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A Guide to PEO in Indiana

PEO

Author

Deel Team

Published

September 11, 2024

Last Update

September 26, 2024

Table of Contents

The benefits of partnering with a PEO in Indiana

Indiana’s payroll, employment, and labor laws

Choosing the right PEO for your organization

Manage your Indiana, US, and global workers with Deel

Key takeaways
  1. PEOs offer localized expertise and compliance support to help businesses navigate Indiana's complex labor laws and ensure compliance with federal regulations.
  2. A PEO in Indiana enables businesses to offer more cost-effective and extensive employee benefits packages, improving their capacity to attract and retain skilled workers in a competitive employment landscape.
  3. Utilizing a PEO offers small businesses and startups in Indiana access to expert HR and payroll management, enabling them to focus on growth and development.

Partnering with a professional employer organization (PEO) in Indiana can offer significant benefits to businesses of all sizes. By outsourcing HR functions to a PEO, companies can save time and money, gain access to localized expertise, improve compliance, and attract top talent.

Read on to unpack the process and benefits of using a PEO in Indiana.

The benefits of partnering with a PEO in Indiana

A PEO is a third-party entity to which your organization can outsource a wide range of employee management tasks, resulting in the following benefits:

Save time and money on HR operations

By outsourcing tasks to a PEO, you can increase your HR operations’ efficiency and cost-effectiveness. PEOs often reduce costly labor hours with sophisticated HR technology platforms that automate payroll processing, track payroll spending, and provide real-time analytics. This also allows your team to focus on strategic planning and analysis.

A PEO is often more cost-effective than hiring a team of full-time HR staff and offers a pricing model that’s predictable month-over-month which helps limit unforeseen costs. 

Benefit from localized expertise

Startups and small businesses often cannot fund in-house payroll and HR expertise that covers every state. With a PEO, they gain access to extensive local knowledge and resources, such as: 

  • Compliance with state and federal laws and regulations
  • Payroll and tax withholding and filing
  • Benefits administration
  • Reporting
  • Recruitment and hiring
  • Onboarding employees
  • Worker classification
  • Unemployment and workers’ compensation claims
  • Workplace policies
  • Data privacy

Competitive employee benefits plans

Attractive benefits packages help you acquire and retain top talent. Because PEOs co-employ a large number of employees, they can offer client companies competitive rates on benefits, such as health insurance, life and disability insurance, and retirement plans. PEOs help Indiana companies of all sizes compete with the comprehensive employee benefits packages and perks that larger corporations offer.

PEO services also give you the flexibility to work with your existing benefit providers while offloading compliance and administration. 

Stronger compliance and legal protection

You enter into a co-employment relationship when you partner with a PEO. You offload legal liabilities and compliance risk to the PEO for payroll, employment tax, labor laws, and more. You remain responsible for the day-to-day management of your workforce.

A PEO assumes responsibility for ensuring compliance with federal requirements and state-specific legislation. This protects your organization from the potential financial, reputational, and legal repercussions of non-compliance with payroll, employment, and labor laws in Indiana.

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Indiana’s payroll, employment, and labor laws

Employers in Indiana must comply with the federal employment regulations and contributions stipulated in the Fair Labor Standards Act (FLSA), such as federal unemployment tax, unemployment insurance, social security taxes, and Medicare taxes. 

Indiana employers must also follow state-specific regulations about leave and paid time off, union rights, and other labor laws. A PEO can streamline your organization’s compliance with the following legislation, and more:

Payroll and benefits laws

Income tax

Indiana has a flat individual income tax rate. This means all residents pay the same percentage of income tax, regardless of earnings.

Paydays and pay periods

Employers in Indiana must pay wages to employees either semi-monthly or biweekly if requested by the employee. Payments must be made within 10 business days after the end of the pay period.

Final paychecks

Upon termination, Indiana requires employers to pay an employee's final wages by the next scheduled payday.

Pay transparency laws

Indiana currently has no pay transparency laws. Employers aren’t required to disclose pay ranges to job applicants or employees.

Workers’ compensation insurance

Workers’ compensation insurance financially supports eligible employees in the event of work-related injuries or occupational diseases, and protects employers’ liability. Indiana employers must fund workers' compensation insurance for almost every employee (exemptions apply) under IC 22-3-2 through IC 22-3-6.

In Indiana, employers must obtain and maintain worker's compensation insurance from a certified company within the state. Alternatively, they must provide the Worker's Compensation Board with proof of their financial capability to directly pay compensation as required under IC 22-3-2 to IC 22-3-6. 

In this case, the employer may have to pay a security deposit or bond to ensure the payment of its compensation liabilities and fees such as a $500 USD initial application fee, a $250 renewal fee for employers with self-insurance certification, and a $250 late filing fee.

Severe penalties for non-compliance apply. If the Worker's Compensation Board requests proof of compliance and the employer fails to provide it within ten days, the board can notify the employer of the violation and impose a daily fine of $100 from the date of the request, until compliance is achieved. 

Employers who fail to obtain insurance could be fined up to $10,000 and must cease business until they show proof of insurance coverage. They may also be ordered to cover compensation up to double the amount outlined in the IC, medical expenses, and reasonable attorney fees.

Minimum wage

In Indiana, employers with at least two employees must pay at least the basic federal minimum hourly wage of $7.25. This applies to employees aged 16 and above.

However, there's an exception for tipped employees, as employers can use a tip credit towards their wage obligations. This means that employers are allowed to pay tipped employees a lower cash wage of at least $2.13 per hour. If the employee’s combined cash wage and tips equate to less than $7.25 per hour, the employer should apply a supplementary tip credit of up to $5.12 per hour.

Overtime

Overtime compensation for non-exempt employees is mandatory in Indiana after 40 hours of work per week. The applicable overtime premium rate is 1.5 times the employee's regular rate.

Vacation time

Private employers in Indiana aren't legally required to grant unpaid or paid vacations or holiday leave for employees. 

Sick leave

Indiana doesn't have a mandatory paid sick leave law, and any sick leave policy is generally up to the employer to determine. While private employees aren’t entitled to paid sick leave, ‌some may be eligible for up to 12 weeks of unpaid sick leave under The Family and Medical Leave Act (FMLA).

Public employees are entitled to paid vacation leave, paid holiday leave, and paid sick leave.

Labor laws

Meal breaks and rest periods

Indiana doesn't require employers to provide paid or unpaid meal or rest breaks for adult employees. However, if breaks shorter than 30 minutes are provided, they must be paid.

Worker safety regulations

Worker safety in Indiana is governed by Indiana OSHA (IOSHA), which follows federal OSHA guidelines. The agency ensures workplace safety standards, addressing hazards and health risks.

Right to work

Indiana is a ‘right-to-work’ state, meaning employees cannot be compelled to join or pay dues to a labor union as a condition of employment.

Employment laws

At-will employment

Indiana is an at-will employment state, meaning employers can terminate employees without cause, provided the termination does not violate anti-discrimination laws or contractual agreements.

Worker classification

Indiana follows regulations for distinguishing between employees and independent contractors, as defined by the IRS. Misclassifying employees can lead to penalties related to wage withholding, unemployment taxes, and workers' compensation.

Discrimination

Indiana law prohibits employment discrimination based on race, religion, sex, disability, and other protected categories. Complaints can be filed with the Indiana Civil Rights Commission (ICRC) within 180 days of the discriminatory act.

Non-compete agreements

Indiana enforces non-compete agreements, but they must be reasonable in scope and duration. However, a pending FTC rule that could ban non-competes is currently under review, which may affect Indiana law in the future.

Equal pay

While Indiana doesn't have a specific state equal pay act, federal laws, such as the Equal Pay Act of 1963, apply, requiring equal pay for equal work regardless of gender.

In Indiana, a PEO can compliantly navigate complex regulations on behalf of your organization.

Choosing the right PEO for your organization

The following steps will help you select the PEO which best aligns with your business ​needs and goals.

1. Define your business needs

Analyze your current and projected HR-related costs, identifying areas where a PEO could offer savings or efficiencies. Outline its scalability, as well as your needs for payroll management, benefits administration, HR compliance, workers’ compensation, and risk management.

2. Research PEOs with Indiana expertise

Focus your search on PEOs that have a strong presence and a proven track record with the state’s complex labor laws and business environment.

3. Check out the range of services and quality of benefits

Review the PEO’s offerings to ensure they meet your company’s specific needs. Evaluate the quality and cost-effectiveness of the benefits packages provided.

4. Assess compliance and risk management capabilities

Understand the PEO’s approach to continuous compliance with Indiana laws and its risk management capabilities.

5. Evaluate customer service and support

Consider the PEO’s reputation for customer service and support, responsiveness, and use of technology.

6. Review and negotiate the contract

Carefully review the PEO contract to understand all terms, conditions, fees, and exit clauses, with the help of legal advisors if necessary. Compare its pricing structure with other PEOs.

7. Plan for implementation and transition

Prepare for the transition to the PEO by communicating changes to your employees, integrating systems, and setting up processes for ongoing collaboration.

Manage your Indiana, US, and global workers with Deel

Whether you’re hiring in one state, across the country, or around the world, Deel makes payroll and HR management easy, 

As your PEO*, Deel takes care of payroll, HR, and benefits administration while ensuring state tax compliance and handling sensitive issues, including:

  • Expert payroll administration
  • Advanced tax and benefits compliance
  • Access to benefit plans from leading carriers and benefits administration
  • Robust HRIS with free IT, Finance, and PTO management
  • State-specific trainings, HR policies, and on-demand HR support

Book a demo to learn more about using Deel’s PEO in Indiana.

*Provided by Deel PEO US, LLC, Deel Employment Services, LLC, or through Deel's partnership with licensed providers where required.

Disclaimer: This article is intended for informational purposes and shouldn't be considered legal advice. Consult a qualified licensed attorney for help on legal issues. Content is accurate at the time of publishing.

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