Unpaid Wages and Wage-and-Hour Claims in Indiana

When a paycheck is short, late, or missing, the problem is immediate — rent, groceries, and bills don't wait while an employer "looks into it." Indiana wage cases can involve final paychecks, unpaid hours, overtime, commissions, deductions, bonuses, or misclassification. Which path you take depends on what kind of pay is owed, whether you still work there, how your employment ended, and whether state law, federal law, or both apply. And here's something worth knowing up front: under Indiana law, unpaid wages can carry penalties well beyond the wages themselves.

A wage claim is about compensation you earned but were not paid. It can overlap with a bad workplace or a wrongful termination, but it is its own kind of claim — and it does not run through the EEOC. The first question is practical: what exactly is missing from the paycheck? The second is legal: which law governs that missing pay? In Indiana, the answer usually involves one of two state wage statutes, the federal Fair Labor Standards Act (FLSA), or both.

Indiana's Two Wage Statutes — and Why the Difference Matters

This is the most important thing to understand about Indiana wage law, because it determines how and where you pursue a claim. Indiana has two separate statutes, and which one applies turns on how your employment ended.

The Wage Payment Statute (Ind. Code § 22-2-5) governs employees who are still employed or who voluntarily left (quit, or temporarily left). Its key advantage: a worker can generally sue directly in court without first going through any administrative agency.

The Wage Claims Statute (Ind. Code § 22-2-9) governs employees who were involuntarily separated — fired or laid off — or whose work was suspended due to a labor dispute. The crucial difference: a worker generally cannot go straight to court. The claim must first be submitted to the Indiana Department of Labor (IDOL). For claims over $6,000, the worker generally needs IDOL's approval or a release before filing a private lawsuit; for smaller claims, IDOL can pursue collection. After filing, the worker (or their attorney) typically must obtain a waiver or referral from IDOL or the Attorney General's office before proceeding in court.

This is not a technicality. The Indiana Supreme Court held in Walczak v. Labor Works–Fort Wayne LLC, 983 N.E.2d 1146 (Ind. 2013) that whether a worker was voluntarily or involuntarily separated is effectively jurisdictional — file in the wrong forum and a court may lack authority to hear the case at all. So the seemingly simple question "did you quit or were you let go?" can change the entire procedure. And as some Indiana cases show, a worker may have claims under both statutes — for example, commissions or vacation pay that came due while still employed, plus wages unpaid after an involuntary separation.

The Penalty That Makes Indiana Wage Claims Distinctive

Indiana wage law does not just let you recover the wages you were owed. Under Ind. Code § 22-2-5-2, an employee who prevails may also recover liquidated damages — calculated at 10% of the unpaid amount per day, capped at two times the wages due — plus reasonable attorney fees and costs. In practical terms, that means a successful claim can total up to roughly three times the unpaid wages (the wages plus double as liquidated damages), and the attorney-fee provision is what makes many otherwise-small wage cases worth pursuing. These remedies are available under both statutes. Liquidated damages generally hinge on whether the employer's failure to pay was in bad faith or lacked a good-faith basis, so they are not automatic in every case.

Indiana Wage Law and Federal Wage Law Both Matter

The two systems overlap but are not identical. Indiana's statutes address when wages must be paid, what deductions are allowed, and how final pay is handled. The FLSA is the source of federal minimum wage, overtime, recordkeeping, and child-labor rules, plus anti-retaliation protection. One Indiana wrinkle worth knowing: employers covered by the FLSA are generally not also covered by Indiana's separate minimum-wage and overtime statute — for most workers, the federal FLSA is the operative overtime law.

Some disputes are mostly state-law matters (unpaid commissions, final wages, promised PTO under a written policy). Others are mostly federal (unpaid overtime for non-exempt employees). Many involve both.

Final Paychecks in Indiana

A missing final paycheck is one of the most common wage problems. Indiana generally ties final wages to the next regular payday following separation. The applicable statute depends on how you left — Wage Payment Statute if you quit, Wage Claims Statute if you were fired or laid off — which again affects the procedure. Do not assume an employer's "we hold the last check" practice is lawful; final-pay obligations are set by statute, not company preference. Final-paycheck disputes commonly include regular wages and salary through the last day, overtime and commissions earned before separation, earned bonuses, accrued PTO if payable under the policy or agreement, and improper deductions for equipment, uniforms, shortages, or loans. Save your termination notice, pay stubs, timesheets, commission plan, PTO policy, handbook, and any message explaining a withheld payment.

Minimum Wage

Indiana's minimum wage is $7.25 per hour, the same as the federal minimum wage under the FLSA. Minimum-wage problems can arise even for workers who aren't paid hourly — piece-rate, tipped, day-rate, commission, and salaried non-exempt employees can all have minimum-wage rights depending on total pay and hours worked. Common issues include unpaid pre-shift or post-shift work, unpaid training or required meetings, tip-credit errors, and deductions (uniforms, tools) that push effective pay below the minimum. A pay review has to look at both the rate and the actual hours, because a paycheck can look fine on its face while still failing to pay for all compensable time.

Overtime Under the FLSA

Under the FLSA, covered non-exempt employees must receive overtime — at least one and one-half times their regular rate — for hours worked over 40 in a workweek. Two points trip people up constantly:

First, overtime is calculated by the workweek, not the pay period. An employer generally cannot average a 50-hour week and a 30-hour week across a biweekly pay period to wipe out overtime; each week stands on its own.

Second, the "regular rate" is not always the base hourly rate. It can include non-discretionary bonuses, shift differentials, and certain commissions, which must be folded in before calculating the overtime premium. Underpayment often hides in this calculation. Other recurring overtime problems include paying straight time for overtime hours, off-the-clock work, automatic meal deductions, on-call and travel time, and "suffered or permitted" work the employer knew about but never formally approved.

Being Salaried Does Not Automatically Mean "No Overtime"

This is one of the most expensive misconceptions in employment. A salary alone does not make an employee exempt. Under the FLSA, the common executive, administrative, professional, computer, and outside-sales exemptions generally require all of: payment on a salary basis, a salary at or above the salary-level threshold, and job duties that actually fit the exemption.

On the salary level: as of 2026 the threshold is $684 per week ($35,568 per year). (The U.S. Department of Labor issued a 2024 rule raising that figure, but a federal court vacated the rule in November 2024, reverting to the 2019 level; litigation has continued, so this figure is worth confirming at the time of any claim.)

Crucially, job titles do not control — calling someone a "manager," "lead," or "coordinator" does not make them exempt if their actual duties don't meet the test. A salaried worker whose real duties are non-exempt may be owed overtime going back months or years, which is why misclassification cases can be substantial.

Independent Contractor Misclassification

Receiving a Form 1099 instead of a W-2 does not, by itself, make a worker a legal independent contractor. Misclassification matters because employees are entitled to minimum wage, overtime, wage-payment protections, unemployment insurance, and workers' compensation coverage that contractors may not receive. Courts and agencies generally apply an "economic realities" analysis under the FLSA — looking at factors like who controls the work, the worker's opportunity for profit or loss, investment in equipment, permanence of the relationship, the degree of skill and independent judgment, and how integral the work is to the business. (The governing federal regulation has itself been in flux — a 2024 rule was set aside and a replacement was proposed in early 2026 — so the precise test is worth confirming.) A worker can even be classified one way for tax purposes and differently for wage-law purposes.

Deductions From Paychecks

Indiana and federal law both limit what an employer can take out of a paycheck. Under Indiana's wage-deduction and wage-assignment rules (Ind. Code § 22-2-6), many voluntary deductions require a written, signed authorization that meets specific statutory requirements, and certain categories are restricted. Separately, under the FLSA, a deduction is unlawful if it cuts pay below the required minimum wage or reduces overtime. Common flashpoints include uniforms, tools, cash-drawer shortages, broken property, training costs, loans or advances, and overpayment recovery. Keep your pay stubs, any deduction authorizations you signed, handbook provisions, and messages explaining the deduction.

Commissions, Bonuses, PTO, and Vacation Pay

Not every wage case is about hourly pay, and these claims are usually policy-driven — the written plan is the evidence. For commissions, the key questions are when the commission is earned, whether payout depends on invoicing or collection, whether the plan required you to be employed on the payout date, and whether chargebacks apply. For bonuses, much turns on whether the bonus was truly discretionary or was an earned, definite incentive (which can also affect the regular-rate overtime calculation). Indiana generally treats earned vacation/PTO as wages when it is earned under the employer's policy or agreement — but the policy's own terms can determine whether unused PTO is payable at separation. Save the commission plan, bonus plan, handbook, offer letter, payout-term emails, sales records, and PTO balances.

Hours Worked: Off-the-Clock Time, Breaks, and Training

Many wage cases turn not on the rate but on uncounted hours. Under the FLSA, compensable work generally includes time the employer "suffers or permits" the employee to work — so if a supervisor knew or had reason to know work was being performed, it may have to be paid even without formal approval. Frequent culprits: pre-shift setup, post-shift closing, required meetings and training, work-related calls or messages outside hours, travel between job sites during the workday, employer-controlled waiting time, and working through automatically-deducted meal breaks. If lunch is auto-deducted but you regularly work through it, that time may be owed.

Wage Claims Are Not EEOC Claims

A frequent and costly mistake: assuming every workplace problem must start with an EEOC charge. It doesn't. Discrimination and harassment claims require an EEOC or Indiana Civil Rights Commission charge first — but wage claims follow a different path entirely, through the Indiana Department of Labor, the U.S. Department of Labor, or court, depending on the facts. A single situation can contain both kinds of claims (say, denied overtime and a discriminatory firing), and they will have different agencies, deadlines, and remedies. Sorting out which is which, early, is what protects your rights. For more on the EEOC process, see our article on filing an EEOC charge in Indiana.

Retaliation for Asserting Wage Rights

The FLSA prohibits retaliation against employees who assert wage-and-hour rights — filing a complaint, cooperating with an investigation, or testifying. Federal courts have recognized that even certain oral complaints can be protected. Retaliation can take the form of firing, demotion, discipline, reduced hours, or schedule changes following a pay complaint. If you were punished after raising a wage issue, preserve the messages and a timeline, and act promptly — retaliation claims have their own deadlines. For more on the law of retaliation and wrongful termination, see our article on Indiana wrongful termination and workplace retaliation.

Deadlines and How Far Back You Can Recover

Deadlines are decisive in wage cases, and different claims run on different clocks:

• Indiana wage statutes (both § 22-2-5 and § 22-2-9): generally a two-year limitations period, running from when the wages were due — not from when you discovered the problem.
• FLSA: generally two years, extended to three years for willful violations.
• Wage Claims Statute (§ 22-2-9): remember the added step — IDOL submission before court.

Because these periods cut off older unpaid wages as time passes, delay can shrink the claim. An arbitration agreement or collective bargaining agreement can also change where and how a claim proceeds, which is one more reason to gather records and get advice early.

Remedies

The available remedy depends on the law and facts, but commonly includes the unpaid wages, liquidated damages (up to double the wages under Indiana law, or an equal additional amount under the FLSA), attorney fees and costs, interest, and — for retaliation — reinstatement or lost-wage relief. The employer's good faith, the type of claim, the proof of hours or pay owed, and the limitations period all affect the outcome, so not every wage error produces the same recovery.

What Records Help

Employers have recordkeeping duties under wage law, but employees should keep their own records anyway: pay stubs, timecards, schedules, clock-in/out screenshots, messages about hours, commission and bonus plans, PTO policies, handbooks, offer letters, deduction authorizations, bank deposits, and any documents (route logs, dispatch records, job tickets) showing hours actually worked. If records are thin, build a timeline — list the weeks involved, approximate hours, amounts paid versus owed, and names of supervisors or coworkers who saw the work.

Unpaid Wage Cases in Central Indiana

Hammond Legal is based in Anderson and helps employees with wage-and-hour matters across Central Indiana, including Madison County (Anderson), Hamilton County (Noblesville), Hancock County (Greenfield), Marion County (Indianapolis), Shelby County (Shelbyville), Delaware County (Muncie), and Henry County (New Castle). Depending on the facts, a wage claim may run through an Indiana agency, a federal agency, or the courts.

If your paycheck is short, your final check is missing, your overtime went unpaid, your employer made deductions you didn't authorize, or your commissions were withheld, the details matter — what was earned, what was paid, what documents control, and which law applies. Speaking with an attorney early gives you the clearest picture of your options, particularly given the two-year clock. Contact Hammond Legal at 317-284-9944 or info@hammond.legal.

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