Indiana Employment Law for Martial Arts Schools: Non-Competes, Pay and Hiring Rules

Indiana courts will enforce an employee non-compete only if it protects a legitimate business interest and is reasonable in time, territory and scope.

Can a martial arts school in Indiana make instructors sign a non-compete?

Indiana has no general noncompete statute; courts enforce employee noncompetes only if they protect a legitimate interest (such as confidential information or customer goodwill) and are reasonable in time, geography and activity, and courts view them with disfavor. Indiana follows a strict ‘blue pencil’ rule: a judge may cross out unreasonable words but will not rewrite or add terms, even if the contract has a reformation clause (Heraeus Medical v. Zimmer, Ind. 2019), so a badly drafted clause can be thrown out entirely. The only statutory limits are for physicians (Ind. Code 25-22.5-5.5, tightened by SEA 7 in 2023 and SEA 475 effective July 1, 2025, which bans new physician-hospital noncompetes); there is no income threshold or notice period for ordinary workers. A martial arts instructor can be bound by a narrow, reasonable noncompete, but a broad one is risky because the court will not fix it for you.

Can you stop a departing instructor from soliciting your students?

Customer (student) non-solicitation clauses are judged under the same reasonableness test and are generally easier to enforce than a full noncompete. The Indiana Supreme Court has said they can even cover prospective customers if limited to people the employee actually dealt with or had confidential information about, and limited to a reasonable time. Draft narrowly: list the students/families the instructor worked with and a defined period, because the blue-pencil rule will not save an overbroad clause.

Can you stop a departing instructor from recruiting your staff?

No-poach / employee non-solicit clauses are allowed only if reasonable. In Heraeus v. Zimmer (2019) the Indiana Supreme Court voided a clause barring solicitation of ‘any person employed’ by the company because it reached employees with no access to confidential information; it could not be blue-penciled, so it fell entirely. Limit the clause to staff the departing employee worked with or who have access to your confidential business information.

What is the minimum wage for instructors in Indiana?

$7.25 per hour (same as the federal rate; unchanged in 2026). No 2027 increase is scheduled. Indiana law does not allow cities to set their own higher minimum wage, so there are no local minimums.

When do instructors earn overtime?

Overtime follows the federal rule: time-and-a-half after 40 hours in a workweek, with no daily overtime. Indiana has no state salary threshold for exempt employees above the federal level.

When is the final paycheck due?

Whether the employee quits or is fired, all earned wages are due no later than the next regular payday (Ind. Code 22-2-5-1 for those who leave voluntarily; Ind. Code 22-2-9-2 for those who are separated). Earned commissions are wages and must be included; unused vacation must be paid only if your policy or practice says it is payable. Bad-faith nonpayment can expose you to up to treble damages plus attorney fees.

What background checks can you run on instructors who teach children?

Indiana has no ban-the-box law for private employers, and a 2017 law (SB 312) prevents cities and counties from barring private employers from asking about or using criminal history, so you may ask on the application. However, you may not ask about, or refuse to hire because of, a sealed or expunged arrest or conviction (Indiana’s ‘Second Chance’ expungement law). Federal FCRA rules apply when you use a background-check company; Indiana has no separate state FCRA. There is no Indiana law requiring fingerprint checks for private martial arts schools; the state also has no salary-history ban for private employers.

Are martial arts instructors mandated reporters of child abuse?

Yes. Indiana is a universal-reporting state: any individual who has reason to believe a child is a victim of abuse or neglect must report immediately to the Department of Child Services (hotline 1-800-800-5556) or local law enforcement (Ind. Code 31-33-5-1 to -4). Staff who learn of abuse through their job must also tell the person in charge, but that does not replace their own report. Knowingly failing to report is a Class B misdemeanor.

What can a dress code or grooming policy require?

Indiana has no CROWN Act or state hair-discrimination law. The Indiana Civil Rights Law protects religion (relevant to religious dress) and sex, but does not list sexual orientation or gender identity; federal Title VII (15+ employees) does protect them under Bostock, and some cities (e.g., Indianapolis) have local ordinances. Build dress-code flexibility for religious head coverings and hair where safety allows.

How far can a morals or conduct clause reach into off-duty life?

Indiana has no general lawful off-duty conduct law, but it does protect employees from being fired or refused hire for using tobacco off the job. Recreational marijuana is illegal in Indiana, so you may keep a drug-free policy. There is no state protection for off-duty political activity beyond federal law, so morals clauses are generally enforceable if not discriminatory.

Do you have to disclose pay or allow staff to discuss it?

Indiana has no pay-range disclosure law for job postings and no state wage-discussion protection beyond the federal NLRA, which already protects most non-supervisory employees who discuss pay.

What privacy rules apply to student and parent records?

The Indiana Consumer Data Protection Act took effect January 1, 2026, but it applies only to businesses that process personal data of 100,000+ Indiana residents a year (or 25,000+ and earn over half of revenue from selling data). A typical martial arts school is far below that, though children’s data should still be protected and federal COPPA applies to online collection from under-13s.

Other Indiana rules that catch school owners

Indiana has no state paid sick leave mandate, no predictive scheduling law and no state meal-break rule for adult employees. Teen assistant instructors are subject to Indiana and federal child labor hour limits for 14-17-year-olds; check the Indiana Department of Labor youth employment rules before scheduling minors.

What to watch in Indiana

SEA 475 (effective July 1, 2025) expanded the physician noncompete ban, showing a trend toward restrictions. A 2025 bill to ban nearly all noncompetes (HB 1625) and a 2026 plumbing-trade noncompete bill (HB 1054) both died in committee, but similar bills could return.

The bottom line for Indiana schools

If you use a non-compete at all, reserve it for senior roles with a real legitimate interest, and keep time, territory and activity narrow. Where Indiana law allows it, a narrow student non-solicitation clause limited to students the employee actually taught, a confidentiality agreement, and real control of the student database protect a school far better.

Sources

• Foley & Lardner – Indiana Adds More Restrictions on Physician Noncompete Agreements (SEA 475)
• Ogletree – Indiana Supreme Court Reaffirms Blue Pencil Doctrine (Heraeus v. Zimmer)
• Indiana State Library – Duty to report child abuse
• Seyfarth – Indiana SB 312 (2017) preempts local ban-the-box
• Faegre Drinker – Indiana’s revised Second Chance (expungement) law
• Hunton – Indiana privacy law to take effect January 1, 2026
• FRED – State Minimum Wage Rate for Indiana
• Amundsen Davis – Indiana HB 1625 proposal on noncompete agreements

Also for Indiana: Martial arts laws in Indiana · Indiana membership contracts

What every martial arts school staff package should contain

• Offer or employment agreement: the legal employer, the role and duties, workplace, pay, employment status and termination terms, reviewed against local rules. U.S. at-will language does not belong in a Canadian contract.
• Compensation schedule: hourly or salary terms, commissions and bonuses, and exactly when each is earned and paid. Record all working time, not only time on the mat. See instructor pay structures and overtime.
• Appearance and conduct policies: functional uniform, hygiene and safety standards with a written accommodation process. See the dress code and grooming guide.
• Child-protection policy: boundaries, private communications, transport, supervision and reporting. See the conduct clause guide and background checks for instructors.
• Confidentiality and data-security agreement: student records, CRM access, permitted use, return and deletion, and protected-disclosure exceptions (in the U.S., the federal DTSA whistleblower-immunity notice). See student data and trade secrets.
• Restrictive-covenant addendum: only what local law permits, usually a narrow student or staff non-solicitation clause; a non-compete only in exceptional cases. See non-compete laws by state and non-solicitation agreements.

Planning for a departure? Read When an instructor leaves: protecting students and records. Every state and province is indexed in the Martial Arts Employment Law Center.

Before you act on this

This article provides general information and is not legal advice. Employment, wage, human-rights, privacy and restrictive-covenant laws change, and their application depends on the exact wording of an agreement, the employee’s duties and pay, where the work is done and when the agreement was signed. Confirm the current statute, regulations and agency guidance, and take advice from a lawyer admitted in the relevant state or province, before drafting, changing or enforcing an employment agreement. Corrections: see our editorial policy.