What is the Fair Labor Standards Act (FLSA)

The Fair Labor Standards Act (FLSA) is a U.S. federal law that establishes minimum wage, overtime pay eligibility, recordkeeping, and child labor standards for full-time and part-time workers in the private sector and in federal, state, and local governments.

What are the key provisions of the FLSA?

The key provisions of the FLSA include:

• Minimum wage: The FLSA sets the federal minimum wage, which is the lowest hourly wage that can be paid to employees
• Overtime pay: Employees covered by the FLSA must receive overtime pay for hours worked over 40 in a workweek at a rate not less than time and one-half their regular rates of pay
• Recordkeeping: Employers are required to keep employee time and pay records
• Child labor: The FLSA regulates the employment of minors, including restrictions on the types of jobs and the hours they can work

Who is covered by the FLSA?

The FLSA covers most employees in the private sector as well as federal, state, and local government employees. Coverage is determined by two main criteria:

• Enterprise coverage: Businesses with at least two employees and an annual business volume of at least $500,000.
• Individual coverage: Employees engaged in interstate commerce or in the production of goods for interstate commerce.

Certain employees are exempt from the FLSA, such as executive, administrative, and professional employees, as well as some seasonal and recreational employees.

How does the FLSA define overtime?

Under the FLSA, overtime is defined as any hours worked over 40 in a workweek. Employees covered by the FLSA are entitled to overtime pay at a rate of at least 1.5 times their regular pay rate for each hour worked beyond 40 hours.

What are the recordkeeping requirements under the FLSA?

Employers must maintain accurate records of employees' wages, hours, and other conditions of employment. Key records that must be kept include:

• Employee information: Name, address, and occupation.
• Wage information: Rate of pay, hours worked each day and week, total earnings, and deductions.
• Work schedules: Start and end times, and total hours worked each workweek.

Employers must retain these records for at least three years.

What are the child labor provisions under the FLSA?

The FLSA sets specific child labor standards to protect minors in the workforce:

• Minimum age: Generally, the minimum age for employment is 14 years old.
• Work hours: Restrictions on hours worked for minors under 16, including limits on the number of hours per day and week, and prohibitions on work during school hours.
• Hazardous occupations: Minors under 18 are prohibited from working in hazardous occupations identified by the Secretary of Labor.

How does the FLSA impact global hiring and remote work?

The FLSA primarily applies to employees working within the United States. However, U.S.-based companies with remote employees or those hiring globally must ensure compliance with local labor laws in addition to the FLSA. For remote workers within the U.S., the FLSA's provisions on minimum wage and overtime still apply.

What are the penalties for non-compliance with the FLSA?

Non-compliance with the FLSA can result in significant penalties, including:

• Back pay: Employers may be required to pay back wages to employees for unpaid minimum wages or overtime.
• Civil penalties: Employers can face fines for willful or repeated violations, including child labor violations.
• Criminal penalties: Willful violations may result in criminal prosecution and fines.

How is the FLSA enforced?

The FLSA is enforced by the Wage and Hour Division (WHD) of the U.S. Department of Labor. Enforcement actions include:

• Investigations: The WHD conducts investigations to ensure compliance.
• Complaints: Employees can file complaints with the WHD.
• Legal actions: The WHD can initiate legal action against non-compliant employers.

Can employees waive their rights under the FLSA?

No, employees cannot waive their rights to minimum wage and overtime pay under the FLSA. Any agreement to waive these rights is not legally binding and cannot be enforced.

How does the FLSA interact with state labor laws?

The FLSA sets federal minimum standards, but states can enact their own labor laws that provide greater protections. When state and federal laws differ, the law most favorable to the employee generally applies. For example, if a state minimum wage is higher than the federal minimum wage, the state wage applies.

What is the role of the FLSA in determining exempt vs. non-exempt employees?

The FLSA establishes criteria for classifying employees as exempt or non-exempt from overtime pay:

• Exempt employees: Typically include executive, administrative, and professional employees who meet specific salary and duties tests.
• Non-exempt employees: Entitled to minimum wage and overtime pay. Classification depends on job duties and salary level.

Employers must carefully evaluate job roles to ensure proper classification.

How can employers ensure compliance with the FLSA?

Employers can take several steps to ensure compliance with the FLSA:

• Training: Educate HR personnel and managers on FLSA requirements.
• Audits: Conduct regular audits of pay practices and employee classifications.
• Recordkeeping: Maintain accurate and comprehensive records of wages and hours worked.
• Policy updates: Regularly review and update workplace policies to align with FLSA standards.

What are common misconceptions about the FLSA?

Some common misconceptions about the FLSA include:

• Salaried employees are always exempt: Not all salaried employees are exempt from overtime; job duties and salary level must meet specific criteria.
• Small businesses are exempt: Many small businesses are covered by the FLSA if they meet the enterprise coverage criteria.
• Comp time instead of overtime: Private sector employers cannot provide compensatory time off in lieu of overtime pay; this is allowed only in the public sector under certain conditions.