🇺🇸 Indiana Overtime Laws — 2026 UPDATE

Overtime Laws in Indiana 2026: Pay Rates, Exemptions & Tax Deduction (2026)

⚠️Informational only — not legal or tax advice.

Guide for Indiana overtime laws 2026

Last verified: March 1, 2026

Next scheduled review: June 1, 2026

Overtime in Indiana 2026

Table of Contents

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Indiana Overtime Laws at a Glance (2026)

Indiana Overtime Law — At a Glance (2026)
Details
Overtime threshold 40 hours/workweek
Overtime pay rate 1.5× regular rate of pay
Double time No
Daily overtime No — weekly calculation only
7th consecutive day rule No
State minimum wage (2026) $7.25/hour
Exempt salary threshold (2026) Federal: $684/week ($35,568/yr)
State enforcement agency Indiana Department of Labor — Wage and Hour Division
Federal enforcement U.S. DOL Wage and Hour Division
Overtime tax deduction (federal) Up to $12,500/yr (2025–2028) — FLSA-covered workers
Overtime tax deduction (state) Equal to federal deduction amount — 2026 tax year only (SB 243, awaiting governor's signature)
Statute of limitations 3 years (Indiana) / 2 years FLSA (3 if willful)

Governing law: Indiana Code § 22-2-2-4; Fair Labor Standards Act, 29 U.S.C. § 207
Last verified: March 1, 2026

Does Indiana Have Its Own Overtime Law?

Indiana has its own overtime law under Indiana Code § 22-2-2-4, part of the Indiana Minimum Wage Law of 1965. Under this statute, employers subject to Indiana law must pay nonexempt employees at least 1.5 times their regular rate of pay for all hours worked over 40 in a workweek.

However, there is a critical coverage distinction between Indiana law and the FLSA. The Indiana Minimum Wage Law applies to employers not covered by the FLSA — specifically, employers with two or more employees who are not subject to federal minimum wage provisions. Because the FLSA covers virtually all employers engaged in interstate commerce or with annual gross sales of $500,000 or more, most Indiana workers are governed by the FLSA rather than Indiana’s state overtime statute.

When both laws apply, the standard more favorable to the employee governs.

Key points about Indiana’s overtime law:

  • Indiana Code § 22-2-2-4(f) requires overtime pay at 1.5× the regular rate for hours over 40 in a workweek, mirroring the FLSA standard.
  • The Indiana statute explicitly excludes employers who are already subject to the FLSA from its coverage (IC § 22-2-2-3, definition of “Employer”).
  • The Indiana statute’s overtime threshold is the same as the federal standard — 40 hours per workweek. There is no daily overtime trigger under Indiana law.
  • Indiana does not have a higher exempt salary threshold. The federal $684/week ($35,568/year) threshold applies.
  • Indiana’s statute of limitations for wage claims (3 years) is longer than the FLSA baseline (2 years), which can be advantageous for workers filing under state law.

State statute: Indiana Code § 22-2-2-4 — https://iga.in.gov/laws/2025/ic/titles/22
Federal statute: Fair Labor Standards Act, 29 U.S.C. § 207 — https://www.dol.gov/agencies/whd/overtime

How Overtime Pay Is Calculated in Indiana

What Is a “Workweek”?

Under the FLSA, a workweek is a fixed, regularly recurring period of 168 consecutive hours (seven consecutive 24-hour periods). A workweek does not have to start on Monday or align with a calendar week — the employer may designate any day and time as the start of the workweek.

Each workweek stands alone. An employer cannot average hours across two or more workweeks to avoid overtime. If an employee works 50 hours in one week and 30 the next, overtime is owed for the first week regardless of the second.

Source: 29 C.F.R. § 778.104–778.105

Pay Rates

Under Indiana Code § 22-2-2-4(f) and the FLSA, nonexempt employees in Indiana earn overtime at the following rate:

Time-and-a-half (1.5× regular rate):

  • All hours worked over 40 in a workweek

Indiana does not require daily overtime. Working more than 8 hours in a single day does not trigger overtime pay unless total weekly hours exceed 40.

Indiana does not require double time at any threshold.

What Counts as the “Regular Rate of Pay”

The regular rate is not always the same as the hourly wage. Under the FLSA (29 C.F.R. § 778.108), the regular rate includes:

  • Base hourly rate or salary equivalent
  • Non-discretionary bonuses and incentive pay
  • Shift differentials
  • Commissions
  • Piece-rate earnings

The regular rate does NOT include:

  • Discretionary bonuses (e.g., holiday gifts)
  • Employer contributions to benefit plans
  • Vacation, holiday, or sick pay when no work is performed

Calculation Example

Indiana’s minimum wage is $7.25/hour, the same as the federal minimum wage.

Example — Weekly overtime in Indiana:

An employee earns $7.25/hour and works 48 hours in one workweek:

  • Regular pay: 40 hours × $7.25 = $290.00
  • Overtime pay: 8 hours × ($7.25 × 1.5) = 8 × $10.875 = $87.00
  • Total weekly gross pay: $377.00

Example — Higher-wage worker:

An employee earns $20.00/hour and works 50 hours in one workweek:

  • Regular pay: 40 hours × $20.00 = $800.00
  • Overtime pay: 10 hours × ($20.00 × 1.5) = 10 × $30.00 = $300.00
  • Total weekly gross pay: $1,100.00

For the current Indiana minimum wage, see the Indiana Minimum Wage page.

Source: Indiana Code § 22-2-2-4(f); 29 C.F.R. § 778.108–778.122; https://www.in.gov/dol/wage-and-hour/wage-and-hour-faqs/

Who Is Exempt from Overtime in Indiana?

Not all employees in Indiana are entitled to overtime pay. Certain employees are classified as “exempt” under federal and/or state law.

Federal FLSA Exemption Requirements

To be exempt from overtime under the FLSA, an employee must meet ALL THREE criteria:

1. Salary basis test: Paid a predetermined, fixed salary each pay period (not hourly)

2. Salary level test: Earn at least $684 per week ($35,568 per year)

3. Duties test: Perform specific job duties in one of these categories:

Indiana Overtime Exemptions — Key Duty Test (2026)
Exemption Key duty requirement
Executive Manages enterprise or department; directs 2+ employees; authority to hire/fire
Administrative Office/non-manual work related to management or business operations; exercises independent judgment
Professional Work requiring advanced knowledge in science or learning (prolonged specialized study)
Computer employee Systems analysis, programming, software engineering — $684/week salary or $27.63/hour
Outside sales Primary duty is making sales away from the employer's place of business

Source: 29 C.F.R. Part 541 — https://www.dol.gov/agencies/whd/overtime

What Happened to the 2024 DOL Salary Threshold Increase?

In April 2024, the U.S. Department of Labor issued a final rule that would have raised the exempt salary threshold to $1,128/week ($58,656/year) effective January 1, 2025.

On November 15, 2024, the U.S. District Court for the Eastern District of Texas vacated that rule nationwide in Texas v. U.S. Department of Labor (No. 4:24-cv-00499).

The salary threshold remains $684/week ($35,568/year) as of 2026.

Indiana-Specific Exemptions Under State Law

Indiana Code § 22-2-2-3 sets out additional exemptions that apply to employers covered by Indiana’s state overtime law (i.e., employers NOT covered by the FLSA). These include:

  • Executive, administrative, and professional employees earning $150 or more per week with authority to hire or fire — IC § 22-2-2-3(n)
  • Outside salespeople compensated solely by commission — IC § 22-2-2-3(k)
  • Agricultural workers engaged in agriculture or horticulture — IC § 22-2-2-3
  • Student workers enrolled and regularly attending classes at the employing school, college, or university — IC § 22-2-2-3(i)
  • Interns and resident physicians employed by accredited hospitals after completing a four-year medical school course — IC § 22-2-2-3(h)
  • Student nurses enrolled in accredited nursing programs — IC § 22-2-2-3(g)
  • Casual babysitters and companions in private homes — IC § 22-2-2-3
  • Computer systems analysts, programmers, and software engineers meeting specified criteria — IC § 22-2-2-3
  • Employees of seasonal amusement or recreational establishments and organized camps exempt under the FLSA — IC § 22-2-2-4(r)
  • Air carrier employees subject to Title II of the Railway Labor Act — IC § 22-2-2-4(s)
  • Employees in remedial education programs — up to 10 hours per week above the 40-hour threshold — IC § 22-2-2-4(p)

Important: Most Indiana workers are covered by the FLSA (not Indiana’s state overtime law) because most employers meet the $500,000 annual sales threshold or engage in interstate commerce. For FLSA-covered workers, the FLSA exemption standards under 29 C.F.R. Part 541 apply, not Indiana’s state-law $150/week threshold.

Source: Indiana Code § 22-2-2-3; Indiana Code § 22-2-2-4 — https://iga.in.gov/laws/2025/ic/titles/22

Overtime Tax Deduction: "No Tax on Overtime" in Indiana (2025–2028)

Indiana has enacted two overlapping overtime tax deductions — one federal and one state — giving Indiana workers a significant tax advantage for 2026 overtime earnings.

Federal Overtime Tax Deduction (2025–2028)

The One Big Beautiful Bill Act (Public Law 119-21), signed on July 4, 2025, created a new federal income tax deduction for qualified overtime compensation under Internal Revenue Code § 225.

This deduction is available for tax years 2025 through 2028.

Who Is Eligible (Federal)

  • Nonexempt employees covered by the Fair Labor Standards Act (29 U.S.C. § 207)
  • Must have a Social Security number valid for employment
  • Cannot use the Married Filing Separately filing status

Who is NOT eligible:

  • Exempt (salaried) employees who do not receive FLSA overtime
  • Independent contractors (1099 workers) who are not FLSA-covered
  • Employees receiving overtime only under state law, employer policy, or collective bargaining (if not also required by the FLSA)

What Is Deductible (Federal)

The deduction covers the premium portion of overtime pay — the amount that exceeds the regular rate of pay.

Overtime Premium — Deductible Portion Example ($20/hr Regular Rate)
Overtime type What is deductible Example ($20/hr regular rate)
Time-and-a-half (1.5×) The "half" — 1/3 of total OT pay $10/hr per OT hour ($30 − $20)

IRS shortcut for 2025: If you only know your total overtime pay and were paid time-and-a-half, divide the total overtime amount by 3. (Source: IRS Notice 2025-69)

Federal Deduction Limits (Overtime Tax Deduction 2025–2028)
Filing status Maximum annual deduction Phase-out begins
Single $12,500 $150,000 MAGI
Married filing jointly $25,000 $300,000 MAGI
W-2 Reporting (Federal) — Qualified Overtime Compensation
Tax year Employer reporting requirement
2025 NOT required to separately report (transition year — IRS Notice 2025-62). May voluntarily report in W-2 Box 14 as "QUAL OT" or provide a separate statement.
2026 and later REQUIRED to separately report qualified overtime compensation. The IRS has published a draft W-2 form indicating Box 12, Code TT for this purpose (draft form, subject to change before finalization).

If an employer did not separately report overtime for 2025, the IRS allows employees to use “any reasonable method” to calculate the deductible amount, including one-third of total overtime pay (for time-and-a-half workers), payroll records, or employer statements.

Source: IRS FAQs on Qualified Overtime Compensation Deduction; IRS Notice 2025-69; IRS Notice 2025-62; IRC § 225; P.L. 119-21, § 70202
Official IRS page: https://www.irs.gov/newsroom/questions-and-answers-about-the-new-deduction-for-qualified-overtime-compensation

What the Federal Deduction Does NOT Do

  • Does NOT exempt overtime from Social Security (6.2%) or Medicare (1.45%) taxes
  • Does NOT change how much overtime pay an employee receives — it reduces taxable income when filing
  • Does NOT apply to overtime paid solely under state law or employer policy that exceeds FLSA requirements

Indiana State Overtime Tax Deduction (2026 Tax Year Only)

Indiana enacted Senate Bill 243 (Senate Enrolled Act 243), which passed both the Indiana Senate (47–1) and the Indiana House (77–19) and was sent to Governor Mike Braun in late February 2026.

SB 243 conforms Indiana’s state and county income tax to the federal “no tax on overtime” provision for the 2026 tax year only. This means qualifying Indiana workers can deduct the same overtime amount from their state and local (county) taxable income as they deduct federally — when they file their 2026 Indiana state income tax returns in 2027.

Key details of Indiana SB 243:

  • Coverage: Applies to the same qualified overtime compensation deductible under IRC § 225 (federal law)
  • Tax year: 2026 only (not a multi-year provision)
  • Scope: Reduces both Indiana state income tax (currently 3.05% for 2026) and applicable county income tax
  • Estimated savings: Up to $237 million in state and local taxes for Indiana workers in the 2026 tax year
  • Projected revenue impact: $61.2 million to $98.1 million reduction in state income tax revenue; $34.6 million to $55.5 million in county income tax revenue

Indiana is a static conformity state — it aligns its tax code to the federal Internal Revenue Code at a fixed date. SB 243 updates conformity through January 1, 2026 for purposes of the overtime and tips deductions.

Source: Indiana SB 243 (2026); Indiana Legislative Services Agency Fiscal Note, SB 243; Indiana General Assembly — https://iga.in.gov/legislative/2026/bills/senate/243

Combined Federal + State Tax Benefit for Indiana Workers (2026)

An Indiana worker earning overtime in 2026 may benefit from deductions at both levels:

Indiana Tax Impact — Overtime Deduction (2026)
Tax Rate (2026) Effect of overtime deduction
Federal income tax Varies (10%–37%) Deduct up to $12,500 (single) from federal taxable income
Indiana state income tax 3.05% Deduct same qualified OT amount from state taxable income
County income tax 0.5%–3.38% (varies by county) Deduct same qualified OT amount from county taxable income
Social Security tax 6.2% Not deductible — FICA still applies
Medicare tax 1.45% Not deductible — FICA still applies

Example: An Indiana worker (single filer, Marion County) earns $8,000 in total overtime at time-and-a-half. The qualified overtime deduction (1/3 of total) = $2,667.

  • Federal income tax savings (at 22% bracket): ~$587
  • Indiana state income tax savings (3.05%): ~$81
  • Marion County income tax savings (2.02%): ~$54
  • Total estimated combined savings: ~$722

Important: The Indiana state deduction mirrors the federal deduction. Workers must be eligible for the federal deduction (FLSA-covered, nonexempt) to claim the Indiana state deduction. The deduction does not affect FICA taxes.

Cross-reference: For Indiana income tax details, see the Indiana Income Tax page.

Can an Employer Require Overtime in Indiana?

Under the FLSA, there is no federal limit on the number of hours an employer can require an adult employee (age 16 and older) to work in a workweek, as long as the employee is properly compensated for all overtime hours.

Indiana is an at-will employment state. An employer may discipline or terminate an employee for refusing to work overtime, unless a specific law, employment contract, or collective bargaining agreement provides otherwise.

Indiana does not have additional mandatory overtime restrictions beyond the FLSA for most industries. As the Indiana Department of Labor states, employers in Indiana may set work hours at their own discretion, and employees may be required to work longer or later hours.

Protections That Always Apply

Regardless of mandatory overtime policies, the following protections apply in Indiana:

  • All overtime hours must be compensated at the applicable overtime rate
  • Employers cannot retaliate against employees who file wage complaints (29 U.S.C. § 215(a)(3))
  • Disability accommodation requests under the ADA may limit overtime requirements
  • Child labor laws restrict hours for employees under 18
  • Collective bargaining agreements may set additional limitations on mandatory overtime

Source: 29 U.S.C. § 207; Indiana Code § 22-2-2-4; https://www.in.gov/dol/wage-and-hour/wage-and-hour-faqs/

Industry-Specific Overtime Rules in Indiana

Healthcare (8-and-80 System)

Under 29 U.S.C. § 207(j), hospitals and residential care facilities may use a 14-day work period instead of the standard 7-day workweek for overtime calculations. Under this arrangement, overtime is due after 8 hours per day OR 80 hours in the 14-day period, whichever calculation results in more overtime pay.

To use the 8-and-80 system, the employer and employee must have an agreement in effect before the work is performed.

Source: 29 U.S.C. § 207(j)

Agriculture

Under the FLSA, agricultural workers are generally exempt from federal overtime requirements (29 U.S.C. § 213(b)(12)). Indiana Code § 22-2-2-3 similarly exempts employees engaged in agriculture or horticulture from Indiana’s state overtime law.

Indiana has not enacted agricultural overtime requirements comparable to those in California or Washington. Agricultural workers in Indiana do not receive overtime pay under state or federal law unless covered by a specific employment contract or collective bargaining agreement.

Source: 29 U.S.C. § 213(b)(12); Indiana Code § 22-2-2-3

Retail and Commission Employees

Under 29 U.S.C. § 207(i), retail or service establishment employees paid more than half their earnings in commissions may be exempt from overtime if their regular rate exceeds 1.5× the applicable minimum wage.

Indiana Code § 22-2-2-3(k) also exempts outside salespeople compensated solely by commission from the state overtime requirement.

Source: 29 U.S.C. § 207(i); Indiana Code § 22-2-2-3(k)

Public Sector / Government Employees

Under 29 U.S.C. § 207(o), public employers (state and local government) may offer compensatory time off instead of overtime pay, provided:

  • The comp time accrues at 1.5 hours for each overtime hour worked
  • A prior agreement exists between the employer and employee (or union)
  • The cap is 240 hours of accrued comp time (or 480 hours for public safety, emergency response, and seasonal employees)
  • Employees must be permitted to use accrued comp time within a reasonable period

Indiana state government employees are subject to the Indiana State Personnel Department’s Hours of Work and Overtime Policy, which follows FLSA requirements. State law enforcement officers and firefighters covered under 29 U.S.C. § 207(k) operate under a different work period and do not earn premium pay on a standard calendar-week basis.

Source: 29 U.S.C. § 207(o); 29 U.S.C. § 207(k); Indiana State Personnel Department Hours of Work and Overtime Policy — https://www.in.gov/spd/policies-and-procedures/hours-of-work-and-overtime/

Compensatory Time (“Comp Time”) — Private Sector

Under the FLSA, private-sector employers cannot offer comp time in lieu of overtime pay. An employee who works overtime hours must be compensated at 1.5× their regular rate in wages, not in time off. Indiana does not provide an exception to this rule for private employers.

Source: 29 U.S.C. § 207(o)

Transportation (Motor Carrier Exemption)

Employees whose duties affect the safe operation of motor vehicles in interstate commerce may be exempt from FLSA overtime under the Motor Carrier Act exemption (49 U.S.C. § 31502). Indiana has a significant transportation and logistics industry, and this exemption commonly applies to truck drivers and certain other transportation workers.

Source: 49 U.S.C. § 31502; 29 U.S.C. § 213(b)(1)

How to File an Overtime Wage Complaint in Indiana

Employees in Indiana who believe they have not received proper overtime pay have three options:

Option 1: Indiana Department of Labor — Wage and Hour Division

Indiana Wage Complaint Filing — State Agency (2026)
Details
Agency Indiana Department of Labor, Wage and Hour Division
Online filing https://www.in.gov/dol/wage-and-hour/online-wage-claim-form/
Phone (317) 232-2655
Address 402 West Washington Street, Room W195, Indianapolis, IN 46204
Deadline 3 years from the date the claim arose
Process Agency contacts employer within 2 weeks; employer has 2 weeks to respond or dispute

Note: The Indiana Department of Labor handles claims of $30 to $6,000 at no charge. Claims exceeding $6,000 require approval from the Department before filing a private lawsuit. The IDOL accepts wage claims as a service to resolve disputes but cannot guarantee compensation.

Additional resource: Indiana DOL Knowledge Base — https://kb.dol.in.gov/

Option 2: U.S. Department of Labor — Wage and Hour Division

Indiana Overtime Complaint — Federal (U.S. DOL WHD)
Details
Online https://www.dol.gov/agencies/whd/contact/complaints
Phone 1-866-487-9243 (toll-free)
Nearest office Indianapolis, Indiana
Deadline 2 years from violation (3 years if willful)

Option 3: Private Lawsuit

Employees may file a lawsuit against their employer in state or federal court. Under Indiana’s Wage Claims Statute (IC § 22-2-9) and Wage Payment Statute (IC § 22-2-5), and the FLSA (29 U.S.C. § 216(b)), remedies may include:

  • Back wages owed
  • Liquidated damages (up to double the amount of wages due under Indiana law, or equal to unpaid wages under the FLSA)
  • Reasonable attorney’s fees and court costs

Important: Under Indiana law, employees with claims exceeding $6,000 under the Wage Claims Statute must obtain approval from the Indiana Department of Labor before filing a private suit.

Retaliation Protection

Under the FLSA (29 U.S.C. § 215(a)(3)), employers cannot retaliate against employees for:

  • Filing an overtime wage complaint
  • Participating in an investigation
  • Testifying in proceedings related to overtime violations

The Indiana Department of Labor notes that Indiana law provides no additional job protection for employees who file a wage claim against a current employer beyond federal protections. However, retaliation itself is a separate legal violation.

Source: Indiana DOL Wage Claim page — https://www.in.gov/dol/wage-and-hour/online-wage-claim-form/; 29 U.S.C. § 216(b); Indiana Code § 22-2-9

Penalties for Overtime Violations in Indiana

Federal FLSA Penalties
Penalty type Amount
Back wages Full amount of unpaid overtime owed
Liquidated damages Equal to unpaid wages (effectively doubles recovery)
Civil monetary penalty Up to $2,451 per violation (willful/repeated — adjusted annually)
Criminal prosecution Willful: fines up to $10,000; second offense: up to 6 months imprisonment

Source: 29 U.S.C. § 216

Indiana State Penalties

Under Indiana’s Wage Payment Statute (IC § 22-2-5-2) and Wage Claims Statute (IC § 22-2-9), when a court finds that an employer failed to pay wages in bad faith, the employer must pay:

  • The full amount of wages owed
  • Liquidated damages of up to two times (2×) the wages due (i.e., up to treble damages total when combined with the base wages) when the failure to pay was not in good faith
  • Reasonable attorney’s fees
  • Court costs

Indiana courts have interpreted the liquidated damages provision broadly to protect workers. The Indiana Supreme Court has affirmed that the wage statutes apply to all employees, regardless of immigration status, and that treble damages and attorney’s fees serve as a substantial deterrent to employers.

Source: Indiana Code § 22-2-5-2; Indiana Code § 22-2-9; Indiana DOL — https://www.in.gov/dol/wage-and-hour/wage-and-hour-home/

Indiana Overtime Law Updates (2025–2026)

Federal Changes Affecting Indiana

  • July 4, 2025: One Big Beautiful Bill Act (P.L. 119-21) signed — created federal overtime tax deduction for tax years 2025–2028 under IRC § 225. FLSA-covered nonexempt employees may deduct up to $12,500/year (single) or $25,000/year (joint) of the premium portion of overtime from federal taxable income.
  • November 15, 2024: DOL salary threshold rule vacated by federal court in Texas v. U.S. Department of Labor (No. 4:24-cv-00499) — exempt salary threshold remains $684/week ($35,568/year).

Indiana State Changes (2026)

  • February 2026: Indiana Senate Bill 243 passed the Senate 47–1 and the House 77–19. The bill conforms Indiana’s state and county income tax to the federal overtime deduction under IRC § 225, for the 2026 tax year only. Qualifying Indiana workers can deduct the same overtime amount from state and county taxable income when filing their 2026 state income tax returns in 2027. As of March 1, 2026, the bill is awaiting Governor Mike Braun’s signature.

Source: Indiana SB 243 (2026) — https://iga.in.gov/legislative/2026/bills/senate/243; Indiana Capital Chronicle, February 2026

No Change to Minimum Wage

Indiana’s minimum wage remains $7.25/hour, tied to the federal minimum wage. Indiana Code § 22-2-2-10.5 prohibits local governments from enacting ordinances setting a minimum wage above the state or federal rate. No local minimum wage increases are in effect anywhere in Indiana.

Last reviewed: March 1, 2026
Next scheduled review: June 1, 2026

Frequently Asked Questions About Overtime in Indiana

Does Indiana have overtime laws?

Yes. Indiana has its own overtime law under Indiana Code § 22-2-2-4, which requires employers to pay nonexempt employees 1.5 times their regular rate for all hours worked over 40 in a workweek. However, because most Indiana employers are covered by the federal FLSA (which has the same 40-hour threshold), the FLSA governs most Indiana workers. Indiana’s state law serves as a backstop for employers not subject to the FLSA.

What is the overtime rate in Indiana in 2026?

The overtime rate in Indiana is 1.5 times the employee’s regular rate of pay for all hours worked over 40 in a workweek. Based on Indiana’s minimum wage of $7.25/hour, the minimum overtime rate is $10.875/hour. Indiana does not have a double-time requirement.

Does Indiana require daily overtime?

No. Overtime in Indiana is calculated on a weekly basis only. Working more than 8 hours in a single day does not trigger overtime pay under Indiana law or the FLSA unless total weekly hours exceed 40.

Is mandatory overtime legal in Indiana?

Yes, generally. Indiana is an at-will employment state, and the FLSA imposes no limit on the number of hours an employer may require an adult employee to work. Employers may discipline or terminate employees who refuse to work overtime, unless a law, employment contract, or collective bargaining agreement provides otherwise. All mandatory overtime hours must be compensated at the applicable overtime rate.

Am I exempt from overtime in Indiana?

Exemption depends on both salary level and job duties. Under the FLSA, employees must earn at least $684/week ($35,568/year) on a salary basis AND perform executive, administrative, or professional duties to be exempt. Indiana does not have a higher exempt salary threshold than the federal standard. If you are paid hourly or earn less than $684/week, you are very likely nonexempt and entitled to overtime.

Can salaried employees get overtime in Indiana?

Yes. Being paid a salary does not automatically make an employee exempt from overtime. Salaried employees who earn less than $684/week, or who do not meet the duties tests under 29 C.F.R. Part 541, are nonexempt and entitled to overtime pay. Overtime for salaried nonexempt employees is calculated by dividing the weekly salary by 40 to determine the regular hourly rate, then multiplying by 1.5 for each overtime hour.

Is overtime taxed in Indiana?

Overtime pay is normally subject to both federal and Indiana state income taxes. However, for 2025–2028, FLSA-covered nonexempt employees may deduct up to $12,500 (single) or $25,000 (married filing jointly) of the premium portion of overtime from federal taxable income under IRC § 225. Additionally, for the 2026 tax year only, Indiana SB 243 (awaiting Governor Braun’s signature) would allow the same deduction from Indiana state and county income tax. These deductions do not affect Social Security or Medicare taxes.

How do I calculate the overtime tax deduction?

For time-and-a-half pay, the deductible amount (the “premium portion”) equals one-third of total overtime pay. For example, if you earned $9,000 in total overtime at time-and-a-half, the qualified overtime compensation is $3,000. The IRS confirms this calculation method in IRS Notice 2025-69. This deductible amount applies to both the federal deduction and, for 2026, the Indiana state deduction under SB 243.

Source: IRS Notice 2025-69 — https://www.irs.gov/newsroom/questions-and-answers-about-the-new-deduction-for-qualified-overtime-compensation

How do I file an overtime complaint in Indiana?

File a wage claim online with the Indiana Department of Labor, Wage and Hour Division at https://www.in.gov/dol/wage-and-hour/online-wage-claim-form/ or call (317) 232-2655. Alternatively, file with the U.S. DOL Wage and Hour Division at 1-866-487-9243. The Indiana statute of limitations is 3 years from the date the claim arose; the FLSA deadline is 2 years (3 years for willful violations).

Can my employer fire me for refusing overtime in Indiana?

In most cases, yes. Indiana is an at-will employment state, and employers may discipline or terminate employees who refuse to work mandatory overtime, unless a law, employment contract, or collective bargaining agreement provides otherwise. However, employers cannot retaliate against employees for filing an overtime wage complaint or participating in a wage investigation.

Can my employer give comp time instead of overtime pay in Indiana?

Under the FLSA, private-sector employers cannot offer comp time in lieu of overtime pay. Employees who work overtime must receive cash wages at 1.5× their regular rate. Public-sector employers (state and local government) may offer comp time at 1.5 hours per overtime hour, up to 240 hours (or 480 hours for public safety and emergency response workers). Indiana state government follows this federal framework.

Source: 29 U.S.C. § 207(o)

Does working on weekends or holidays count as overtime in Indiana?

No. Under both the FLSA and Indiana Code § 22-2-2-4, working on weekends or holidays does not automatically constitute overtime. Overtime depends solely on total hours worked in the workweek, regardless of which days those hours occurred. Some employers voluntarily pay premium rates for weekend or holiday work, but this is not required by state or federal law.

What happens if my employer doesn’t pay overtime in Indiana?

Under the FLSA and Indiana’s wage statutes, employees may recover unpaid overtime wages, liquidated damages (up to double the amount owed under Indiana law when bad faith is found), and attorney’s fees. The Indiana Department of Labor can attempt to recover wages on your behalf for claims of $30 to $6,000 at no charge. For larger claims, you may file a private lawsuit after obtaining IDOL approval.

Source: Indiana Code § 22-2-5-2; 29 U.S.C. § 216(b)

What is the statute of limitations for overtime claims in Indiana?

Under Indiana law: 3 years from the date the claim arose. Under the FLSA: 2 years (3 years if the violation was willful). Because Indiana’s 3-year period is longer than the standard FLSA period, claims filed under Indiana’s wage statutes may recover a longer period of back wages in some circumstances. Workers should consult with the Indiana Department of Labor or an attorney about which statute applies to their situation.

Source: Indiana Code § 22-2-2-9; 29 U.S.C. § 255(a)

Does Indiana’s minimum wage apply to my employer?

Indiana’s state Minimum Wage Law (IC § 22-2-2) applies to employers with 2 or more employees who are not covered by the federal FLSA. Because the FLSA covers most Indiana businesses (those with annual gross sales of $500,000+ or engaged in interstate commerce), most workers are governed by the FLSA rather than Indiana’s state law. The minimum wage is $7.25/hour under both laws. Indiana prohibits cities and counties from setting higher local minimum wages.

Source: Indiana Code § 22-2-2-3; Indiana Code § 22-2-2-10.5 — https://www.in.gov/dol/wage-and-hour/wage-and-hour-faqs/

How does Indiana SB 243 affect my 2026 overtime pay?

Indiana SB 243, passed by both chambers of the Indiana General Assembly in February 2026, allows Indiana workers to deduct their qualified overtime compensation from Indiana state and county taxable income — the same amount already deductible from federal income taxes under IRC § 225. This applies only to overtime earned in the 2026 tax year (reported on your 2026 return, filed in 2027). The bill was sent to Governor Braun for signature in late February 2026. It does not affect FICA taxes or your paycheck amount.

Source: Indiana SB 243 — https://iga.in.gov/legislative/2026/bills/senate/243

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