Effective July 1, 2015, amendments passed by the General Assembly will make changes to Indiana’s Assignment of Wages Statute. The amendments include new additional purposes for which an employee can make a wage assignment. The new purposes for which an employee can make a wage assignment are:
(6) Purchase price of merchandise, goods, or food offered by the employer and sold to the employee for the employee’s benefit, use, or consumption, at the written request of the employee.
(14) The purchase of uniforms and equipment necessary to fulfill the duties of employment. The total amount of wages assigned may not exceed the lesser of:
(A) two thousand five hundred dollars ($2,500) per year; or
(B) five percent (5%) of the employee’s weekly disposable earnings as defined by Ind. Code Section§ 24-4.5-5-105(1)(a).
(15) Reimbursement for education or employee skills training. However, a wage assignment may not be made if the education or employee skills training benefits were provided, in whole or in part, through an economic development incentive from any federal, state, or local program.
(16) An advance for:
(A) payroll; or
Ind. Code § 22-2-6-2.
In addition, the amendments to Indiana’s Assignment of Wages Statute add subsection (c). Subsection (c) sets forth an interest rate that can be charge on loaned or advanced amounts.
The amendments to Indiana’s Assignment of Wages statute did not change the conditions that need to be satisfied for an employee’s wage assignment to be valid. To be valid an employee’s assignment of wages still must satisfy the following conditions:
(1) The assignment is:
(A) in writing;
(B) signed by the employee personally;
(C) by its terms revocable at any time by the employee upon written notice to the employer; and
(D)agreed to in writing by the employer.
(2) An executed copy of the assignment is delivered to the employer within ten (10) days after its execution.
(3) The assignment is made for a purpose described in subsection (b).
Ind. Code § 22-2-6-2. Before taking wages out of an employee’s pay, it is important to make sure that all requirements set forth in Indiana’s Assignment of Wages Statute are satisfied as improperly withholding wages from an employee could result in a cause of action against you for failure to pay wages under Ind. Code § 22-2-5-2 (“Failure to Pay Statute”). Under the Failure to Pay Statute, an employer “who shall fail to make payment of wages to any such employee… is liable to the employee for the amount of unpaid wages…” and the employee can recover their attorney’s fees. Ind. Code § 22-2-5-2 as amended. In addition, if the Court finds the employer “was not acting in good faith, the court shall order…that the employee be paid an amount equal to two (2) times the amount of wages due to the employee.” Id.
Written by Todd Small, Attorney at Law, Richard A. Mann, P.C.