Fair Labor Standards Act (FLSA)

HR glossary

What is the Fair Labor Standards Act (FLSA)?

The Fair Labor Standards Act (FLSA) is a landmark piece of U.S. legislation passed in 1938 that establishes a range of employment protections, including regulations on minimum wage, overtime pay, recordkeeping, and child labor. Administered by the U.S. Department of Labor, the FLSA was designed to ensure that workers are fairly compensated for their labor and are protected from exploitation in the workplace.

The FLSA has undergone various amendments and revisions over the years, but its core principles of wage protection and working hours remain fundamental. It applies to most businesses and employees across the United States, although there are some exceptions for certain industries and job types.

Key Provisions of the Fair Labor Standards Act (FLSA)

  1. Minimum Wage
    One of the central features of the FLSA is the establishment of a federal minimum wage, which employers must pay to most employees. The FLSA sets a baseline for wages, but individual states, counties, and municipalities are free to set higher minimum wage standards. As of 2024, the federal minimum wage is $7.25 per hour, although many states and cities have adopted higher rates.
  2. Overtime Pay
    The FLSA mandates that eligible employees receive overtime pay at a rate of at least one and a half times their regular hourly wage for any hours worked over 40 in a workweek. This provision applies to non-exempt employees, meaning those who are entitled to overtime pay under the FLSA. However, certain employees, such as executives, administrative professionals, and highly compensated employees, may be exempt from overtime requirements based on their job duties and salary level.
  3. Child Labor Protections
    The FLSA also includes provisions to protect minors in the workforce. It restricts the types of work that minors under the age of 18 can perform, particularly in hazardous occupations. The law also limits the number of hours minors can work, ensuring that their employment does not interfere with their education or health. For example, children under 14 are generally restricted to working in certain jobs, such as delivering newspapers or working in non-hazardous family-owned businesses.
  4. Recordkeeping Requirements
    The FLSA requires employers to maintain accurate records of the hours worked by employees and their wages. These records must be kept for a specified period, typically at least three years, to ensure compliance with wage and hour regulations. Employers must also track overtime hours for employees who are eligible for overtime pay.
  5. Exempt and Non-Exempt Status
    The FLSA distinguishes between exempt and non-exempt employees. Exempt employees are not entitled to overtime pay and typically hold salaried positions that involve executive, administrative, professional, or highly specialized duties. Non-exempt employees, on the other hand, are entitled to overtime pay and are usually paid on an hourly basis.

Who Does the FLSA Apply To?

The FLSA applies to most employees working in the United States, but certain exemptions exist. Key considerations for whether the FLSA applies to a specific worker include:

  1. Industry Type
    The FLSA applies to businesses engaged in interstate commerce, as well as those involved in producing goods for interstate commerce or handling goods that have been shipped across state lines. This includes a wide range of industries, including retail, hospitality, manufacturing, and healthcare.
  2. Employee Classification
    Employees are classified as exempt or non-exempt based on their job duties and compensation. Exempt employees, such as executives, managers, and certain professionals, are not subject to minimum wage and overtime provisions. Non-exempt employees, including most hourly workers, are protected by these provisions.
  3. Size of the Employer
    The FLSA generally applies to businesses with at least two employees who are engaged in interstate commerce or to businesses with annual revenues exceeding a specific threshold (currently $500,000). However, some provisions of the FLSA also apply to smaller businesses involved in specific industries, like healthcare or education.

How the FLSA Protects Employees

  1. Ensuring Fair Compensation
    The FLSA provides critical protections for employees by setting minimum wage standards and ensuring they are compensated for overtime work. This helps prevent employers from exploiting workers by paying below the minimum standard and requiring excessive work hours without proper compensation.
  2. Protecting Work-Life Balance
    By regulating overtime, the FLSA encourages a healthier work-life balance. The law ensures that employees are not forced to work excessive hours without appropriate compensation, which can help reduce burnout and promote employee well-being.
  3. Protecting Vulnerable Workers
    The FLSA’s child labor provisions help protect minors from exploitation and unsafe working conditions. These protections ensure that young workers can focus on their education and development, rather than being overburdened with long or hazardous work hours.
  4. Promoting Equity
    The FLSA helps ensure that all employees, regardless of their job classification or industry, are paid fairly for their labor. By setting clear wage and hour standards, it promotes equitable treatment in the workplace and reduces the potential for wage theft or discrimination.

Compliance and Enforcement

The U.S. Department of Labor (DOL) is responsible for enforcing the FLSA. Employers are required to comply with its provisions, and employees can file complaints with the DOL if they believe their rights under the FLSA have been violated. The DOL can investigate complaints, conduct audits, and take legal action against employers who fail to comply with the law.

If an employer is found to be in violation of the FLSA, they may be required to pay back wages, fines, and, in some cases, additional damages. Employees who are misclassified as exempt and denied overtime pay may also be entitled to compensation for the unpaid overtime hours.

Common Violations of the FLSA

  1. Misclassification of Employees
    Employers may incorrectly classify employees as exempt from overtime pay when they should be classified as non-exempt. This is a common violation, particularly in salaried positions where job duties do not meet the criteria for exemption.
  2. Failure to Pay Overtime
    Employers may fail to pay overtime wages to eligible employees, either due to misclassification or because they fail to track hours worked accurately. This can result in significant financial penalties if employees pursue legal action.
  3. Failure to Maintain Accurate Records
    Employers are required to maintain accurate records of hours worked and wages paid. Failure to keep proper records can result in fines and penalties if the employer is audited or investigated.
  4. Child Labor Violations
    Employers who hire minors for hazardous work or allow them to work beyond the legally prescribed hours can face fines and penalties. The FLSA sets strict rules for child labor to ensure that young workers are not exploited or exposed to dangerous conditions.

Best Practices for Employers

  1. Ensure Accurate Classification
    Employers should regularly review employee job descriptions and duties to ensure that employees are classified correctly as exempt or non-exempt. Misclassification can lead to costly penalties and lawsuits.
  2. Track Employee Hours Diligently
    Employers must maintain accurate records of the hours worked by non-exempt employees. This includes tracking overtime hours and ensuring that employees are compensated for all the time worked.
  3. Implement Overtime Policies
    Clear policies regarding overtime work should be communicated to employees, and overtime hours should be pre-approved by supervisors to ensure compliance with the FLSA.
  4. Stay Up-to-Date on Wage and Hour Laws
    Labor laws can change over time, including adjustments to the minimum wage and overtime rules. Employers should stay informed about updates to the FLSA and adjust their practices accordingly.
  5. Provide Training
    Train HR personnel, managers, and payroll staff on FLSA requirements to ensure that all employees are paid fairly and that the company complies with wage and hour laws.

Conclusion

The Fair Labor Standards Act (FLSA) is a critical piece of legislation that protects workers’ rights by establishing standards for minimum wage, overtime pay, and child labor. By ensuring fair compensation and regulating working hours, the FLSA plays a vital role in promoting a fair and just workplace for millions of employees across the United States. Employers must be diligent in complying with the provisions of the FLSA to avoid legal penalties and ensure that employees are treated equitably. By understanding and applying the principles of the FLSA, businesses can create a work environment that supports both employee rights and organizational success.