Indiana Employment Law: An Overview of the Wage Payment Statute and the Wage Claims Statute

A topic in Indiana employment law that recently has generated some interesting debates involves the Wage Payment Statute under Ind. Code. 22-2-5 and the Wage Claims Statute under Ind. Code. 22-2-9. Both of these statutes govern the options available to an employee who believes his or her employer has failed to pay wages owed. However, it is important to know the differences between the two statutes.

First, the Wage Payment Statute governs the time within which employers must pay wages to their employees. If an employee assigns a wage payment claim to the Department of Labor (“DOL”) and the DOL accepts that assignment, the employee cannot bring a lawsuit under the Wage Payment Statute, unless the DOL ratifies, is substituted, or joins the employee’s lawsuit.

Second, Wage Claims Statute concerns disputes over the amount of compensation. Claims under the Wage Claims Statute must be filed with the DOL. After filing an application with the DOL, a waiver or referral must be requested from the DOL or the Attorney General’s Office (“AGO”) so the employee’s attorney can proceed with the lawsuit.

Submitting an application to the DOL is relatively easy. Normally, the employee’s attorney will handle the process and submit the application using forms provided by the DOL. Otherwise, an application for wage claim can be filed online through the DOL’s website.

It is important to discuss with an attorney or the DOL, if the employee does not have an attorney, the various requirements regarding filing an application. For example, the DOL will refuse to process the application if the employee’s basis is minimum wage, overtime, holiday pay, or sick pay. Additionally, the DOL will not process the application if the employer has filed for bankruptcy is not located in the State of Indiana. Also, if you performed the work as an independent contractor, the DOL will not process the application. The DOL will only process applications if the claim is between $30.00 or $6,000. In all other situations, the employee will need to retain an attorney.

The Indiana Supreme Court recently addressed the Wage Claim Statute and the Wage Payment Statute in the case Walczak v. Labor Works – Fort Wayne LLC, 983 N.E.2d 1146 (Ind. 2013). This decision clarified what claims are to be brought under the Wage Payment Statute, as opposed to the Wage Claims Statute.

The Walczak case turned on the meaning of “separated from the pay-roll” as that term is used in the Wage Claims Act. The supreme court found that the issue was truly jurisdictional; if the worker was involuntarily separated from the payroll, the trial court had no jurisdiction over her claim, but if she voluntarily left her employment, the trial court did have jurisdiction.

The supreme court concluded that when an employee who did not leave her job on her own terms made a claim for wages, it made sense to subject her claim to administrative review before it may proceed directly to court. A day labor employee was not separate from the pay-roll for the purposes of the Wage Claim Act unless that employee had no immediate expectation of possible future employment with the same employer. The worker did have such an immediate expectation. She continued to work for the agency on a sporadic basis for the next four weeks. The worker was not separated from the pay-roll and need not comply with the requirements of the Wage Claims Act.

The Walczak case extended the law and held that “[w]hen an employee who did not leave her job on her own terms makes a claim for wages, it makes sense to subject her claim to administrative review before it may proceed directly to court.” An employee is not separated from the payroll for the purpose of the Wage Claims Act unless than employee has no immediate expectation of possible future employment with the same employer.