Your Complete Guide to the FLSA

The Fair Labor Standards Act (FLSA) is a federal law that came to be in 1938 to protect workers from unfair work practices and is specifically designed for organizations that conduct interstate business. The act requires employers to pay a federal minimum wage to employees, pay overtime for more than 40 hours worked per week and follow child labor regulations.

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Who is Subject to the FLSA?

Any Business that engages in interstate commerce and has sales of $500,000 or more per year is subject to the FLSA. The business and its employees must be located in the United States. Businesses involved with instruments of interstate commerce are also covered by the FLSA. These instruments include railroads, highways, radio or tv stations, and even waterways. In some cases, telephone calls and internet usage have been considered means of conducting interstate business. In addition, organizations like hospitals, schools and government agencies are required by law to comply with the FLSA. Essentially, the FLSA covers most businesses operating in the United States.

What Is Not Required?

The FLSA does not regulate all employment practices. The FLSA does not require employers to provide severance or sick pay. Mealtime, break periods (except for nursing mothers), holidays off and vacation time are also not regulated by the FLSA. The list continues with things like premium pay for weekends or holidays, pay raises and pensions. A discharge notice, reason for the discharge or immediate final payment are also not required. And although the FLSA does set child labor requirements, it does not limit the number of hours in a day or days in a week a 16-year-old employee can work.

Exempt vs Nonexempt

The FLSA requires employers to classify jobs in their organization as exempt or nonexempt. Nonexempt employees are protected by the rights and regulations of the FLSA, and exempt employees are not. Exempt employees are not included in minimum wage and overtime regulations. They are generally salaried and fall into the job categories of executive, professional and administrative, computer and outside sales. Nonexempt employees must be paid the minimum wage and overtime.

Minimum Wage

The FLSA requires employers to pay their covered employees at least the federal minimum wage. But, if the state’s minimum wage is higher than that, the employer must pay the higher wage. There are exceptions to this such as the youth minimum wage and subminimum wages for certain individuals.


If an employee receives more than $30 a month in tips, then an employer is allowed to count these tips as part of their minimum wage, and there is a tipped minimum wage.

Housing Credit

A credit can be given to businesses that provide room and board to employees. This cost can be included in the wages they pay to employees, but only if the lodging is usually provided by the employer or similar employers. The employee must voluntarily choose to live there, and the space must be furnished and in compliance with all laws. The lodging must be a benefit to the employee, not the employer.

Hours Worked

Hours worked include suffered or permitted work, waiting and on-call time, rest and mealtime, sleeping time, training time and travel time. It is important for employers to be educated on what falls into each of these types of times that are considered hours worked. The U.S. Department of Labor, Wage and Hours Division, offers clear outlines for both employers and employees.


Nonexempt employees covered by the FLSA must be paid overtime for any hours worked above and beyond 40 hours per work week. Overtime pay is 1 ½ times the employee’s regular rate of pay.

Child Labor

The FLSA has specific regulations when it comes to employing children. Children as young as 14 can be employed in certain types of jobs for limited periods of time. There are more than 20 defined jobs that the FLSA says children aged 14 to 15 cannot perform, as well as more than 16 jobs that the same aged children cannot miss school to perform. States may have child labor regulations of their own that must also be followed.


Employers are required to keep records on employee identification, payroll and hours worked. Records must be kept for at least 2 or 3 years, depending on the kind of record. The specific details required are listed on the Department of Labor website for reference.

Enforcement and Violations

The FLSA is enforced by the Department of Labor’s Wage and Hour Division, which finds more than 5,000 violations each year. The division helps with back pay recovery from common violations like misclassifying employees, unpaid overtime and improper records. Fines for violations can range from a few thousand dollars to hundreds of thousands of dollars and can also lead to jail time in some situations.

Filing a Complaint

The Wage and Hour Division receives over 20,000 FLSA complaints every year, recovering billions of dollars in back pay for employees. Employers and employees should make sure they are aware of the statute of limitations for filing complaints. Complaints can be filed by the employee or a third party that does not work for the same employer. Individuals can file complaints in person at a local Wage and Hour Division office.


The Wage and Hour Division will investigate every complaint filed by gathering information through company records and interviewing current and former employees. Once the investigation is complete, the Division will meet with the employer and advise them of any violations found.

Next Steps

To protect yourself and your employees, your business must follow all federal and state laws. Make it a regular business practice to be aware of state laws and updates to the FLSA. KnowledgeCity’s online training course provides a detailed overview of the FLSA and how it applies to your business. In some cases, state laws may be stricter than the FLSA, so make sure you and your employees always aware of current FLSA requirements.

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