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Wage Deductions Under Indiana Law
January 04, 2009

Indiana only allows deductions to be made from wages for certain reasons specified by statute and only if certain procedural safeguards are met. Deductions made from an employee's wages generally are defined as "wage assignments." An assignment of the wages of an employee is valid only if the assignment is:

(1) agreed to in writing;
(2) signed by the employee personally; and
(3) by its terms revocable at any time by the employee upon written notice to the employer.
Under Indiana law, employers may only make wage deductions for the following purposes:
  • Payments on loan from employer supported by separate loan document signed by parties
  • Dues to medical expense plan
  • Payment to credit union, non-profit organization, or association of employees
  • Payment to any person or organization regulated by UCC for deposit or credit to employee’s account
  • Premiums on life insurance policies
  • Purchase price of shares of mutual funds
  • A judgment that employee owes subject to garnishment rules under Indiana’s garnishment statute.
Indiana employer’s regularly make improper wage deductions. Wage deductions that violate Indiana law include:
  • Deductions for employee uniforms
  • Deductions for education expenses
  • Deductions for damaged property
  • Deductions for overdrawn vacation balances
If you believe that your employer is unlawfully making deductions from your wages, contact Gibbons Jones, P.C. for a free case evaluation. Employers who make illegal wage deductions may be liable for treble damages, plus payment of your attorney’s fees.


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