Fair Labor Standards Act: Laws for Minimum Wage and Working Hours

State laws govern many rules about working conditions, but the federal government also has a set of standards. The Fair Labor Standard Act (FSLA) is the key federal law covering wages, employee classification, hours, and other employment rights and obligations. The FLSA establishes:

• The federal minimum wage
• Overtime pay requirements
• Pay periods
• Employer recordkeeping requirements
• Child labor employment standards
• A 40-hour workweek

The FLSA defines what kind of behavior qualifies as work. The federal law requires that you get paid for work you do, no matter the time or place. However, it is also the reason why you do not get paid for your commute to work.

Take a look through the articles below to find out more about the FLSA, including minimum wage requirements, special rules for tipped employees like waitstaff, the difference between an exempt and a nonexempt employee, and child labor standards.

Employees

The FLSA does not apply to all workers. The federal employment law affects:

• Full-time and part-time private sector workers
• Federal, state, and local government employees

It does not apply to independent contractors.

Enforcement

The U.S. Department of Labor's (DOL) Wage and Hour Division (WHD) enforces the federal employment and labor law. Typically, penalties for infringements involve fines. However, repeated willful violations can lead to criminal prosecution.

The Department of Labor collaborates with labor departments across individual states. Every state maintains its own Department of Labor and establishes its own specific labor laws.

Compliance

FLSA compliance begins with knowing whether the law covers a small business or employer. Some federal employment laws ask employers to count employees to determine if they apply; however, the requirements of the FLSA are a little different. The FLSA has two ways for the law to apply:

• Enterprise coverage: The business has at least two employees and annual sales of $500,000.
• Individual coverage: The FLSA protects employees even when there is no enterprise coverage if their work regularly involves interstate commerce or the production of goods for commerce. Interstate coverage is broadly defined. For example, companies that regularly use the mail to send and receive letters via U.S. mail are engaged in interstate commerce. Employees using company telephones or computers to place or accept business calls or take orders can also subject an employer to the FLSA.

The FLSA requirements apply if a small business or employer meets either criteria.

Minimum Wage

Under the FLSA, employees receive a minimum hourly wage. The federal minimum wage is $7.25 per hour. However, many states have enacted higher state minimums. In addition, some cities and counties have also enacted higher minimum wage laws. If state or local laws specify a higher minimum wage, then the FLSA's minimum wage does not apply, and employees must receive the higher mandated wage in the area where they work.

There are exceptions to the minimum wage rate that allows employers to pay some workers a lesser hourly wage, i.e., a subminimum wage. These include:

• Tipped employees: Employers may pay tipped workers like waiters $2.13 an hour.
• Workers with disabilities: Employers who receive certification from the Wage and Hour Division can pay less than minimum wage to some workers with disabilities.
• Youth minimum wage: During the first 90 days of employment, full-time students who are under 20 years old can be paid $4.25 an hour as long as they are not hired to displace other workers. This exception is rarely used. After the 90 days is over, pay reverts to the $7.25 minimum wage.

FLSA Overtime

The FLSA regulates overtime pay. Under the FLSA's overtime rules, employers must pay non-exempt workers one-and-one-half times their regular rate of pay as overtime compensation when the number of hours they work exceeds 40 hours in a workweek. Federal law defines a workweek as any consecutive seven-day period of time.

Once again, state law and municipal law can come into play. In some states and municipalities, more than eight or 10 hours worked in a day can trigger overtime pay requirements. It does not matter whether the employee works more than 40 hours a week.

Some workers do not qualify for overtime compensation. Although employees are either exempt or non-exempt, few know what the terms mean. Exempt employees are not entitled to overtime pay regardless of the number of hours they work. Exempt employees are generally professional workers. Nonexempt employees are generally hourly workers. Nonexempt employees earn overtime pay.

Exempt Employees

The FLSA provides several exemptions from minimum wage and overtime pay requirements. Employers must consider salaries and job duties in determining whether workers are exempt from the FLSA's overtime pay requirements.

There are several available exemptions under the FLSA, including bona fide jobs that qualify as:

• Executive
• Administrative
• Professional
• Outside sales

Employers must meet two tests -- salary basis and job duties – for each exemption if they want to exempt workers from overtime pay. The salary basis test requires that employees earn more than $684 per week, with an exception for the outside sales exemption. Once employees meet the salary threshold, the assessment considers their job duties. The exemptions vary in their required job duties.

Generally, the type of work that qualifies for an exemption is white collar, while the type of work that requires FLSA overtime pay is blue collar or pink collar.

Pay periods

The FLSA provides some rules on when employees should be paid. Employers must pay employees on the regular payday for the pay period in which they worked those hours. Courts have interpreted the FLSA to require prompt payment of wages.

FLSA-exempt employees must be paid at least once a month. Other employees must be paid at least twice a month.

State laws, however, often provide additional requirements.

Compensatory time

Compensatory time off (comp time) is paid time off that an employee earns instead of a cash payment for working overtime hours. The FLSA limits comp time to public sector employees such as police, firefighters, emergency response personnel, etc.

Child Labor

The FLSA has several child labor provisions. Minors must be at least 16 years of age to work most non-farm jobs under the FLSA. Some states have different rules.

Meal and Break Time

The federal law generally does not require meal or break periods. However, if an employer offers a meal or break time, some rules apply:

• Short breaks are paid. A short break, called a rest period, generally lasts five to 20 minutes.
• Meal periods are unpaid as long as the employee is relieved of their job duties during the meal break. The meal period is paid if the employee is not fully relieved of job duties.

Additionally, the FLSA requires employers to offer break time and space to nursing mothers to express breast milk for up to two years after the birth of a child.

Tipped Employees

Employers can pay tipped workers a reduced hourly wage of $2.13. Should the total of their wage and tips fall short of the federal minimum wage of $7.25 per hour, the employer must compensate for the shortfall in hourly wage payments.

Farm workers

The FLSA covers farm workers because of the production of goods for interstate commerce. However, they are exempt from some of the FLSA's wage and hour laws. The FLSA does not require that agricultural workers receive federal overtime pay when they work more than 40 hours of work in a workweek.

There are other requirements:

• Farm workers are entitled to receive at least the federal minimum wage or the promised wages, whichever is higher.
• Employers must furnish farm workers with a detailed written account of their earnings and all applicable pay deductions.
• Employers have an obligation to supply farm workers with clear, written details regarding their pay and work conditions in a language that is comprehensible to them.

Employer Recordkeeping Requirements

Employers demonstrate compliance with FLSA requirements through proper recordkeeping. Some employers might think that not keeping records will aid them if an FLSA audit or investigation occurs. Violating recordkeeping rules is a separate violation. The failure to keep proper records can result in separate citations and penalties.

Key employer recordkeeping requirements under the FLSA include:

• Employers must keep records of employees' wages, hours worked daily, and total hours worked each workweek.
• For non-exempt employees, records must indicate the regular hourly rate of pay, the overtime hourly rate of pay, and additions or deductions to wages.
• Employers should also maintain records for determining exempt vs. non-exempt status, such as employees' job descriptions and duties.
• FLSA records must be kept for at least three years. Some states require longer record retention periods.
• The records must be available for inspection by the U.S. Department of Labor's Wage and Hour Division, which enforces FLSA rules.
• Records can be maintained on paper or electronically as long as they are accessible, accurate, and unaltered.

Still Evolving

The FLSA has been around for a long time, but it continues to evolve. There have been many amendments to the Fair Labor Standards Act of 1938. For example, in December 2022, President Joe Biden signed the “PUMP for Nursing Mothers Act" (PUMP Act) into law. The new law, an amendment to the FLSA, requires that employers provide break time for employees to express breast milk for a nursing child for up to one year after the child's birth.

Before the passage of the PUMP Act, hourly workers had the right to breaks for pumping breast milk. The PUMP Act extended that right to millions of salaried workers.

Contact an Employment Lawyer

The FLSA is a complex and important workplace law. State and federal regulators are keen on enforcing its requirements. If you are an employer, you must understand and apply the law to your employees. If you are an employee, it's important to know your rights. Contact an employment lawyer to learn more.