Indiana Senate Bill 162 Change Notification
This measure makes several changes to Indiana’s unemployment insurance law that may affect benefit eligibility, employer coverage, and claims processing:
- Vacation and sick pay excluded from deductible income
- Payments for accrued vacation or sick leave will no longer be treated as deductible income when determining unemployment benefits. As a result, individuals may be eligible to receive full unemployment benefits even if they receive these types of payments at separation.
- “Suitable work” definition limited to extended benefit claims
- The definition of suitable work has been narrowed to apply primarily to extended benefit claims. This change may impact how refusals of work are evaluated outside of extended benefit periods.
- Revised definition of employment for certain organizations
- The law removes the requirement that religious, charitable, and educational organizations must employ four or more individuals to be considered subject to unemployment insurance. This change may expand coverage to smaller organizations that were previously excluded.
- Limited direct deposit disbursements authorized
- The Department of Workforce Development is now permitted to issue certain unemployment benefit payments via direct deposit, allowing for more efficient distribution of benefits.
- Additional benefits for disaster unemployment assistance claims
- Individuals filing for Disaster Unemployment Assistance may qualify for expanded benefits under qualifying circumstances, increasing the potential duration or amount of assistance available.
Effective Date
July 1, 2026
Indiana SB 162 Implication to Stakeholders
These changes may result in increased unemployment benefit payouts on certain claims, particularly due to the exclusion of vacation and sick pay from deductible income, which could impact employer chargeability and future unemployment tax rates. Employers, especially smaller religious, charitable, and educational organizations, should review their status to determine if they are now subject to unemployment insurance coverage and related reporting requirements. Additionally, adjustments to how “suitable work” is defined may influence claim determinations involving job refusals. Overall, employers should be prepared for potential changes in claims handling, benefit costs, and compliance obligations under Indiana law.
Recommended Action
Employers should review their separation and payroll practices to account for the exclusion of vacation and sick pay from deductible income, as this may increase potential claim costs. Organizations, particularly smaller religious, charitable, and educational employers, should evaluate whether they are now subject to unemployment insurance coverage and ensure proper registration and reporting compliance. Employers should also monitor unemployment claims more closely, including job refusal issues, and respond promptly to agency requests. Finally, consider consulting with your unemployment insurance representative or advisor to assess potential impacts on your tax rate and claims strategy.
