Indiana Deductions from Pay laws & HR compliance analysis

Indiana Deductions from Pay: What you need to know

An employer may make deductions from an employee's wages only if the deduction is required by court order; by state, local, or federal law; or if the employee expressly authorizes the deduction in writing in accordance with Indiana law on wage assignments (IN Code Sec. 22-2-6-2).
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In Indiana, an authorization for a payroll deduction is considered to be a wage assignment. Any assignment of wages is valid only if:
• It is in writing and signed personally by the employee;
• It is revocable at any time by the employee on written notice to the employer;
• It is agreed to in writing by the employer; and
• A copy of the written agreement is delivered to the employer within 10 days after its execution(IN Code Sec. 22-2-6-2(a)).
In addition to the above requirements, a wage assignment is valid only if it is made for purposes of paying any of the following (IN Code Sec. 22-2-6-2(b)):
• Premiums on an insurance policy obtained for the employee by the employer
• Contributions to a charitable or nonprofit organization
• Purchase price of U.S. Savings Bonds
• Purchase of the employing company's stock (but the employee has the right to cancel a purchase agreement at any time)
• Union dues
• Merchandise, goods, or food that an employer offers to an employee for the employee’s benefit, use, or consumption when the employee makes the request in writing
• Contributions of the employee to a medical expense plan, pension plan, or other designated benefits
• Payment to an employee's account at a credit union or an organization regulated under Indiana's consumer credit code
• Premiums on life insurance policies and annuities purchased by the employee
• Purchase price of ...

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