per week ($35,568 per year). Any salaried worker paid less is automatically non-exempt, whatever their duties.⁴ The Department of Labor is currently enforcing this 2019 threshold after a federal court vacated a higher one. Nondiscretionary bonuses, commissions, and incentive payments made at least annually can count toward up to 10 percent of the weekly minimum.⁵

Duties

Even if the salary numbers check out, your actual day-to-day work has to fit one of the recognized exemption categories:

Executive: your primary duty is managing the business or a department, you regularly direct at least two full-time employees, and you have genuine authority (or meaningful input) over hiring, firing, or promotions.
Administrative: you primarily perform office or non-manual work tied to management or general operations, and the job requires independent judgment on matters that actually matter. Routine clerical work does not qualify.
Professional: your primary work requires advanced knowledge in a field such as science, medicine, law, engineering, or accounting, typically gained through specialized education. A separate creative-professional track covers work requiring originality in a recognized artistic field.
Computer employee: systems analysts, programmers, and software engineers whose main work is designing, developing, testing, or documenting systems or programs. This role can be paid hourly at $27.63 or more instead of on a salary. Using a computer as a tool, or repairing hardware, does not qualify.⁶
Outside sales: your primary duty is making sales or getting contracts, and the work is customarily performed away from the employer’s office. No minimum salary threshold applies.⁷

There is also a shortened analysis for highly compensated employees. If your total annual compensation is at least $107,432, including at least $684 per week on a salary basis, you only need to customarily and regularly perform one exempt duty from the executive, administrative, or professional lists, as long as your primary work is office or non-manual.⁸

If any of these tests fail, you are non-exempt and entitled to overtime, regardless of what your offer letter or handbook calls you.

When Your Employer Can and Can’t Dock a Salary

The salary-basis rule is where employers most often trip up. If you are exempt, your employer can deduct from your salary for full-day absences taken for personal reasons and for full-day absences due to sickness where the company has a paid-leave plan. Deductions are also allowed for unpaid FMLA leave, good-faith disciplinary suspensions of one or more full days for workplace conduct violations, and penalties for safety-rule infractions that risk serious danger.³

Docking for partial-day absences is not allowed. Sending an exempt worker home two hours early and shaving their pay can destroy the exemption entirely and convert that person into an overtime-eligible employee retroactively.

How Overtime Is Calculated on a Salary

If you are salaried and non-exempt, you get overtime at one-and-a-half times your regular rate for every hour past 40 in a workweek.⁹ Your regular rate is the weekly salary divided by the hours it is meant to cover. A $700 weekly salary covering 40 hours produces a regular rate of $17.50 per hour, and each overtime hour is worth $26.25.

If your salary covers fewer than 40 hours, the math shifts. A $700 salary meant to cover 35 hours gives a regular rate of $20 per hour. Hours 36 through 40 pay at $20; anything past 40 pays at $30.¹⁰

Paydays and Final Paychecks

Indiana requires employers to pay you at least twice a month, and each payday must fall no more than ten business days after the end of the pay period it covers. If you request biweekly or semimonthly pay, the employer must accommodate that.¹¹

When your employment ends, whether you quit or are fired, your employer must pay all remaining wages by the next regularly scheduled payday. Indiana law does not let an employer hold your check until you return a laptop, uniform, or other company property. If they think you owe them for something, they have to pursue that separately.¹¹

One exception: if you quit without leaving a forwarding address, the deadline is paused until you either demand the wages or provide an address for payment.¹¹

What Can Be Deducted From Your Paycheck

Indiana treats paycheck deductions as valid only when you sign a written authorization, that authorization is revocable at any time with written notice, and the employer agrees in writing.¹²

Even with your signature, deductions are limited to specific purposes: insurance premiums purchased through the employer, charitable contributions, payroll or vacation advances, and a handful of similar categories. Deductions for uniforms and job-required equipment are permitted but capped at the lesser of $2,500 per year or 5 percent of your weekly disposable earnings, and only at the employer’s actual cost from an outside vendor.¹² No deduction can drop your effective pay below the $7.25 federal minimum wage.

Vacation, Breaks, and Time Off

Indiana treats accrued vacation as earned compensation, which means you may be owed a prorated payout of unused time when you leave. But the state gives employers wide latitude to set forfeiture conditions. If a company policy says you lose unused vacation upon termination, or upon failure to give two weeks’ notice, that condition is enforceable so long as it was in place before the vacation accrued.¹³ Check your handbook before assuming a payout.

Indiana does not require employers to provide meal or rest breaks to adult employees.¹⁴ If your employer does offer them, federal rules still apply: breaks under 20 minutes must be paid, and a meal period of 30 minutes or more is unpaid only if you are completely relieved of duties during that time. Eating at your desk while covering the phones is compensable time.

If Your Employer Got the Rules Wrong

Misclassifying a non-exempt employee as exempt, or failing to pay wages owed, creates exposure on two fronts. Under Indiana law, an employer who fails to pay wages in bad faith can be ordered to pay double the amount owed as liquidated damages.¹⁵ Under the FLSA, an employee who wins an unpaid-overtime suit can recover the full back wages plus an equal amount as liquidated damages, along with attorney’s fees and costs. Willful or repeated violations can also draw civil money penalties and, in willful cases, criminal prosecution.¹⁶

Time matters. Under the FLSA you have two years from the date of the violation to file, or three years if the violation was willful.¹⁷ Waiting means losing the ability to collect on the oldest pay periods.

Filing a Wage Claim

To pursue unpaid wages, overtime, or unauthorized deductions through the state, file a claim with the Indiana Department of Labor’s Wage and Hour Division using the Application for Wage Claim (State Form 2069). You will need your employment dates, the gross amount you say you are owed, and a clear breakdown showing how you calculated it. Attach pay stubs, time records, employment contracts, and any correspondence.¹⁸

Once the claim is accepted, the department contacts your employer, who has two weeks to pay or dispute. If the employer does not respond, a final notice gives them one more week. If it still cannot be resolved, the department sends you a letter recommending you consult an attorney or file in court. The full process can take up to 90 days, and incomplete applications are returned without action.¹⁸

For FLSA overtime disputes specifically, you can also file directly with the U.S. Department of Labor’s Wage and Hour Division or hire a private attorney to sue in federal court. The federal route often produces stronger results for overtime cases because attorney’s fees and liquidated damages are available.

If your employer does not track your hours, keep your own records: personal notes, calendar entries, and screenshots of clock-in times all become useful evidence when the employer cannot produce anything of its own.

1
Indiana General Assembly. Indiana Code 22-2-2-3 – Definitions; Exemptions
2
U.S. Department of Labor. Fact Sheet 17A – Exemption for Executive, Administrative, Professional, Computer and Outside Sales Employees Under the Fair Labor Standards Act
3
eCFR. 29 CFR 541.602 – Salary Basis
4
U.S. Department of Labor. Earnings Thresholds for the Executive, Administrative, and Professional Exemption
5
eCFR. 29 CFR 541.602 – Salary Basis
6
U.S. Department of Labor. Fact Sheet 17E – Exemption for Employees in Computer-Related Occupations Under the Fair Labor Standards Act
7
eCFR. 29 CFR Part 541 Subpart F – Outside Sales Employees
8
eCFR. 29 CFR 541.601 – Highly Compensated Employees
9
eCFR. 29 CFR Part 778 – Overtime Compensation
10
eCFR. 29 CFR Part 778 – Overtime Compensation – Section 778.113
11
Indiana General Assembly. Indiana Code 22-2-5-1 – Payment; Voluntarily Leaving Employment
12
Indiana General Assembly. Indiana Code 22-2-6-2 – Assignment of Wages; Requisites
13
IN.gov. When I Leave My Employment, Is My Former Employer Required to Pay Me for Any Accrued Vacation Time
14
IN.gov. Is There Any Information Regarding Indiana Lunch or Breaks Laws
15
Indiana General Assembly. Indiana Code 22-2-5-2 – Failure to Pay; Damages; Actions for Recovery
16
U.S. Department of Labor. Fair Labor Standards Act Advisor – Enforcement Under the Fair Labor Standards Act
17
U.S. Department of Labor. Back Pay
18
IN.gov. Wage Claim Instructions and Application