FLSA: What I Need to Know

What Is the FLSA?

The Fair Labor Standards Act (FLSA) is a U.S. federal law that establishes standards for minimum wage, overtime pay, recordkeeping, and child labor. For HR professionals, especially those managing smaller organizations, understanding the FLSA is not just a legal requirement but also a key component of fostering a fair and compliant workplace. With evolving work environments and the increasing complexity of employment laws, staying informed about the FLSA is essential to protect both employees’ rights and your organization from potential legal pitfalls. 

In 1938, The Department of Labor (DOL) issued The Fair Labor Standards Act. In light of its creation, the DOL launched the Wage and Hour Division to enforce it. The act was initially generated as a response to the Great Depression. By incentivizing employers to hire additional staff instead of increasing overtime hours worked by existing employees, job opportunities grew. Through its facilitation of economic prosperity, the act naturally established federal regulations that protected the employee experience, fortifying the relevancy of the FLSA for the years to come.

The four main provisions of the FLSA are:

• Federal minimum wages
• Overtime pay
• Employer recordkeeping
• Child labor

It is important to note that while the FLSA covers an extensive range of employees in the public and private sector, not all employees are covered. The lack of coverage for some industries accounts for varied natures of work. For example, small farm employees, movie theater workers, casual babysitters and independent contractors are not always covered. It is important that employers carefully examine these technicalities of the law to ensure compliance. 

 

FLSA Status

Another technicality that employers should consider is FLSA status. FLSA status refers to the classification of employees under the Fair Labor Standards Act as either exempt or non-exempt. The FLSA duties test and salary examinations serve as the basis of distinction between exempt and nonexempt employees. Nonexempt employees are entitled to minimum wage and overtime pay for hours worked beyond 40 in a work week, while exempt employees do not receive these benefits. Exempt employees are typically salaried and perform more executive or administrative roles. Conversely, non-exempt employees are typically paid by the hour to perform more manual and technical duties.  

Check out our HR Party of One episode on exempt vs. nonexempt employees to ensure you are correctly classifying employees.  

FLSA Minimum Wage Provisions

The Fair Labor Standards Act establishes a federal minimum wage that serves as a baseline for employee compensation across the United States. 

Currently, the federal minimum wages are:

• $7.25 per hour for covered, non-exempt employees
• $2.13 per hour for tipped employees who receive more than $30 in tips per month
• $4.25 per hour for workers under 20 during their first 90 days of employment

It is important to note that many states enacted laws that constitute higher minimum wage rates. The discrepancy between states reflects varying political climates and costs of living. For example, California’s minimum wage is currently $16.00 per hour. Employers should comply with their state’s minimum wage regulations unless their state’s regulation is lower than the minimum set by the FLSA. In other words, the FLSA always trumps state minimum wage regulations that are lower than $7.25 per hour. 

FLSA Overtime Provisions

Overtime is defined as work that exceeds 40 hours within a workweek. The FLSA defines the workweek as 7 consecutive days or 168 hours. It is illegal to deny overtime pay to covered, non-exempt employees that exceed the 40 hour threshold. The FLSA’s provision of overtime prevents the exploitation of employees and encourages employers to create work environments that promote work-life balance. 

Overtime pay is calculated by the FLSA’s “time-and-a-half” rule. In other words, overtime compensation is one and a half times the employees regular pay rate. For example, if an employee earns $10 per hour and has exceeded 40 hours of work within a week, their employer must pay them $15 for each additional hour worked. Employers must pay overtime on the scheduled payday within the pay period that the wages were earned. 

It is also important to note that not all salaried employees are exempt from overtime. Exemption status is determined by the overtime threshold. Currently all employees who earn less than $844 per week or $43,888 annually are not considered exempt from FLSA overtime regulations. On January 1st, 2025, the threshold will be raised to $58,656

To view an in-depth list of DOL's exemptions from both minimum wage and overtime pay provisions, check out their website page.

FLSA Recordkeeping Provisions

The FLSA also mandates that employees maintain accurate records of employees’ daily and weekly hours worked, regular hourly pay rates, overtime earnings, and deductions. Recordkeeping helps employers establish a transparent workplace while also equipping the organization to navigate disputes with ease. 

Employers are encouraged to complete FLSA audits. Sometimes FLSA audits are initiated by the Department of Labor. Conducting audits internally helps employers put out compliance fires before they start. FLSA audits are comprehensive evaluations of the four FLSA provisions. Recordkeeping should enhance the audit process by simplifying the time consuming project through accessible, organized documentation. 

Many companies outsource their recordkeeping responsibilities to juggle the demands of FLSA compliance. BerniePortal's all-in-one HRIS simplifies FLSA recordkeeping by seamlessly tracking time, attendance, PTO, and payroll to ensure compliance with FLSA standards. 

FLSA Child Labor Provisions

The FLSA also establishes important protections against child labor. The act outlines age restrictions, specifies the type of work minors can perform, and determines the times that assigned duties should be conducted. 

Here is a quick overview of the FLSA’s child labor laws:

• Age 13 or younger: Permitted to babysit, deliver newspapers, and work in agricultural settings with parent permission
• Ages 14-15: Permitted for some roles in establishments like grocery stores, retail stores, restaurants, movie theaters, and amusement parks
• Ages 16-17: Permitted for any job not declared hazardous
• Age 18: No restrictions 

Children that fall within the 14-15 age bracket are most susceptible to violations of child labor laws. Moreover, curfews and hourly limits apply to this group. Youth of this age can only work between the hours of 7am and 7pm. Exemptions do apply to this regulation from June 1st to Labor Day. Additionally, youth that fall into this category are not permitted to work more than 3 hours on school days, and in a school week, they are not permitted to work more than 18 hours.  On non-school days, they may work up to 8 hours, and during non-school weeks, they can work a total of up to 40 hours.

What Is Not Required by the FLSA? 

While the FLSA’s requirements are extensive, it leaves many details to be determined by individual agreements or state laws. 

Here are some items the FLSA does not require:

• A set number of hours or days employees must work, excluding employees under 16
• Pay raises or employee benefits
• Vacation, holiday, or sick pay
• Premium pay for weekend or holiday work
• Meal periods or rest breaks
• Termination notices, termination reasons and immediate payment of wages to terminated employee

Employers should understand both the scope and limitations of the FLSA. This knowledge is crucial for comprehending the extent of HR responsibilities, from compliance to effective management.

Consequences for Lack of FLSA Compliance

Violating the FLSA could result in serious fines and reputational harm. Violators could owe up to $10,000 for each penalty. Additionally, violations of the minimum wage and overtime requirements involve back pay. Back pay is compensation that covers the difference between what an employee was paid and what they should have received. Back pay accounts for the compensation that was unfairly withheld from an employee. Lastly, the reputational damage from such violations can also affect employee morale and hiring because of damaged public perception, making it essential for employers to implement compliance measures and stay informed about FLSA regulations to mitigate these risks.

Additional Resources

You can stay informed, educated, and up to date with important HR topics using BerniePortal’s comprehensive resources:

• BernieU—free online HR courses, approved for SHRM and HRCI recertification credit
• BerniePortal Blog—a one-stop shop for HR industry news
• HR Glossary—featuring the most common HR terms, acronyms, and compliance
• Resource Library—essential guides covering a comprehensive list of HR topics
• HR Party of One—our popular YouTube series and podcast, covering emerging HR trends and enduring HR topics
• Community—the HR Party of One Community forum, a place devoted to HR professionals to ask questions, learn more, and help others