Fair Labor Standards Act

Fair Labor Standards Act (FLSA): Overview

The Fair Labor Standards Act (FLSA) is a federal law that establishes basic labor standards in the United States, including minimum wage, overtime pay, child labor protections, and record-keeping requirements. Enacted in 1938, the FLSA has been amended over time to broaden coverage and address pay discrimination.

Key takeaways

• Sets the federal minimum wage and requires overtime pay at 1.5× the regular rate for hours worked over 40 in a workweek.
• Distinguishes between exempt and nonexempt employees for overtime eligibility.
• Applies to employers engaged in interstate commerce or with annual gross sales of $500,000 or more, and to certain industries (e.g., hospitals, schools, public agencies, domestic service).
• Protects against exploitative child labor and has been amended by related laws addressing equal pay and age discrimination.

Coverage and applicability

The FLSA applies to:
* Enterprises with annual gross sales or business of $500,000 or more.
* Employers engaged in interstate commerce or producing goods for interstate commerce (this has a broad interpretation — use of mail, phones, or the internet across state lines can count).
* Specific categories of workers, including employees of hospitals, schools, government agencies, and certain domestic workers.

Even if an employer is not a covered enterprise, individual employees may still be covered if their work involves interstate commerce or production for interstate commerce.

Minimum wage and overtime

• Minimum wage: The FLSA sets the federal minimum wage. (States and localities may set higher minimums.)
• Overtime: Nonexempt employees must receive overtime pay at no less than 1.5 times their regular rate for hours worked over 40 in a single workweek.
• Recordkeeping: Employers must keep accurate records of hours worked and wages paid.

Exempt vs. nonexempt employees

Employees are classified by duties (and, in some cases, salary level) as either:
* Nonexempt — eligible for overtime and other FLSA protections.
* Exempt — not eligible for overtime. Common exemptions include executive, administrative, professional, outside salesperson, and certain computer-related positions.

Salary threshold: Current federal guidance sets a minimum salary level for many exemptions (the long-standing level is $684 per week). Proposed increases have been subject to rulemaking and litigation; courts have vacated some recent changes, so employers should monitor DOL guidance and case law.

Tipped employees

Employers may take a tip credit only if the employee regularly receives tips (a common threshold used in guidance is at least $30 per month). If an employee’s tips plus the employer’s direct pay do not equal the applicable minimum wage, the employer must make up the difference. Tip pooling is permitted under rules set by the DOL; employers generally may not keep employees’ tips.

Child labor and anti-discrimination provisions

• Child labor: The FLSA restricts hazardous work for minors and sets minimum ages and hour limits to protect students and young workers.
• Pay discrimination: Amendments such as the Equal Pay Act (1963) and related laws prohibit pay differences based on sex and protect older workers from age-based discrimination.

Common violations

Frequent FLSA violations include:
* Misclassifying employees as exempt or as independent contractors.
* Treating salaried workers as automatically exempt from overtime.
* Failing to pay for “off-the-clock” work (job duties, training, meetings outside scheduled hours).
* Not compensating for work done during breaks or on-call time when the worker cannot use the time for personal purposes.
* Waiving overtime pay or averaging workweeks to avoid overtime pay (both prohibited).

Exemptions and special categories

Certain workers and situations are excluded or treated differently under the FLSA, including:
* True independent contractors and bona fide volunteers.
* Certain seasonal, casual, or small-farm employees.
* Employees covered by other federal laws (e.g., railroad workers under the Railway Labor Act, some transportation workers governed by the Motor Carrier Act).
* Outside salespeople paid principally by commission.
* Some professional employees who meet the duties and salary tests.

Determining exemption status depends on job duties and context, not job title alone.

Enforcement

The Wage and Hour Division (WHD) of the U.S. Department of Labor enforces the FLSA. WHD investigates complaints, conducts audits, and can require back pay and penalties for violations. Employees can also bring private lawsuits to recover unpaid wages.

What the FLSA does not require

The FLSA does not mandate:
* Payment for normal commuting time.
* Paid vacations, holidays, severance, or sick leave.
* Meal and rest breaks (though some states require them).
* Premium pay for weekends or holidays.
* Pay raises or fringe benefits.

State or local laws, collective bargaining agreements, or employer policies may provide additional benefits.

Other laws and alternatives

If the FLSA does not apply, workers may still be protected by:
* State and local labor laws (which may be more protective).
* Industry-specific federal statutes.
* Collective bargaining agreements.
* Employment contracts and other federal laws (e.g., FMLA, OSHA, civil rights statutes).

Brief history

• 1938 — FLSA enacted, establishing minimum wage, maximum workweek (later 40 hours), overtime pay, and child labor restrictions.
• Subsequent amendments and related laws expanded coverage (e.g., Portal-to-Portal Act clarifying hours worked; expansions to schools, hospitals, and government employees; Equal Pay Act and Age Discrimination protections).

Practical notes

• Most workers covered by the FLSA are nonexempt; job duties and pay determine treatment.
• Employers should maintain accurate time and payroll records and carefully evaluate classification decisions.
• Because federal rules and court decisions evolve, employers and workers should consult current DOL guidance or legal counsel for specific situations.

Bottom line

The FLSA establishes foundational wage and hour protections in the U.S.—minimum wage, overtime pay, child labor limits, and recordkeeping. Its scope is broad but not universal; proper employee classification and adherence to recordkeeping and pay rules are essential to compliance.