When your company undertakes the Indiana employee separation process, it’s important to understand how the state’s employee termination laws differ from other states.
This employee separation checklist and guide is designed to provide an overview of Indiana’s final paycheck requirements, separation notices, and severance agreements, as well as reporting employee termination and withdrawing registration to do business in the state.
Indiana Employee Separation Checklist
- Provide final paycheck
- Issue separation notice
- Execute severance agreement
- Report termination
- Withdraw registration to do business
1. Final Paycheck Requirements in Indiana
Regardless of the reason for employee separation, Indiana law requires employers to pay terminated employees on the next scheduled payday. If, however, an employer is unaware of where to send the final paycheck after resignation, the employee may send a demand. The employer will have 10 days to pay following receipt.
While Indiana law mandates that all wages earned must be paid upon separation, employers are not obligated to pay out unused vacation time unless it is specified in an employee contract or company policy.
It’s advisable for employers to issue the final paycheck in the usual manner, although the state does not mandate a specific location for payment. Employers who fail to pay final wages may face penalties. These include paying the unpaid wages, employee costs, attorney’s fees, and potentially up to twice the amount owed, if the employer acted in bad faith.
2. Firing Employees in Indiana
Indiana is an at-will employment state, but it does require that employers send a notice about the availability of unemployment insurance after separating from or firing employees. This notice must be provided at the time of separation.
The Indiana Department of Workforce Development has provided approved language for this notification:
“Unemployment Insurance (UI) benefits are available to workers who are unemployed and who meet the requirements of state UI eligibility laws. You may file a UI claim in the first week that employment stops or work hours are reduced.
For assistance or more information about filing a UI claim or questions about the status of your UI claim once filed, visit www.Unemployment.IN.gov. You will need to provide the state UI agency with the following information in order for the state to process your claim:
- A valid email account – your email address will become your Uplink Username.
- Driver’s license or valid ID, address, Social Security number, date of birth, and phone number.
- Last employer’s name, mailing address, phone number, dates of employment, and reason you are unemployed.
- Bank routing number and account number if choosing direct deposit as your payment option (NOTE: Key2Benefits prepaid MasterCard® is also available).”
3. Severance Agreements in Indiana
Employers entering into claims releases with employees must clearly specify the claims being released under both federal and state law. In Indiana, this includes potential claims under the Indiana Civil Rights Law, Indiana Wage Payment Statute, Indiana Wage Claims Statute, Indiana Minimum Wage Law, and Indiana’s leave laws. It’s crucial that any release of claims only covers those that arose before the agreement’s effective date, ensuring that future claims are not inadvertently waived.
Employers should also carefully review relevant federal laws. Notably, the NLRB’s recent decision, along with guidance from its General Counsel, limits the use of non-disparagement and confidentiality clauses in severance agreements.
4. Reporting Employee Termination in Indiana
If you have an employee with Income Withholding for Support Order (“IWO”), report the employee’s termination as soon as possible to the child support agency, court, or attorney that issued the IWO. To expedite the process, register for online reporting with the Federal Office of Child Support Enforcement here.
Alternatively, you can report an employee’s termination by completing the Notification of Employment Termination or Income Status section of the IWO. Then fax or mail it to the child support agency that issued it. You will need the following information:
- Employee Name
- Employee Case Identifier
- Last Known Home Address
- New Employer Address (if known)
- Date of Employee Separation
5. Withdraw Registration to do Business in Indiana
Separation from your last Indiana employee may end your need to do business within the state. If you would like to formally withdraw your Indiana business registration, For-Profit Corporations, Non-Profit Corporations, and Limited Liability Companies (LLCs) all must file this Statement of Withdrawal.
Stay Compliant with Indiana Employee Separation Requirements
Understanding employer obligations and employee rights in Indiana Employee Separation Agreements can be complicated—but it doesn’t have to be.
Looking for instant access to a reliable database of federal, state, and local laws? Check out SixFifty’s employment law platform. With SixFifty, you can research state-specific laws, and generate multi-state handbooks, policies, addenda, agreements, and more in a matter of minutes.
Want to see how it works? Schedule a free demo today!
Looking for employee separation laws for a different state? Our interactive map makes it easy to find all employee termination requirements by state.
