Indianapolis, Ind. (January 31, 2024) – The year 2023 presented significant new developments in labor and employment law in the state of Indiana. Such developments included restrictions on noncompete agreements for physicians, the enactment of a consumer data privacy law, and new tax legislation. Below is a summary of these key changes.

Restrictions on Noncompete Agreements for Physicians

Significant restrictions were placed on noncompete agreements for physicians in Indiana when Enrolled Senate Bill 7 took effect on July 1, 2023. Under Senate Bill 7, noncompete agreements with primary care physicians are explicitly prohibited. A primary care physician is defined as a physician practicing in family medicine, general pediatric medicine, or internal medicine. However, any noncompete agreement signed with a primary care physician prior to July 1, 2023 will remain enforceable.

Other specialty physicians, such as gynecologists, neurologists, or cardiologists, are also subject to restrictions regarding noncompete agreements. Beginning July 1, 2023, a noncompete agreement with a physician is not enforceable if (1) the employer terminates the physician's employment without cause; (2) the physician terminates the physician's employment for cause; or (3) the physician's employment contract has expired and the physician and employer have fulfilled the obligations of the contract.

Furthermore, under this new law, if a physician decides to exercise the option to purchase a release from a noncompete agreement, the employer is required to negotiate in good faith with the physician to agree to a reasonable purchase price. Either party can require mediation if the parties cannot agree to a reasonable purchase price. Under such circumstances, the party seeking mediation must serve a notice of intent to pursue mediation to the other party no later than 35 days after the physician requests to purchase a release.

Employers should review any noncompete agreements with physicians to ensure they are compliant with this new law.

Enactment of the Indiana Consumer Data Protection Act

On May 1, 2023, Indiana Governor Eric Holcomb signed into law Enrolled Senate Bill 5, known as the Indiana Consumer Data Protection Act (INCDPA). Indiana is the seventh state to enact such a privacy law. However, the INCDPA will not take effect until January 1, 2026.

The INCDPA is a consumer privacy law that applies to companies conducting business in Indiana or companies producing products or services targeted to Indiana residents that either: (1) control or possess personal data of at least 100,000 Indiana consumers; or (2) control or process personal data of at least 25,000 Indiana consumers and derive more than 50% of gross revenue from the sale of personal data. Under the INCDPA, personal data is defined as any information linked or reasonably linked to an identified or identifiable individual, except for de-identified data, aggregate data, or publicly available information.

Many entities and types of data are specifically exempt from the INCDPA. Some entities excluded include state agencies, institutions of higher education, and nonprofit organizations. Certain data excluded from the INCDPA includes information protected under HIPPA and information governed by the Fair Credit Reporting Act, the Farm Credit Act, and the Family and Educational Rights and Privacy Act.

The INCDPA includes the following key provisions:

  • Indiana consumers have a right (1) to confirm whether their personal data is being processed, (2) to correct inaccuracies for personal data previously provided, (3) to delete personal data previously obtained or provided, and (4) to obtain a copy or a representative summary of their personal data previously provided;
  • Indiana consumers may opt out of the processing of personal data for purposes of targeted advertising, the sale of personal data, or the use of personal data for profiling purposes;
  • A controller of personal data must limit the collection of personal data to what is adequate, relevant, and reasonably necessary for the purposes in which the data is processed; and
  • A controller of personal data must create and implement reasonable security practices to protect the confidentiality and accessibility of personal data.

While this law will not take effect for another two years, we will continue to monitor the enactment of the INCDPA.

New Tax Legislation

Finally, on May 4, 2023, Governor Holcomb also signed Senate Bill 419, which includes certain tax provisions that may affect those who perform employment-related duties in Indiana. Specifically, Senate Bill 419 provides that any compensation received by an individual who is (1) not a resident of Indiana, and (2) receives compensation for employment duties performed in Indiana for 30 days or less during the calendar year is exempt from the adjusted gross income tax under the bill. This change is effective January 1, 2024.

Minimum Wage

Indiana has not increased the minimum wage for non-exempt workers for 2024.

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