Fair Labor Standards Act: What Employers Need to Know

In 1938, the Fair Labor Standards Act (FLSA) first appeared in President Franklin Roosevelt's New Deal. The legislation was a landmark law for the socio-economic development of the nation. It established overtime regulations, child labor laws, and minimum wage requirements.

The creation of FLSA also brought about the Wage and Hour Division of the Department of Labor. The division is responsible for administering various employment laws and enforcing FLSA.

The Equal Pay Act of 1963

The Equal Pay Act of 1963 (EPA) was created as an amendment to the FLSA. The FLSA serves to protect individuals from being discriminated against due to sex. The Act covers all forms of compensation, including

Salary
Hourly pay
Overtime
Life insurance
Holiday pay
Accommodations for gas and hotels
Reimbursements for travel or supplies
Bonuses
Benefits

For a complaint to be valid, it must meet several qualifications. Skill level must be considered equivalent between jobs. This means that the jobs must employ the same skill sets and require the same ability, education, and training. The positions must require the same physical or mental exertion, degree of responsibility, and physical conditions such as comparable temperature and related hazards.

Generally speaking, "equal jobs" don't need to be identical roles, though they must be substantially equal. The DOL describes this as "closely related" or "very much alike." If organizations base pay on merit, seniority, production, or other factors unrelated to sex, they may have a defense for different earnings.

The EPA only applies to establishments—which refers to any physical place of business—and does not apply to the entirety of an organization that may have multiple business sites. For example, if an employer in a centralized headquarters hires an employee and assigns them to a separate location, that location may be considered a single establishment.

If an individual chooses to file an equal pay claim, they will be considered protected from any unlawful retaliation from their employer. Retaliation can be described as any adverse action taken by the employer as a direct reaction to a claim made. This action can be termination, demotion, reduction in hours, or any other harmful action against the employee.

Overtime

FLSA encompasses all overtime laws and regulations. The Act defines the workweek as any 168-hour period— which is seven 24-hour periods. This timeframe does not need to align with the calendar workweek and may begin at any hour on any day so long as the week remains consistent. Employers may also establish different periods for different groups of employees. In other words, employers have some discretion in establishing their workweeks, but they cannot change those parameters at will once established.

Organizations must pay non-exempt employees overtime for any hours worked beyond the standard 40 hours in any given workweek. The overtime rate must be at least one and a half times the employee’s regular pay rate. Employers must pay required overtime compensation on the regular payday for applicable employees.

The Act does not regulate the total number of hours an employee beyond the age of 16 is allowed to work, so long as the overtime rule is followed. The Act maintains that there is no requirement to pay overtime on Saturdays, Sundays, or holidays–unless overtime is worked on those days.

Minimum Wage

Minimum wages are established within the FLSA. Historically, many amendments have increased the minimum wages up to the year 2009. the current federal minimum wage is $7.25 per hour. This minimum wage first went into effect on July 24, 2009, and has remained unchanged. As this is the federal minimum requirement, states can require higher minimum wages if they choose. Should a state have a higher minimum wage requirement, employers must abide by those state conditions.

Employment Issues Not Covered Under FLSA

While FLSA sets outlines minimum wage and overtime pay requirements, certain employment practices are not regulated:

Vacation, holiday, severance, or sick pay
Rest periods, holidays off, or vacations
Premium pay for either weekend or holiday hours worked
Fringe benefits or pay increases
Discharge notices
Immediate payment of final set of wages to terminated employees

Recordkeeping

Employers are required to display an FLSA poster outlining key provisions of the Act. The Wage and Hour Division offers a free copy of this poster to employers. They must always maintain specific documentation as determined by the FLSA for each non-exempt worker. No particular form must be held, but detailed employee information must be appropriately kept. This information includes:

Full name and social security number
Address, including ZIP code
Date of birth if younger than 19 years of age
Employee sex
Employee occupation
Time and day of the week when the employee's workweek begins
Total number of hours worked each day
Total hours worked each week
The circumstances of employee's wages (i.g., $10/hour, $500/week, etc.)
Typical hourly pay rate
Total weekly or daily straight-time earnings
Total number of overtime hours worked
All additions and deductions from an employee's wages
Total number of wages paid
Date of the pay period and the period covered by said payment

Payroll records, collective bargaining agreements, and sales and purchase records must be maintained for at least three years while documents that show how wages were computed need to be retained for two years. Computation documents refer to time cards, wage rate tables, etc. The records can be stored in the office or in a centralized records location.

All records need to remain open to inspection by WHD representatives, as these representatives may ask for extensions, computations, and transcriptions.

Child Labor Laws

The FLSA also includes child labor provisions designed to protect workers under 16 years of age. This includes protection from jobs that would be considered detrimental to their health and safety. Regulations and requirements differ depending on whether a job is deemed to be agricultural or non-agricultural.

Children over the age of 13 are permitted to work in an agricultural job so long as they work outside of school hours. These hours must correlate to the school district the child is assigned. Once a child turns 16, they are permitted to work on any farm at any given time.

If under the age of 12, children are permitted to work outside of school hours in any non-hazardous capacity. They may only work on small farms exempt from the federal minimum wage provisions, provided they receive parental consent. Children of any age may work at any time on a farm owned or operated by their parent or legal guardian.

If working in a non-agricultural capacity, children under the age of 14 are only permitted to work select jobs:

Delivering Newspapers
Act or perform in film, radio, or theater performances
Babysit on an occasional basis
Homeworker gathering evergreen materials and making wreaths
Work for a business owned entirely by parents or legal guardians aside from mining, manufacturing, or other hazardous conditions specified by FMLA

If a child is 14 or 15 years of age, they are permitted to work only outside of school hours. These children may work no more than:

3 hours on a given school day, including Friday
18 hours per week while school is in session
8 hours a day when school is not in session
40 hours per week when school is not in session

Children 14-15 are restricted from working either before 7:00 a.m. or after 7:00 p.m. on any day except June 1 through Labor Day. During this timeframe, nighttime work hours are extended to 9:00 p.m.

Children 14-15 may work in various positions that have been deemed non-hazardous. Children 16 and older are permitted to work unlimited hours in any occupation outside of those deemed hazardous.

It is important to always check state regulations as there may be differences. Employers are required to abide by both state and federal regulations.

Civil Penalties

Should employers break any labor laws associated with the FLSA, they will be subject to monetary penalties. Willful and repeated violation of minimum wage and overtime requirements will be subject to a civil penalty of up to $1,000 per violation.

Employers who violate child labor law requirements will be subject to a civil penalty of up to $10,000.

Any willful violations of FLSA can result in criminal prosecution. Violators can be fined up to $10,000 while repeated offenses can even lead to jail time.

Additional Resources

You can also stay informed, educated, and up-to-date with FLSA and other important topics by using BerniePortal’s comprehensive resources:

BerniePortal Blog—a one-stop-shop for HR industry news
HR Glossary—featuring the most common HR terms, acronyms, and compliance
HR Guides—essential pillars, covering an extensive list of comprehensive HR topics
BernieU—free online HR courses, approved for SHRM and HRCI recertification credit
HR Party of One—our popular YouTube series and podcast, covering emerging HR trends and enduring HR topics