The Fair Labor Standards Act: Law Explained

Employers and employees alike would agree that wages and work hours are complex issues needing clear guidance.

The Fair Labor Standards Act (FLSA) aims to provide that guidance by establishing baseline federal standards for minimum wage, overtime pay, and other employee protections.

This article will explain the key provisions of the FLSA in simple terms, overview recent and proposed changes to the law, discuss which workers are covered, outline compliance requirements, and more.By the end, readers will have a solid grasp of this landmark US labor law.

Introduction to the Fair Labor Standards Act

The Fair Labor Standards Act (FLSA) is a key federal law that establishes minimum wage, overtime pay eligibility, recordkeeping, and child labor standards for employees in the private sector and in federal, state, and local governments.

Enacted in 1938 during the Great Depression, the FLSA aims to improve working conditions and ensure fair compensation for many workers. Some of the key provisions include:

Establishing a federal minimum wage that employers must pay their employees
Requiring overtime pay of at least 1.5 times an employee's regular rate for hours worked over 40 in a workweek
Setting standards around child labor, including restrictions on hours and hazardous occupations for workers under 18
Mandating that employers keep detailed pay and time records for covered non-exempt workers

Over the years, the FLSA has been updated through amendments and court cases to expand protections. However, it still does not cover certain workers, such as many agricultural workers, independent contractors, volunteers, and white-collar exempt employees. Understanding which employees are covered and the employer obligations under the FLSA is crucial for compliance.

What is the Fair Labor Standards Act in simple terms?

The Fair Labor Standards Act (FLSA) is a federal law that establishes minimum standards for wages, overtime pay, recordkeeping, and child labor across the United States.

At its core, the FLSA aims to protect workers by setting a federal minimum wage, requiring overtime pay for hours worked over 40 in a workweek, and regulating child labor. Here are some key things to know about the law in simple terms:

Minimum Wage: The FLSA sets the federal minimum wage that must be paid to all covered non-exempt employees. This is currently $7.25 per hour. Some states or cities may have higher minimum wages.
Overtime Pay: If employees work over 40 hours in a single workweek, the FLSA generally requires that they be paid 1.5 times their regular hourly rate (time and a half) for those excess hours. There are some exceptions, like for certain salaried executive or professional staff.
Recordkeeping: Employers must keep accurate records of employees' wages, hours, and other conditions of employment. This includes tracking exact hours worked each day and total hours for the workweek.
Child Labor: The FLSA sets minimum age standards for certain dangerous jobs, restricts hours worked by minors, and prohibits youth from working in hazardous occupations.

So in short, the Fair Labor Standards Act establishes baseline federal protections for wages, overtime pay, recordkeeping practices, and child labor provisions. It aims to ensure fair pay and treatment for employees nationwide. Understanding these FLSA standards can help both employers comply with labor regulations and employees advocate for their rights.

What are the changes in the FLSA 2023?

The U.S. Department of Labor recently proposed updates to the salary thresholds for determining overtime eligibility under the Fair Labor Standards Act (FLSA). Here are some key things to know:

The standard salary level for exempt employees would increase from $455 per week ($23,660 per year) to $1,059 per week ($55,068 per year). This means employees paid below this amount would need to be paid overtime, regardless of their job duties.
The highly compensated employee (HCE) total annual compensation level would increase from $100,000 per year to about $147,000 per year. This means "highly paid" white collar workers would be exempt from overtime if they meet this higher salary test.
These changes would expand overtime pay protections to over 1 million more U.S. workers according to a DOL estimate. Employers may need to review employee classifications to ensure compliance.
The proposed rule is still open for public comment until November 28, 2022. The final rule could be issued in 2023.

So in summary - the proposed FLSA changes would raise the minimum salary thresholds substantially, extending overtime pay eligibility to over 1 million more workers. Employers should closely monitor these regulatory updates as they develop and prepare accordingly.

Which of the following is not covered under the Fair Labor Standards Act FLSA )?

Executive, administrative, professional and outside sales employees who are paid on a salary basis are exempt from both the minimum wage and overtime provisions of the FLSA. However, some exceptions apply.

For example, non-management computer professionals paid on an hourly basis are eligible for FLSA overtime pay even if they meet the other criteria for exemption. Certain commissioned sales employees may also be non-exempt.

Additionally, the FLSA does not cover independent contractors, unpaid volunteers, trainees, certain transportation employees, and some seasonal amusement and recreational workers. State and local government employees may also be exempt from FLSA coverage.

In summary, while salaried executive, administrative, professional and outside sales staff are typically exempt from FLSA rules, some exceptions exist based on the specific nature of the work and compensation. Checking Department of Labor guidance is advisable when determining exemption status. Maintaining detailed pay records is also essential for compliance.

Which of the following statements is true of the Fair Labor Standards Act?

The Fair Labor Standards Act (FLSA) is a federal law that establishes standards for minimum wage, overtime pay, recordkeeping, and child labor. Here are some key things to know about the FLSA:

The FLSA does not limit the hours an employee can work in a week. However, it does set standards for what constitutes a "normal workweek" for the purposes of calculating overtime pay. For most workers, a normal workweek is 40 hours.
The FLSA requires that covered non-exempt employees receive overtime pay of at least 1.5 times their regular hourly rate for all hours worked over 40 in a workweek. This overtime requirement helps ensure adequate compensation for long work hours.
While the FLSA does not require vacation, holiday, or sick pay, it does require employers to keep detailed pay records for covered non-exempt employees. This includes hours worked each day and total hours for the workweek.
The FLSA sets federal standards for child labor, including restrictions on hours and occupational duties for workers under 18. This helps prevent exploitation of underage workers.

In summary, the one true statement about the Fair Labor Standards Act is that it does not limit the total hours an employee can work in a week, but rather sets standards for overtime pay, recordkeeping, and child labor protections. The FLSA essentially aims to ensure fair compensation, especially for overtime hours worked.

Understanding the FLSA: Definition and Scope

The Fair Labor Standards Act (FLSA) is a federal law that establishes minimum wage, overtime pay, recordkeeping, and child labor standards for employees in the private sector and in federal, state, and local governments.

Fair Labor Standards Act Definition

The FLSA was passed in 1938 during the Great Depression to protect workers and set fair labor standards. It applies to most employees, but there are some exceptions. The FLSA requires that covered non-exempt employees receive at least minimum wage and overtime pay of 1.5 times their regular rate for all hours worked over 40 in a workweek. There are also restrictions on child labor. In addition, employers must keep certain records regarding employees and wages.

Coverage and Employment Status Advisor

The Wage and Hour Division provides guidance on FLSA coverage and determining if an employee is exempt or non-exempt. Factors like the nature of the business, annual sales volume, and the specifics of an employee's duties are considered. There are also advisors available to help determine hours worked, overtime eligibility, and other issues.

FLSA Exempt vs Non-Exempt Employees

The difference comes down to whether the specific employee is subject to (non-exempt) or not subject to (exempt) the FLSA's minimum wage and overtime provisions. For example, executive, administrative, and professional employees can be exempt if they meet certain tests regarding their job duties and are paid on a salary basis above a minimum level. All other employees are generally non-exempt and entitled to overtime and minimum wage protections.

Misclassification of Employees as Independent Contractors

Misclassifying employees as independent contractors is illegal under the FLSA when the economic realities show an employer/employee relationship that should be subject to the Act's provisions. Consequences can include back pay awards, fines, and penalties. Proper classification is essential for compliance.

Questions and Answers about the FLSA

The Wage and Hour Division website contains extensive FLSA guidance, fact sheets, and FAQs covering many topics such as minimum wage, overtime pay, recordkeeping, hours worked, youth employment, and more. Employers and employees can access plain-language guidance on FLSA compliance issues and requirements.

Historical Context: Why the FLSA was Created

The Fair Labor Standards Act (FLSA) was a major piece of New Deal legislation enacted in 1938 during Franklin D. Roosevelt's presidency. It established federal standards for minimum wages, overtime pay, recordkeeping requirements, and child labor regulations.

The FLSA was created in response to poor working conditions and exploitation of workers during the Great Depression era. Prior to its passage, there were no federal laws regulating wages or hours. Many employees worked long hours in difficult, hazardous conditions for extremely low pay. Child labor was also widespread at the time.

Labor Conditions Preceding the FLSA

In the early 20th century, working conditions for many Americans were extremely difficult:

Employees often worked over 60 hours per week for low wages in unsafe environments. There were no regulations or standards established.
No federal laws guaranteed workers a minimum wage, overtime pay, workplace safety protections, or limitations on child labor.
Exploitative labor practices were common, especially toward minority groups, women, and children.

This necessitated federal intervention to improve labor standards across industries.

The New Deal and the FLSA's Role in Reform

The FLSA was a major component of Franklin D. Roosevelt's New Deal legislation. Other key programs included Social Security, unemployment insurance, banking and financial regulations, and public works projects.

The New Deal aimed to provide economic relief and recovery during the Great Depression. Improving conditions for the American workforce was a central focus. The FLSA established much-needed fair labor protections by:

Setting the first federal minimum wage at $0.25 per hour.
Requiring time-and-a-half overtime pay for over 40 hours per week.
Prohibiting oppressive child labor.
Mandating employer recordkeeping of wages and hours.

This transformed the landscape for American workers and set higher standards moving forward.

Child Labor and the Drive for Regulation

Widespread child labor - especially in manufacturing, mining, agriculture, and other hazardous occupations - was among the key issues the FLSA aimed to address.

In the early 1930s, over 250,000 children under 14 were working in mills, canneries, mines, and factories.
No federal child labor laws existed prior to 1938. State regulations were limited and poorly enforced.
The FLSA set a minimum age of 16 for most non-agricultural work and placed strict limits on employing those under 18.

Curbing pervasive, unregulated child labor was a major impetus behind the FLSA's creation and passage.

FLSA Minimum Wage and Overtime Provisions

FLSA Minimum Wage Standards

The Fair Labor Standards Act (FLSA) establishes a federal minimum wage that applies to most employees in the United States. As of 2023, the federal minimum wage is $7.25 per hour. However, states can choose to set a minimum wage higher than the federal level. When federal and state laws have different minimum wage rates, the higher standard applies.

The FLSA minimum wage provisions apply to most employees, with some exceptions. Workers who are not covered under the FLSA include independent contractors, volunteers, trainee students, and certain seasonal amusement employees. Some employers can also apply to pay below the minimum wage to workers with disabilities through a special certificate program.

Calculating Overtime Pay

The FLSA requires that covered non-exempt employees receive overtime pay of at least 1.5 times their regular hourly rate for all hours worked over 40 in a workweek. To calculate overtime pay:

Determine the employee's regular hourly rate. This is usually calculated by dividing total weekly earnings by total hours worked.
Multiply the employee's regular hourly rate by 1.5 to get their overtime rate.
Multiply the overtime rate by the number of overtime hours worked.

For example, an employee being paid $15 per hour works 45 hours in a week. Their regular pay is $15 x 40 hours = $600. Their overtime pay is $15 x 1.5 = $22.50 overtime rate x 5 overtime hours = $112.50.

Special Wage Provisions for Tipped and Youth Employees

The FLSA allows for payment of less than the full minimum wage to certain categories of workers:

Tipped employees can be paid as low as $2.13 per hour if they regularly earn enough tips to make up the difference between the tipped rate and full minimum wage when tips are included. If tips fall short, employers must pay the difference.
Workers under 20 can be paid $4.25 per hour for their first 90 calendar days of employment. After 90 days, they must receive the full federal minimum wage.

Overtime Calculator Advisor

The Department of Labor provides an Overtime Calculator Advisor to help employers accurately compute overtime payments for non-exempt employees. This tool guides users through determining the regular rate of pay, overtime hours worked, and correct overtime wages owed based on the requirements of the FLSA. Using resources like this Overtime Calculator can help ensure full compliance with federal wage and hour regulations.

Recordkeeping and Hours Worked Under the FLSA

The Fair Labor Standards Act (FLSA) imposes certain recordkeeping responsibilities on employers to track hours worked by employees. Proper time tracking is essential for determining wages and overtime in compliance with the law.

Employer Recordkeeping Requirements

The FLSA requires employers to keep accurate records of hours worked and wages paid to non-exempt employees. At a minimum, records must include:

Employee information: name, address, occupation, rate of pay, etc.
Daily hours worked
Total wages paid each pay period
Any deductions made
Total overtime pay for each week

Records can be maintained through time clocks, timecards, or modern time and attendance software. Records must be kept for at least 3 years.

Defining 'Hours Worked'

Under the FLSA, working time that requires compensation includes:

Time actually spent performing job duties
Waiting time that is controlled by the employer
Training sessions required by the employer
Traveling for work during normal work hours

Hours worked does not generally include meal periods, breaks of 20 minutes or less, or time spent changing clothes.

Time & Attendance Systems

Modern time and attendance systems provide an efficient way for employers to track hours worked and generate paychecks in compliance with FLSA rules. Features like GPS tracking, geofencing, and facial recognition can verify attendance and automate payroll.

Off-the-Clock Work and FLSA Implications

Requiring or allowing employees to work "off-the-clock" and not counting those hours towards wages is generally prohibited. All time that an employee must give to the employer must be paid, even if the work is done away from the workplace or outside normal working hours. Failing to pay for off-the-clock work is a serious FLSA violation.

Child Labor Regulations and Protections

Examining the FLSA's guidelines on the employment of minors and the protections it affords them.

Restrictions on Employing Children

The Fair Labor Standards Act (FLSA) places restrictions on the employment of minors to ensure safe and fair working conditions. Some key restrictions include:

Minimum age requirements: Children under the age of 14 cannot be employed in non-agricultural jobs. There are exceptions for newspaper delivery, acting, and some family businesses.
Hour limitations: 14- and 15-year-olds may only work outside school hours, up to 3 hours per school day and 18 hours per school week. During summer breaks, they may work up to 8 hours per day and 40 hours per week.
Hazardous occupations: Those under 18 are prohibited from working in dangerous jobs like mining, manufacturing, construction, and operating heavy machinery.

These restrictions aim to prevent the exploitation of child workers while allowing appropriate work opportunities. Employers must understand and comply with all applicable state and federal child labor laws.

Youth Employment Laws and Compliance

In addition to federal FLSA regulations, states have their own youth employment and child labor laws. These may include permitting processes, supervision requirements, rest break mandates, restricted industries and occupations, and more.

To maintain full legal compliance, employers should:

Review state labor department websites for youth employment resources
Understand all relevant state and federal child labor provisions
Complete any necessary permit or certification processes
Closely supervise minor employees
Provide required rest breaks
Avoid restricted hazardous tasks

Staying current on evolving legal obligations is key for avoiding violations. HR managers and legal counsel can provide guidance.

Child Labor Rules Advisor

The Wage and Hour Division's Child Labor Rules Advisor provides customized information on federal FLSA and state child labor laws. Employers simply enter the minor's age, state, industry, tasks, and work times to receive official guidance on compliance.

This free online tool helps prevent unintentional violations through proactive education. It also includes downloadable PDF fact sheets on various child labor topics. Using these readily available resources can support full adherence to both federal and individual state regulations.

Navigating FLSA Exemptions and Classifications

FLSA Exempt Employee Criteria

The Fair Labor Standards Act (FLSA) outlines criteria that determine if an employee is exempt from overtime pay and other protections. To qualify as exempt, employees must meet certain salary basis and duties tests.

Specifically, exempt employees must be paid on a salary basis, earning at least $684 per week. Their primary job duties must also involve executive, administrative, or professional responsibilities as defined by FLSA regulations. For example, exempt administrative employees exercise discretion and independent judgment on significant matters.

If employees do not meet these salary and duties test criteria, they are considered non-exempt and entitled to FLSA protections like overtime pay.

Salary Basis and Duties Tests

The FLSA uses two key tests to evaluate whether employees qualify for exempt status:

Salary Basis Test: The employee must receive a predetermined, fixed salary that is not subject to reductions based on quality/quantity of work. Certain deductions for unpaid leave are allowed.

Duties Test: The employee's primary job duties must involve executive, administrative, or professional responsibilities as defined under FLSA regulations.

For instance, exempt executive duties include supervising other employees and making key decisions about operations or services. Exempt administrative duties involve significant discretion/judgment, while professional duties require advanced knowledge in a field of science or learning.

Both tests must be met for exemption. Employees who pass the salary basis test but not the duties test are still eligible for overtime pay.

How to Classify Employees Correctly

To correctly classify employees under FLSA:

Review job descriptions to identify primary duties. Compare against FLSA definitions of executive, administrative, professional duties.
Ensure base salary meets the $684 per week threshold set by FLSA regulations. Confirm employees are paid on a salary basis without impermissible deductions.
Document your analysis of how employees meet (or do not meet) salary basis and duties tests for exemption.
Classify employees as exempt only if they clearly satisfy both exemption tests.

Proper classification helps avoid FLSA violations. When in doubt, classify employees as non-exempt until definitive assessment. Consult the DOL for guidance.

The Impact of Incorrect Classification

Misclassifying employees as exempt when they do not meet FLSA criteria carries significant consequences, including:

Wage theft if employees are wrongfully denied overtime pay
FLSA lawsuits, fines, back pay awards
Employee dissatisfaction and turnover

If non-exempt employees have been misclassified, rectify errors immediately by:

Reclassifying employees as non-exempt
Paying back overtime wages owed
Coming into compliance on recordkeeping
Updating policies/job descriptions

Avoiding misclassification protects workers and limits employer liability. When uncertain, presuming non-exempt status is safest until confirmation.

FLSA Compliance: Breaks, Benefits, and Payroll Administration

The Fair Labor Standards Act (FLSA) provides important protections for employees regarding breaks, benefits, and payroll administration. Understanding these regulations is key for organizations to maintain compliance.

Break Time for Nursing Mothers

The FLSA requires employers to provide reasonable break time and a private space for nursing mothers to express milk at work. The break time does not need to be paid if it does not run concurrently with normally scheduled rest periods. These accommodations must be provided for up to one year after the employee's child is born.

Handling Vacation, Holiday, and Sick Leave

The FLSA does not require employers to provide paid vacation, holiday, or sick leave. However, if an employer chooses to provide these benefits, they must follow certain rules:

Paid leave hours cannot be counted toward overtime threshold calculations. For example, if an employee works 35 hours in a week and takes 8 hours paid sick leave, they are only considered to have worked 35 hours that week.
Paid leave hours may still qualify as "hours worked" for minimum wage requirements. Employers need to ensure that incorporating paid leave does not bring an employee below minimum wage for the hours actually worked.

Fringe Benefits and FLSA Considerations

The FLSA does not address fringe benefits except where they are tied to minimum wage or overtime requirements. For example, employers cannot count health insurance or other benefits toward satisfying minimum wage obligations. Benefits also cannot qualify as substitutes or offsets for overtime pay.

The Role of Payroll in FLSA Compliance

Accurate payroll administration is crucial for FLSA compliance. Payroll teams must track regular and overtime hours correctly, properly calculate rates of pay, adhere to rules regarding deductions and allowances, maintain detailed pay records, and stay current on regulatory changes. Robust timekeeping and payroll processes provide the foundation for ongoing FLSA adherence.

FLSA Enforcement and Legal Framework

The Fair Labor Standards Act (FLSA) establishes legal protections for workers regarding minimum wage, overtime pay, child labor, and recordkeeping. Effective enforcement of the FLSA is critical to ensure employers comply with the law.

Wage and Hour Division: Enforcement and Investigations

The Wage and Hour Division (WHD) of the U.S. Department of Labor is responsible for enforcing the FLSA. The WHD conducts investigations in response to complaints as well as proactive directed investigations targeting high-risk industries. When violations are found, the WHD may assess back wages plus damages. Willful or repeat offenders may face civil money penalties or criminal prosecution.

Civil Money Penalty Inflation Adjustments

The Federal Civil Penalties Inflation Adjustment Act requires agencies to adjust civil money penalties for inflation each year. As a result, the maximum fines for FLSA violations rise over time. In 2022, the maximum civil penalty per violation was raised to $2,924 from $2,074 in 2021.

Litigation and Legal Precedents

Over the decades, FLSA-related lawsuits and legal decisions have further defined employer requirements and employee rights under the law. Key court cases have addressed issues like defining regular rate of pay for calculating overtime, clarifying exemptions, and determining compensability for certain activities like security screenings or donning protective gear.

Compliance Assistance and Resources

The Department of Labor offers many resources to help employers comply with FLSA rules. These include fact sheets explaining various provisions, online tools to determine worker classifications and overtime pay, and field operations handbooks detailing investigation procedures. Employers can also request written opinion letters regarding the application of FLSA provisions to their specific situation.

Conclusion: FLSA Compliance and Best Practices

The Fair Labor Standards Act (FLSA) establishes important baseline protections for workers regarding minimum wage, overtime pay, recordkeeping, and child labor standards. As an employer, maintaining compliance with FLSA regulations is crucial. Here are some best practices:

Classify employees properly as exempt or non-exempt based on the duties test and salary basis test. Ensure a clear understanding of which employees are entitled to minimum wage and overtime pay.
Calculate overtime correctly at time-and-a-half regular pay rates for hours worked over 40 in a workweek. Review state laws too as they may differ.
Keep accurate time and payroll records for all employees. Documents hours worked each day and total hours for the workweek.
Allow adequate and timely meal and rest breaks as required by law. Ensure nursing mothers have proper accommodations.
Follow all restrictions concerning child labor, especially around hazardous occupations.
Display updated FLSA posters prominently in the workplace. Provide the required minimum wage and overtime pay notifications.

Staying current with FLSA regulations through resources like the Wage and Hour Division ensures compliance. Conducting periodic audits of pay practices and recordkeeping can identify any issues to be addressed promptly. Maintaining compliance protects workers and avoids costly FLSA lawsuits or Department of Labor penalties down the road. Reach out to an employment lawyer with any questions.

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