Guides

Indiana restaurant pay rules (2026): what to pay tipped and non-tipped staff

Mays TeamApril 8, 2026
The Edit position dialog in Mays for a food runner, with a default wage of $2.13 an hour and Tipped position ticked, so the position shares in the tip pool by default

Indiana's minimum wage is $7.25 an hour, the federal rate, and state law sets it to whatever the federal law pays (Ind. Code title 22); tipped staff can be paid $2.13 in cash wages (Indiana DOL, tipped employees). The state law itself reaches only employers the federal Fair Labor Standards Act (FLSA) doesn't cover, so for most restaurants the federal law is the one that applies, with the same figures (Ind. Code title 22). What's new is a tip-pool law signed in February 2026 and made to reach back to June 2024. It spells out who counts as tipped, food runners, barbacks and hosts included, and says working face to face with customers isn't what decides it (Ind. Code title 22).

This page puts Indiana's figures in one place. It covers what you owe tipped staff like servers and bartenders, what you owe everyone else, and two example weeks with the math shown. Every figure links to the official page it comes from.

Updated September 24, 2026: these figures are still current. Indiana's minimum wage is $7.25 an hour ($2.13 cash wage for tipped employees). No increase is scheduled. Since July 1, 2026, employers no longer register teen workers in the Youth Employment System: the law requiring it was repealed, and the system has been shut down (HEA 1302 (2026); Indiana DOL, youth employment).

This is general information, not legal advice. Whether a rule applies can depend on your business's size and your own facts; the note at the end says more.

Indiana pay rules at a glance

As of April 8, 2026:

Rule

Indiana

Minimum wage

$7.25 an hour, since July 24, 2009

Tipped employees: minimum cash wage

$2.13 an hour, if you take the tip credit

Maximum tip credit

$5.12 an hour

Who counts as tipped

Customarily and regularly receives more than $30 a month in tips

Overtime

1.5× the regular rate after 40 hours in a workweek; no daily overtime

Meal and rest breaks for adults

Not required by Indiana or federal law

Next change

None scheduled

Sources: Indiana DOL poster; Indiana DOL, tipped employees; US DOL, tipped wages by state; Indiana DOL, overtime; Indiana DOL, breaks; Ind. Code title 22.

Who Indiana's law covers. Indiana's minimum wage law applies to employers with 2 or more employees, but it leaves out any employer the FLSA covers, and it doesn't count workers under 16 (Ind. Code title 22). A restaurant with $500,000 or more in yearly sales is covered by the FLSA, and a smaller one can be too, through staff whose work regularly involves commerce across state lines (DOL Fact Sheet #14). Either way, the figures below are the same.

Who counts as a tipped employee in Indiana

In Indiana, a tipped employee is someone who customarily and regularly receives more than $30 a month in tips (Indiana DOL, tipped employees).

In a restaurant that usually means servers, bartenders, bussers and counter staff who serve customers, including baristas who get tips. Cooks and dishwashers usually aren't tipped employees. Only tips the employee actually receives count. If someone works two jobs, say a server who also works prep shifts, the tip credit applies only to the hours in the tipped job (DOL Fact Sheet #15).

Indiana's 2026 tip-pool law names waiters, counter servers who serve customers, bussers, barbacks, food runners, hosts and bartenders as tipped employees, and dishwashers and cooks as staff who aren't. What decides it is whether someone's work directly supports, or is, the service a customer tips for; dealing with customers directly isn't required (Ind. Code title 22).

What you must pay tipped staff in Indiana

Servers, bartenders, bussers and baristas who get tips can be paid a lower cash wage, with part of their tips counted toward the minimum wage. That's the tip credit, and it comes with conditions:

  • Pay at least $2.13 an hour in cash wages. That's the $7.25 minimum wage minus the most you can credit from tips, $5.12 (Indiana DOL, tipped employees).
  • Cash wages plus tips must reach $7.25 for every hour worked, week by week. If tips fall short in a workweek, you pay the difference by the regular payday for that week (DOL Fact Sheet #15).
  • Tell them first. Before you take the tip credit, tell each tipped employee, in writing or out loud: the cash wage you pay, the tip credit you claim, that the credit can't be more than the tips they actually get, that they keep all their tips except through a valid tip pool, and that the credit doesn't apply unless you've told them all this (DOL Fact Sheet #15).
  • Overtime is figured on the full minimum wage. An overtime hour is worth 1.5 × $7.25 = $10.875. After the $5.12 tip credit, you pay at least $5.755 of it in cash wages (DOL Fact Sheet #15).

You don't have to take the tip credit. If you pay tipped staff the full $7.25 an hour, their tips are all on top, there's nothing to make up at the end of the week, and you can put kitchen staff in the tip pool (see below).

Indiana also makes the employer responsible for backing up the tip credit it takes with the tips its employees report (Ind. Code title 22).

What you must pay non-tipped staff in Indiana

Cooks, dishwashers, prep cooks, and cashiers or counter staff who don't get tips are paid like any other hourly employee:

  • At least $7.25 an hour for every hour worked (Indiana DOL poster). No tip credit applies.
  • The same goes for a tipped employee's hours in a non-tipped job, like a server's prep shift (DOL Fact Sheet #15).
  • Overtime is at least 1.5 times their regular rate for hours over 40 in a workweek. At $7.25 an hour, that's $10.875 (Indiana DOL, overtime).
  • Can they share in the tip pool? Only if you take no tip credit and pay everyone in the pool at least the full minimum wage. If you take a tip credit, a pool you require can include only staff who customarily and regularly receive tips (Ind. Code title 22). Managers and supervisors can never take from the pool.

Younger workers. Indiana repealed its own training wage in 2020 (Indiana DOL, training wage), but the federal law lets an employer the FLSA covers pay a worker under 20 at least $4.25 an hour for their first 90 consecutive calendar days on the job (DOL Fact Sheet #32).

Worked examples (made-up numbers)

The names, hours and tips below are made up. The rates are Indiana's as of April 8, 2026.

A server's week: when you have to top up

Sam is a server paid the $2.13 cash wage. He works 35 hours in each of two weeks: a busy one with $470.00 in tips and a slow one with $110.00.


Busy week

Slow week

Hours worked

35

35

Cash wages (35 × $2.13)

$74.55

$74.55

Tips received

$470.00

$110.00

Cash wages + tips

$544.55

$184.55

Minimum for the week (35 × $7.25)

$253.75

$253.75

You pay on top

$0.00

$69.20

In the slow week, $110.00 in tips covers only part of the $179.20 tip credit (35 × $5.12), so you pay the difference by the regular payday: $253.75 − $184.55 = $69.20. In the busy week you owe nothing extra, and every dollar of tips is still Sam's.

A cook's week with overtime

Ana is a line cook paid the Indiana minimum wage, $7.25 an hour. Over five days she works 8, 10, 9, 9 and 9 hours: 45 hours in all.


Hours

Rate

Pay

Regular hours

40

$7.25

$290.00

Overtime hours (over 40)

5

$10.875 (1.5 × $7.25)

$54.38

Total

45


$344.38

Overtime is counted by the workweek, and hours can't be averaged across two weeks: a long week earns overtime even if the next one is short (US DOL, overtime). Bonuses can change the rate too; see Time clock, breaks and overtime: first-month payroll mistakes to avoid.

Tip pooling rules in Indiana

Indiana has its own tip-pool rules (Ind. Code title 22): A 2026 law, which reaches back to June 27, 2024, lets an employer require tipped employees such as servers, bussers, food runners, hosts, bartenders and barbacks to share tips only with other tipped employees; an employer that pays everyone at least the minimum wage may also include staff who don't get tips, such as cooks and dishwashers. The employer, its managers and supervisors (an owner with a 20 percent stake who helps run the business included) never receive pooled tips, and employees are told any required contribution. The law is part of Indiana's minimum wage law, which leaves out employers the federal FLSA covers.

For an employer the federal Fair Labor Standards Act covers, federal rules apply (US DOL, tips):

  • The business, its managers and supervisors never keep employees' tips. A manager can't take anything from a pool; they may keep only tips for service they directly and solely provide. An owner with a real stake who helps run the business counts as a manager too.
  • With a tip credit, a pool you require can include only staff who customarily and regularly receive tips: servers, bartenders, bussers, counter staff who serve customers.
  • Without a tip credit, when everyone in the pool gets at least the full minimum wage, you can include cooks and dishwashers.
  • Card fees: you may reduce a card tip by the percentage the card company actually charges you, and no more (DOL Fact Sheet #15).
  • Service charges aren't tips. Money you share with staff from a mandatory service charge is wages, and it counts in the regular rate for overtime (DOL Fact Sheet #15).
  • Pay pooled tips out by the regular payday for the week or pay period (DOL Fact Sheet #15).

How to split a pool fairly, with a worked example: Tip pooling for new restaurant owners.

Overtime in Indiana

Indiana's overtime law draws the same line as the federal one (Indiana DOL, overtime): non-exempt employees get at least 1.5 times their regular rate for hours over 40 in a workweek (US DOL, overtime).

A workweek is any fixed, recurring stretch of seven days that you choose, and hours can't be averaged across two weeks. There's no daily overtime, no double time and no seventh-day premium under Indiana or federal law, and weekend or holiday hours don't earn a premium by law.

For tipped staff, overtime is figured on the full minimum wage, not the cash wage (see the tipped section above).

Breaks in Indiana

  • Meal breaks: No specific Indiana rule found — federal rules apply (Indiana DOL, breaks). The FLSA does not require meal periods. A bona fide meal period (typically 30+ minutes) is not work time (US DOL, breaks).
  • Rest breaks: No specific Indiana rule found — federal rules apply (Indiana DOL, breaks). The FLSA does not require breaks. Short breaks an employer offers (about 5 to 20 minutes) are paid work time (US DOL, breaks).
  • Minors: No separate Indiana rule for minors; the adult rules above apply to them too (Indiana DOL, youth employment).

Other Indiana rules that affect pay

  • Paid sick leave: No specific Indiana rule found — federal rules apply (Indiana DOL, sick days). No federal paid sick leave requirement. The FMLA provides unpaid, job-protected leave (up to 12 weeks) where it applies (US DOL, sick leave).
  • Food handler training: A certified food protection manager is required, not a card for every employee. Who: at least one certified food protection manager responsible for all periods of operation, who need not be there at all hours; a new establishment has six months from opening or a change of ownership (IC 16-42-5.2).

Paydays, final pay and deductions

  • Paydays. Pay at least twice a month, or every two weeks if requested, for all wages earned up to no more than 10 business days before payday (Ind. Code title 22).
  • Final pay. Someone you let go is paid on the regular payday for the pay period they left in, and someone who quits by the next regular payday (Ind. Code title 22).
  • Late wages cost more. If a court finds you didn’t act in good faith, it orders liquidated damages equal to 2 times the wages due, and you pay the employee’s attorney’s fees either way (Ind. Code title 22).
  • No fines, and limits on uniform deductions. You can't fine an employee out of their wages (Ind. Code title 22). A uniform or equipment the job needs can come out of pay only if the employee chooses to assign wages for it, up to $2,500 a year or 5% of weekly disposable earnings, whichever is less (Indiana DOL, wage and hour).

Teenagers and alcohol

  • Hours for 14- and 15-year-olds. No work before 7 a.m. or after 7 p.m. (9 p.m. from the start of June through Labor Day), and no more than 3 hours on a school day or 18 in a school week (Ind. Code title 22). Since January 1, 2025, 16- and 17-year-olds can work the same hours as adults (Indiana DOL, youth employment).
  • Register teen workers. An employer with 5 or more workers aged 14 to 17 registers them in the state’s Youth Employment System (YES) and keeps the entries current (Indiana DOL, youth employment changes).
  • Alcohol. A server aged 18 to 20 who has finished server training can serve alcohol in a restaurant's dining area when a trained supervisor aged 21 or older is there, but can't tend bar. Every alcohol server finishes server training within 120 days of starting (Ind. Code title 7.1).

Local rates in Indiana

Indiana law bars cities and counties from requiring private employers to pay a minimum wage other than the state or federal one, or to provide employment benefits, such as paid sick leave, that state or federal law doesn't require (Ind. Code title 22). The same limits reach local rules on working conditions and on attendance, scheduling and leave policies. So the state's $7.25 minimum wage applies everywhere in Indiana, and there's no local rate table for Indiana.

How Mays helps

Mays runs the schedule, time clock, tip pool and payroll export for each location. For Indiana pay rules, that means:

  • Positions and wages. Give each position a default hourly wage, for example the tipped cash wage for servers and at least the minimum wage for cooks. Turn on Labor law compliance and Mays looks up each location's minimum wage from its address and warns you when a position's default wage, someone's hourly wage or a punch is below it, comparing tipped positions with the tipped cash wage when it has that figure. It never blocks the save.
  • A tip pool per location. Split pooled tips by hours worked, equally or by FTAR score, per pay period or day by day, and choose which positions receive. Until you pick positions under Who receives, the positions marked Tipped share the tips; if no position is marked, everyone who worked does, cooks included. So if you take a tip credit, tick Tipped position only on positions whose staff get tips, or pick them yourself. A punch with no position counts under its shift's position, or else the person's primary or only position at that location; with neither, its hours get no share, and the tip pool card shows how many punches that leaves out. Leave managers and admins out of the pool is on by default, so leave it on. The tips come from your connected POS at that location (Square or Union) or from tips synced with 7shifts time punches, and each person's share appears in the Tip Payouts report and the payroll export. With Labor law compliance on, Mays can take your card processor's fee out of card tips, but check Indiana's rule before you turn that on: the tip pool card links the official source.
  • The tip-credit make-up is yours to check. Mays doesn't compare a tipped employee's cash wages plus tips with the minimum wage, so check each workweek the way the server example above does.
  • Time clock and timesheets. Staff clock in on their phone, a shared kiosk or an NFC tag. Timesheets run by pay period. Overtime is counted by the workweek, and with Labor law compliance on, by any daily, double-time and seventh-day rule the location's state sets too, which Mays reads from its address; the schedule's labor cost, the reports and the pay summary all include it.
  • Payroll export. A standard CSV or a Gusto-format CSV with regular and overtime hours and pooled tips for each employee. A card surcharge you share with staff goes in as wages, not tips.
  • Food protection manager certificate. Turn on Labor law compliance and keep your certified manager's certificate in Mays with its expiry date. Each location shows whether someone there holds a valid one, and Mays reminds them and their managers before it expires.
  • Mark who's tipped. Open a position and tick Tipped position for the jobs Indiana's law treats as tipped, like food runners, bussers and hosts, with the default wage you pay them. With no positions picked under Who receives, the tip pool shares tips among the positions marked Tipped. Mays doesn't decide who counts as tipped, so apply Indiana's test to each position yourself.
  • Pay periods that match your paydays. Under Scheduling → Settings → Pay periods, choose every two weeks or twice a month, and timesheets and the payroll export follow those periods.

Sources

Every figure on this page comes from these official pages, as they read on the date shown.

This page is general information, not legal advice. Laws change, and coverage rules (your business's size, whether federal law covers you) decide which of them apply. Check the pages above, and ask an employment lawyer or accountant about your situation.

Run Indiana payroll on the right numbers

Set each position's wage, turn on the tip pool with managers left out, and let the time clock count overtime by the workweek. Then payroll is an export, not an evening.

Start your free trial: 30 days, every module, no card needed. Setting up a tip pool? Read Tip pooling for new restaurant owners.