Fair Labor Standards Act (FLSA)

The Fair Labor Standards Act (FLSA) is the federal statute, codified at 29 U.S.C. 201 and following and cited by its own terms as the "Fair Labor Standards Act of 1938", that sets the baseline wage-and-hour rules for employees in the United States. The Department of Labor's Wage and Hour Division describes it as establishing "minimum wage, overtime pay, recordkeeping, and youth employment standards affecting employees in the private sector and in Federal, State, and local governments." It protects employees only; an independent contractor is outside it, which is why the classification question decides so much.

Who is covered. The Act reaches workers in two ways. Enterprise coverage takes in every employee of an enterprise with at least two employees and either at least $500,000 in annual sales or business done or a business that is a hospital, a residential care facility, a school or preschool, or a government agency, whatever its revenue. Individual coverage reaches an employee of a smaller business whose own work regularly involves interstate commerce: handling goods that move across state lines, making calls to or processing records for out-of-state customers, or traveling for the job. The Department's coverage fact sheet adds that domestic service workers, such as housekeepers, full-time babysitters and cooks, are normally covered as well.

The four standards. Section 206 sets the federal minimum wage, $7.25 an hour since July 24, 2009, with a tip-credit system for tipped workers and a lower wage permitted for a new employee under 20 during their first 90 days (the rates and their mechanics are on the minimum wage page). Section 207 requires overtime at not less than one and a half times the employee's regular rate for hours over 40 in a workweek, which the Department defines as any fixed and regularly recurring period of 168 hours. Section 211(c) requires employers to make and keep records of hours and pay, and the child labor provisions bar minors from occupations the Secretary of Labor has declared hazardous (under 18 in nonfarm jobs, under 16 on farms) and limit the hours and times that workers under 16 may work. The same Act carries the Equal Pay Act, at section 206(d), which prohibits sex-based pay differences for equal work in the same establishment.

Exemptions. Section 213 lists employees the Act does not protect, in whole or in part. The best known are the executive, administrative and professional exemptions, which generally require both a salary paid on a salary basis at or above a threshold and a duties test; an exempt employee is outside both the minimum wage and overtime rules. Being paid a salary does not on its own make someone exempt, and a job title never does.

What the Act leaves alone. The Department's own summary is blunt about it: the FLSA does not require vacation, holiday, severance or sick pay; meal or rest periods; premium pay for weekend or holiday work; pay raises or fringe benefits; or a discharge notice, a reason for discharge, or immediate payment of final wages. It does not cap the hours an employee 16 or older can be scheduled, so long as the overtime is paid. Every one of those subjects is left to state law, to the employer's policy, or to a contract or union agreement, which is why answers to "is my employer allowed to do that" so often turn on the state.

How it interacts with state law. Section 218(a) says nothing in the Act excuses noncompliance with a federal, state or local law setting a higher minimum wage or a shorter maximum workweek. The Department puts it directly: where both apply, the employee is entitled to the higher minimum wage. The federal Act is therefore a floor that many states and cities build on, and the binding rule for a given worker is whichever is more protective.

Enforcement. The Wage and Hour Division investigates complaints and can supervise payment of back wages. Under section 216(b) an employer that violates the minimum wage or overtime rules is liable for the unpaid wages and "an additional equal amount as liquidated damages," and employees may sue directly. Section 255(a) sets the deadline: two years from when the claim accrued, or three years for a willful violation. The Department's interpretive regulation at 29 CFR 790.21(b) notes that courts treat a claim as accruing on the regular payday for each workweek, so a long-running underpayment can be partly out of time while the recent months remain recoverable.

Whether the Act protects a particular worker, and what it guarantees, comes down to a short sequence of questions.

1. Is the worker an employee? The Act covers employees, not independent contractors. Labels in a contract do not decide it; the working relationship does.
2. Is the employee covered? Either the employer is a covered enterprise (at least $500,000 in annual sales, or a hospital, school or public agency) or the employee's own work involves interstate commerce.
3. Is the employee exempt? If a section 213 exemption applies, some or all of the minimum wage and overtime rules fall away.
4. Apply the standards. A covered, nonexempt employee is owed at least the minimum wage for every hour worked and one and a half times the regular rate for each hour over 40 in the workweek. Hours are counted week by week; two short weeks do not offset a long one.
5. Check state law. Where the state or city rule is more generous, it controls.

For example: Teodora earns $20 an hour in a warehouse and is not exempt. One week she works 46 hours. Her straight-time pay is 40 x $20 = $800. The six overtime hours are paid at 1.5 x $20 = $30 an hour, or 6 x $30 = $180. Her gross pay for the week is $800 + $180 = $980. If her employer paid only $20 for every hour, she would be short $60 (six hours x the $10 premium). Under section 216(b) she could recover that $60 and another $60 in liquidated damages, so $120 for the week, and an underpayment repeated every week adds up quickly.

Pros

• Sets a national floor that applies regardless of where the employer is based or which state the worker lives in.
• Overtime rules give hourly workers a predictable premium for long weeks.
• Back pay doubled by liquidated damages makes small, repeated underpayments worth pursuing.
• Leaves room for states and cities to set higher minimums.

Cons

• The federal minimum wage has not changed since 2009, so in many places the state or local rate is the one that matters.
• Silent on paid leave, breaks, severance and final paychecks, which surprises workers who assume federal law covers them.
• Exemptions and the employee-versus-contractor line are fact-heavy, so whether the Act applies to a given job is not always obvious.
• Claims expire: two years for most violations, three for willful ones.