Unpaid Wages in Indiana: How to Recover What You Are Owed

The Fair Labor Standards Act (FLSA), 29 U.S.C. section 201 et seq., establishes the federal baseline for wage recovery. The FLSA requires employers to pay at least the federal minimum wage ($7.25/hour) and overtime at 1.5 times the regular rate for hours worked over 40 in a workweek. The law covers most private employers with annual gross sales of at least $500,000 and certain covered industries regardless of sales, as well as federal, state, and local government employers.

Under the FLSA, employees may recover unpaid wages, an equal amount as liquidated damages, plus attorney fees and costs through civil litigation or administrative complaint. The statute of limitations is generally 2 years for non-willful violations and 3 years for willful violations. The U.S. Department of Labor Wage and Hour Division (WHD) investigates complaints but does not enforce private party suits; employees must file in federal court or state court. The FLSA does not require employers to provide paid time off, sick leave, or severance, and it does not mandate frequency of wage payment, leaving those matters to state law.

Employers cannot deduct amounts from wages for uniforms, equipment, or cash register shortages if doing so reduces wages below minimum wage or cuts into overtime compensation. Retaliation against employees for complaining about wage violations is prohibited.

Indiana Code section 22-2-1-1 et seq. establishes Indiana's wage payment requirements, which are generally aligned with federal law but provide important state-specific protections. Indiana's minimum wage is $7.25 per hour (the federal floor), and overtime must be paid at 1.5 times the regular rate for hours over 40 per week, matching the FLSA.

Under Indiana Code section 22-2-1-2, employers must pay all earned wages by the next regular payday. An employer must establish a regular payday and communicate it to employees. Wages must be paid in lawful U.S. currency unless an employee voluntarily agrees in writing to another form of payment. Indiana does not permit meal period deductions unless the employee is completely relieved of duty.

Indiana's state law is stronger than federal law in one critical respect: Indiana Code section 22-2-7-2 allows employees to recover double damages (treble damages in some jurisdictions' interpretation) plus attorney fees and court costs for willful violations of wage laws. This is more favorable than the FLSA's liquidated damages, which equal only the unpaid wages themselves (not doubled). However, an employee must prove the violation was willful; negligent wage violations may not qualify.

Both public and private employers with any employees are covered by Indiana wage law. The state Department of Labor administers wage claims and can issue citation and penalty orders. Employees may also pursue civil litigation in state court for wage recovery. Indiana does not have a separate wage and hour agency like some states; wage claims are handled by the Department of Labor's Wage and Hour Division. Unlike some states, Indiana does not require paid time off or specify a maximum notice period for wage garnishment, deferring to federal law and the debtor-creditor framework.

Indiana Code section 22-2-1-3 permits certain deductions from wages that do not apply in other jurisdictions: deductions for taxes, Social Security, unemployment insurance, court-ordered garnishments, and valid wage assignments (if in writing and voluntary) are permitted. However, deductions for uniforms, tools, cash shortages, breakage, or customer complaints are prohibited if they reduce wages below minimum wage or cut into overtime compensation.

Employers have a defense if they can show they acted in good faith and made a clerical or administrative error in calculating or paying wages, though they must correct the error promptly. Employers are not liable for wage violations if the violation resulted from force beyond the employer's control, such as a bank failure or government action preventing payment.

Indiana does not require employers to pay unused paid time off upon termination, but if an employer offers PTO, it is treated as earned wages and must be paid according to the employer's stated policy. If the policy is ambiguous, courts construe it in favor of the employee.

Employees classified as independent contractors (1099) are not covered by Indiana wage law; however, misclassification is common and the Department of Labor uses a strict test. An individual is an independent contractor only if the hiring party does not control the manner and means of performance, the individual operates an independent business, and the individual holds themselves out to the public.

Union employees covered by a collective bargaining agreement may have different wage claim procedures specified in the agreement, though the agreement cannot waive the right to minimum wage or overtime under state or federal law. Certain professionals such as outside salespersons may be exempt from overtime if they meet specific Department of Labor tests, though the burden is on the employer to prove exemption.

Step 1 — Document the violation. Keep detailed records of all hours worked (dates, times, tasks), your regular rate of pay, and any communications with your employer about pay. Save your paystubs, timesheets, email exchanges, and notes about what wages were promised versus what you received. If you were not paid at all, keep records of the promised start date and rate. Document the date you discovered the underpayment or non-payment. Take screenshots of electronic timesheets or scheduling systems that show hours worked.

Step 2 — File an internal complaint with your employer if you feel safe doing so. Notify your manager, HR department, or owner in writing (email is fine) that you have not been paid for specific hours or were underpaid, and request immediate payment. Keep a copy of this communication. Employers often correct errors when notified. However, you are not required to complain internally first before filing with the Department of Labor, and filing an internal complaint may not stop the statute of limitations clock.

Step 3 — File a wage claim with the Indiana Department of Labor, Wage and Hour Division. Go to www.in.gov/dol/wage-and-hour/ or call (317) 232-2655. You must file within 2 years of the date the wages were due (or 3 years if the violation was willful). The claim can be filed online, by mail, or in person at the Department of Labor office in Indianapolis. You will need to provide: your name, contact information, employer name and address, dates of unpaid work, hours worked, your regular rate of pay, the total amount owed, and a description of what happened. Attach copies of paystubs, timesheets, and any written communications.

Step 4 — The Department of Labor will investigate your claim. They will send a notice to your employer and request payroll records, timesheets, and a response. The investigation typically takes 30–60 days. You may be contacted for additional information. The Department may conduct a wage audit of the employer's records for all employees. If they find a violation, the Department will issue a citation and order the employer to pay back wages plus penalties. The employer may appeal to the Department's hearing officer. This process is administrative and does not require you to hire an attorney, though you may have one represent you.

Step 5 — If the Department of Labor's order is not paid, or if you prefer civil court, consult an employment attorney licensed in Indiana. An attorney can file a lawsuit in Indiana state court or (if federal jurisdiction exists) in federal court under the FLSA. Many attorneys work on contingency for wage cases, meaning they take a percentage of the recovery rather than an hourly fee. An attorney can pursue double damages plus attorney fees for willful violations, which may make the case more valuable. Unpaid wage claims do not expire if you sue in court; the statute of limitations in civil court is 2 years for non-willful violations and 3 years for willful violations.