Guide to Indiana employee benefits and HR rules

Business owners and HR professionals in Indiana have much to consider when deciding what benefits to offer their employees. To ensure you’re meeting The Hoosier State’s guidelines regarding mandatory employee benefits, read the state’s employment laws in our guide below.

Are you looking for personalized benefits to help you comply with federal and Indiana benefits laws? PeopleKeep can help! Schedule a free consultation with a personalized benefits advisor.

Is your organization compliant with Indiana's employment laws?

If you have an Indiana-based organization or employ Indiana workers, learning everything you need to know about HR compliance in Indiana is crucial. In this guide, we’ll provide a general overview of Indiana's employment and benefits regulations for small to medium-sized businesses.

Topics covered in this guide include:

• Employment laws in Indiana
• What are employees’ rights in Indiana?
• Required and non-required employee benefits in Indiana
• Health insurance in Indiana
• Wage laws in Indiana

What are employment laws in Indiana?

The federal government sets minimum benefits and HR requirements for employers nationwide. But many states create their own employment laws to offer additional employee protections—and Indiana is no exception.

Before opening or expanding your business in Indiana, you should familiarize yourself with the state’s employment laws.

In Indiana, employers must follow several state-specific laws in addition to federal employment laws, such as:

• At-will employment
  • Indiana is an “at-will” employment state. Indiana employers may hire, terminate, promote, demote, lay off, or suspend employees with or without cause. They can also set work hours and policies at their discretion. However, by law, employers can’t terminate an employee due to discrimination or other illegal factors.
  • Employees who believe their employer fired them illegally can file a complaint.
  • The Indiana Civil Rights Commission prohibits employers with six or more employees from discriminating against job candidates, new hires, and current workers based on race, color, disability, national origin, ancestry, religion, gender, or veteran status.
  • Employees hired by their parent, child, or spouse or who are domestic workers are exempt from discrimination laws. Nonprofit corporations, fraternal, religious, or social clubs, schools, educational or charitable religious organizations, and employers with fewer than six employees are also exempt.
  • Individuals who feel an employer has discriminated against them must file a complaint within 180 days of the action.
  • This law prohibits Indiana employers from disclosing untruthful information about an employee's termination.
  • Previous employees who believe their former employer has made untrue statements about them must request any written communication from their former employer to a potential employer within 30 days of applying for a new job.
  • Private employers must file a report with the Indiana New Hire Reporting Center detailing the names, addresses, Social Security numbers, and start dates of all new hires and employees returning to work after a furlough or layoff. Employers must also include their name, address, and federal employer identification number (EIN) in the report.
  • Business owners must submit the report within 20 days of a new hire’s start date or an employee’s return to work.
  • To give all candidates a “fair chance” at employment, Indiana employers can’t ask individuals about their criminal history on their initial job application.
  • Employees in childcare facilities, home health agency personnel, employees of personal services agencies, and school teachers are exempt.
  • Indiana is a right-to-work state, meaning no business, labor organization, or individual can require an individual to become or stay a member of a labor organization or pay union dues, fees, assessments, or charitable donations as a condition of new or continued employment.
  • This law prohibits Indiana employers from requiring their employees to receive a COVID-19 vaccination without providing exceptions. Employers must allow employees to opt out of receiving the vaccine due to medical reasons, religious beliefs, or employee immunity from a prior COVID-19 infection.
  • Employees must provide their employer with a written exemption statement unless the employer waives this requirement.
  • If an employee claims an exemption, employers can require them to take a COVID-19 test once or twice a week, as long as the test is FDA-approved. The test can’t put an undue burden on the employee and should be the least invasive testing option available.
  • Employers may not establish or enforce a policy prohibiting an employee from keeping a firearm or ammunition locked in the employee’s trunk, glove box, or other location within the locked vehicle that is out of plain sight.
  • When and how long minors can work in Indiana depends on age. The law also prohibits minors from working in certain hazardous occupations.
  • Employers with five or more minor employees must use the Indiana Youth Employment System (YES) to maintain and report minor-employee information.
  • This law prohibits smoking in most businesses and public places, within eight feet of a public entrance to a business or public place, and any vehicle—whether owned, leased, or operated—used for government purposes.
  • Bars and taverns, tobacco retail shops, cigar and hookah bars, state-licensed gaming facilities, licensed horse track facilities, and certain membership clubs are exempt.
  • Private and public employers employing 25 or more employees must provide a private location other than a toilet stall where an employee can express breast milk.
  • Employers must also provide a refrigerator or other cold storage device for employees to keep expressed breast milk during their work shift or allow the employee to bring their own cold storage device.

  Now that we’ve reviewed a few Indiana-specific laws, we’ll review the state’s employee rights.

  What are employees’ rights in Indiana?

  Employees in Indiana have many rights under state and federal laws. Regardless of your organization's size, you must know your employees' rights if you have or plan to hire employees in the state.

  Some state rights include:

  • Fair wages
    • Employers must pay at least the federal minimum wage and follow federal overtime regulations.
    • All employees younger than 18 who work six or more consecutive hours are entitled to one or two breaks equaling at least 30 minutes.
    • Other than minors, Indiana doesn’t require employers to provide breaks for rest, meals, or any other reasons. However, if the employer chooses to provide them, breaks lasting less than 20 minutes must be paid. Breaks longer than 20 minutes don’t need to be paid if the employee performs no work during it.
    • COBRA is a federal law that allows employees, former employees, spouses, employees’ former spouses, and dependents to maintain their employer-sponsored health insurance coverage after a qualifying event. All employers with 20 or more employees must follow federal COBRA regulations.
    • OSHA is a federal agency that outlines safety and health standards for all employees in the workplace. Employers can’t take disciplinary action against employees who report them for OSHA violations.
    • In addition to the federal OSHA program, the Indiana Occupational Safety and Health Administration (IOSHA) has a few Indiana-specific regulations for private employers.
    • The Indiana Wiretapping Law makes it illegal for employers to intercept, share, or use an employee’s computer or telephone communications without one party’s consent.
    • An employee may request to see any or all of their personnel files during employment. But the law doesn’t require the employer to comply with the request.
    • If an employee quits, they may submit a written request to see their personnel file. If the employer terminated them, they can also request an accurate statement of why they were fired.
    • Organizations with 15 or more employees must make reasonable workplace accommodations for workers who are pregnant or have medical conditions related to childbirth.
    • Employers may not discipline, terminate, or retaliate against an employee for requesting or using an accommodation.

    Required and non-required employee benefits in Indiana

    All businesses that operate in or employ people in the U.S. must follow federal regulations regarding certain employee benefits. However, some benefits required in one state may not be required in others.

    Let’s look at Indiana's required and non-required employee benefits in the chart below.

    Benefit type

    What’s required

    What’s not required

    Employers with at least 15 employees must provide reasonable accommodations to employees and applicants with disabilities. This applies unless an accommodation creates an undue hardship.

    Indiana has no state medical leave law. But, like every other state, they must adhere to the FMLA.

    Under FMLA, all employees of organizations with 50 or more employees may take up to 12 weeks of unpaid leave to care for themselves or family members when in eligible circumstances. Employees may take four extra weeks for pregnancy or childbirth complications.

    Paid sick leave

    The state doesn’t require employers to provide paid sick leave. But, individual businesses can offer it as part of their compensation package if they choose.

    Jury duty leave

    Employers must give employees unpaid time off for jury duty service. They also can’t threaten, penalize, or fire employees who receive a jury summons, serve as a juror, or attend court for prospective jury service.

    Employees must notify their employer of the summons within a reasonable period of time. Employers can’t require employees to use other accrued leave to serve on a jury.

    If an employer with ten or fewer employees has an employee who received jury duty summons while another employee is currently serving, the employer may request that the court delay the employee's jury duty until the other employee finishes serving.

    Witness duty leave

    Employers can’t threaten, penalize, or fire employees if they have received or responded to a subpoena in a criminal proceeding. Witness duty leave can be paid or unpaid.

    In addition to the Uniformed Services Employment and Reemployment Rights Act (USERRA), Indiana National Guard members must receive a leave of absence for the total number of days they’ll be on active duty.

    The leave can be paid or unpaid and must be in addition to their regular vacation leave (if the employer offers it).

    Employers must provide reserve members a leave of absence of no more than 15 days per calendar year to receive military training. The leave can be paid or unpaid.

    Employees must provide their employer with departure and return dates as soon as possible and provide proof that they completed the training afterward.

    Upon completing their training, employers must reinstate the employee to their previous or a similar position.

    Employers with at least 50 employees in the last 20 weeks must offer military family leave. Employees with family members in the military can take up to ten days of unpaid leave per calendar year during the following times:

    • Thirty days before active duty orders take effect
    • The family member is on a leave of absence from active duty
    • Thirty days after active duty orders end

    Employees must have worked for the employer for at least 12 months and worked at least 1,500 hours during that time before requesting leave to be eligible.

    Upon their return, employers must reinstate the employee to their previous or a similar position. Civil Air Patrol leave

    It’s illegal for employers to take adverse action against an employee who is a Civil Air Patrol member for missing or leaving work to respond to an emergency that began before their scheduled shift or after their shift if the employee received approval from their manager before leaving.

    Emergency response leave

    It’s illegal for employers to take adverse action against an employee who is a volunteer firefighter or volunteer medical service member for missing or leaving work to respond to a fire or emergency that began before their scheduled shift, after their shift if the employee received approval from their manager before leaving, or to tend to injury they received while responding to the incident.

    The state doesn’t require employers to provide retirement benefits. But, individual businesses can offer it as part of their compensation package if they choose.

    Workers' compensation provides benefits to employees who are injured on the job or are otherwise unable to work due to a workplace accident or incident.

    In Indiana, employees must submit a claim within 30 days of an incident to receive benefits. Unemployment benefits

    Indiana’s Office of Unemployment Benefits provides temporary support for employees who are out of work or working reduced hours under certain circumstances.

    To qualify for unemployment, employees must:
    • Be actively looking for work
    • Be able and available for work.
    • Legally authorized to work in the United States.
    Most Indiana employers must contribute to the state’s unemployment insurance fund. Voting leave

    Indiana doesn’t require employers to provide voting leave. But, individual businesses can offer it as part of their compensation package if they choose.

    The state doesn’t require employers to provide bereavement leave. But, individual businesses can offer it as part of their compensation package if they choose.

    Holiday leave

    No state laws require employers to provide holiday leave. But, individual businesses can offer it as part of their compensation package if they choose.

    Some employers will pay twice the employee's rate of pay for working on a holiday as an incentive or benefit to their employees, but this is not required by law.

    Vacation time

    No state laws require employers to provide vacation time. But, individual businesses can offer it as part of their compensation package if they choose.

    If an employer does offer it, they must pay out accrued vacation time to employees upon separation of employment if the company policy requires it.

    Health insurance in Indiana

    The state and federal government don’t require employers in Indiana to offer health insurance to their workers if they have fewer than 50 employees. But federal law requires business owners with 50 or more full-time equivalent employees (FTEs) to provide affordable health insurance with minimum essential coverage (MEC) to satisfy the Affordable Care Act’s (ACA) employer mandate.

    However, just because you may have fewer than 50 FTEs doesn’t mean you shouldn’t offer health benefits. Adding a comprehensive health benefit to your benefits package is a great way to attract and retain talented workers.

    Traditional group health insurance is a popular option for many U.S. employers. But, rising healthcare costs can make it challenging for small to mid-sized businesses on a budget to afford the costly premiums and annual rate hikes.

    Small group health insurance premiums in some Indiana counties can get as high as $736 per month. On the other hand, the average monthly premium for a 50-year-old on a bronze individual health plan can be as low as $416. This makes covering the cost of individual health plans more feasible for many employers than offering a group plan in many parts of Indiana.

    Business owners looking to provide an affordable health benefit can take advantage of Indiana’s lower individual plan prices by implementing a health reimbursement arrangement (HRA) or a health stipend.

    Health reimbursement arrangement (HRA)

    An HRA is an IRS-approved, formal health benefit funded solely by the employer. It allows you to reimburse your employees, tax-free, for their individual health plan premiums and qualifying medical expenses.

    Employees can use their HRA to choose and purchase the individual health insurance plan that meets their healthcare needs and budget. Employers save money by not buying a group health plan, setting a fixed monthly allowance, and only reimbursing their employees when they incur an eligible medical expense.

    Some HRAs, such as the individual coverage HRA (ICHRA), can satisfy the ACA’s regulations for applicable large employers (ALEs), making an HRA a health benefit that can work for businesses of all sizes.

    Thanks to Indiana House Bill 1004, small employers that offer an HRA to their employees in 2024 may be eligible for a tax credit.