(c) The term "wages" may not include the following:

1. (1) The amount of any payment (including any amount paid by an employer for insurance or annuities or into a fund to provide for any such payment) made to, or on behalf of, an individual or any of the individual's dependents under a plan or system established by an employer which makes provision generally for individuals performing service for it (or for such individuals generally and their dependents) or for a class or classes of such individuals (or for a class or classes of such individuals and their dependents) on account of:

   1. (A) retirement;
   2. (B) sickness or accident disability, and in the case of payments made to an employee or any dependents, this clause shall exclude from the term "wages" only payments that are received under a worker's compensation or occupational diseases compensation law;
   3. (C) medical or hospitalization expenses in connection with sickness or accident disability; or
   4. (D) death.
2. (2) The amount of any payment made by an employer to an individual performing service for it (including any amount paid by an employer for insurance or annuities or into a fund to provide for any such payment) on account of retirement.
3. (3) The amount of any payment on account of sickness or accident disability, or medical or hospitalization expenses in connection with sickness or accident disability made by an employer to, or on behalf of, an individual performing services for it and after the expiration of six (6) calendar months following the last calendar month in which the individual performed services for such employer.

4. (4) The amount of any payment made by an employer to, or on behalf of, an individual performing services for it or to the individual's beneficiary:

   1. (A) from or to a trust exempt from tax under Section 401(a) of the Internal Revenue Code at the time of such payment unless such payment is made to an individual performing services for the trust as remuneration for such services and not as a beneficiary of the trust; or
   2. (B) under or to an annuity plan which, at the time of such payments, meets the requirements of Section 401(a)(3), 401(a)(4), 401(a)(5), and 401(a)(6) of the Internal Revenue Code.
5. (5) Remuneration paid in any medium other than cash to an individual for service not in the course of the employer's trade or business.
6. (6) The amount of any payment (other than vacation or sick pay) made to an individual after the month in which the individual attains the age of sixty-five (65) if the individual did not perform services for the employer in the period for which such payment is made.
7. (7) The payment by an employer (without deduction from the remuneration of the employee) of the tax imposed upon an employee under Sections 3101 et seq. of the Internal Revenue Code (Federal Insurance Contributions Act).

(d) The following apply for purposes of determining wages subject to contribution:

1. (1) Costs for meal and lodging allowed by an employer as increased or additional remuneration for employees are wages subject to contribution, except that:

   1. (A) where the employer provides a fixed amount to employees for meals and lodging, that fixed amount is the amount of additional remuneration;
   2. (B) where the employer does not provide a fixed amount to employees, the actual cost of the meals and lodging is the amount of additional remuneration; and
   3. (C) where meals and lodging are furnished by the employer on the premises of the employer for the convenience of the employer, the value of those meals and lodging is not remuneration subject to contributions.
2. (2) Wages in lieu of notice, or termination allowances, include amounts paid by an employer to an employee at the time of employment separation and are wages subject to contribution.

3. (3) The following with respect to back pay awards:

   1. (A) Awards of back pay to individuals by the National Labor Relations Board are reportable as wages for the quarter covered by the award.
   2. (B) Payments of additional wages made pursuant to terms of the Fair Labor Standards Act are reportable as wages for the quarter covered by the payment.
   3. (C) Awards of back pay to individuals resulting from arbitration are reportable as wages for the quarter covered by the arbitration award.
4. (4) Where commissions are paid to salespersons each time a purchaser makes a payment under an installment contract, the commissions are considered wages paid at the time that they are credited to the salesperson in the employer's financial records.

5. (5) The following with respect to certain executives:

   1. (A) An officer of a corporation who receives remuneration for the officer's services as a corporate officer from a corporation is in employment during the entire term of the officer's office, and the remuneration shall be considered wages.
   2. (B) A member of the board of directors of a corporation is not considered in employment, and fees paid for attendance at meetings of the board of directors shall not be deemed wages subject to contribution.
   3. (C) A member of a board of directors is in employment, however, if the member performs services for remuneration for the corporation other than those required by attendance at, and participation in, the meetings of the board of directors.
6. (6) Payments made by a partnership to a partner are not wages.

7. (7) Where an employer:

   1. (A) guarantees employees a minimum number of hours of employment per week; and

   2. (B) makes payments to employees for idle time when they do not render services for the minimum number of hours;

      the payment for the idle time constitutes wages.

8. (8) Discounts allowed employees on the purchase of goods from the employer are not wages if the:

   1. (A) purchase is optional for the employee; and
   2. (B) discounts do not constitute regular or systematic remuneration for services rendered.

9. (9) The following with respect to prizes or bonuses:

   1. (A) A prize or a bonus given by an employer to an employee in cash is considered wages. When given in any medium other than cash, the prize or bonus will be considered wages unless it is not remuneration for employment.
   2. (B) A prize or bonus paid in cash or in any other medium, whether or not paid as a result of a contractual obligation, shall be reported as wages for the week in which the prize or bonus is due or paid.

10. (10) Where an employee accepts a promissory note in lieu of wages, the:

    1. (A) face amount of the note at the time it is delivered to and accepted by the employee is considered the amount of wages subject to contribution; and
    2. (B) wages are considered paid at the time of the delivery and the acceptance of the note.

11. (11) The following with respect to tips and gratuities:

    1. (A) Tips and gratuities received by an employee from persons other than the employer, and not accounted for to the employer, are not wages. However, the amount of tips or gratuities accounted for by the employee to the employer by written statement, as required by Section 6053 of the Internal Revenue Code when the tips are in excess of twenty dollars ($20) per month, are wages.

    2. (B) Where an employer does not permit tipping of employees, but rather:

       1. (i) adds a certain percent to the charges made to patrons; and

       2. (ii) disburses the added amounts to employees;

          the sums disbursed are wages and not tips.

12. (12) The following with respect to travel expenses and drawing accounts:

    1. (A) Actual amounts advanced or reimbursed to employees for traveling expenses, which are expenses of the employer incurred by the employee in connection with the employee's position and the business of the employer, are not wages.

    2. (B) Where:

       1. (i) an employee is allowed a drawing account against which earned commissions are credited;
       2. (ii) the commissions earned do not equal the amounts withdrawn; and

       3. (iii) the employee is required to account to the employer for amounts overdrawn;

          the commissions earned, and not the amounts overdrawn, are wages. However, if the employee is not required to account to the employer for the amounts overdrawn, all amounts advanced to the employee are wages.

    3. (C) In determining contributions due for a quarter, each employee is to be considered individually, and, if the expenses of an employee exceed earnings, the excess may not be credited against the contribution liability incurred by the employer by reason of wages payable to other employees of that employer.
    4. (D) If an employee earns wages in excess of expenses in one (1) calendar quarter, contributions are due and payable on the wages. If the same employee, in a subsequent calendar quarter, incurs expenses in excess of wages, the excess shall not be taken as a credit against contributions due for a previous calendar quarter, or contributions in future months or calendar quarters, respectively.
13. (13) Remuneration paid by an employer to an employee for vacation periods or leaves of absence, in the regular course of employment, is considered wages.

14. (14) The following apply with respect to the taxable wage base:

    1. (A) When an employing unit qualifies under subsection (a) or (b), the remuneration paid by the predecessor in such calendar year is combined with the remuneration paid by the successor in that same calendar year in determining when an employee has reached the taxable wage base limit. The combining of the remuneration paid to an individual by separate employers, in establishing the taxable wage base limitation, applies only in successorship cases.
    2. (B) Remuneration paid to an employee in another state is considered in determining the taxable wage base limitation for a calendar year, if wages are paid to the same employee by the same employer in this state during that calendar year.

15. (15) Remuneration paid to an individual for services rendered as a trustee in bankruptcy is not considered wages.

    Formerly: Acts 1947, c.208, s.402; Acts 1951, c.295, s.2; Acts 1957, c.299, s.12; Acts 1967, c.310, s.5; Acts 1971, P.L.355, SEC.8. As amended by Acts 1977, P.L.262, SEC.8; P.L.227-1983, SEC.1; P.L.20-1986, SEC.2; P.L.2-1987, SEC.28; P.L.21-1995, SEC.65; P.L.98-2005, SEC.1; P.L.175-2009, SEC.4; P.L.110-2010, SEC.23; P.L.66-2018, SEC.1; P.L.122-2019, SEC.9; P.L.121-2026, SEC.13.