Fair Labour Standards Act (FLSA)

The Fair Labour Standards Act (FLSA) is a foundational piece of U.S. labour legislation that governs wages, hours worked, recordkeeping, and youth employment standards. Originally enacted in 1938, the law has evolved to address modern workplace challenges, ensuring a baseline level of protection for workers across industries. This glossary provides definitions and explanations of the most essential FLSA-related terms used in U.S. employment law, helping employers maintain compliance and employees understand their rights.

Fair Labour Standards Act (FLSA)

The Fair Labour Standards Act (FLSA) is a U.S. federal law that sets standards for minimum wage, overtime pay eligibility, recordkeeping, and youth employment. It applies to most private and public sector employers and is enforced by the U.S. Department of Labor’s Wage and Hour Division.

Minimum Wage

The FLSA mandates a federal minimum wage, which is currently $7.25 per hour (as of July 24, 2009). Some states and municipalities have higher minimum wage standards, and employers must follow the law that provides the greater benefit to the employee.

Overtime Pay

Employees covered by the FLSA are entitled to overtime pay at a rate of 1.5 times their regular hourly rate for any time worked beyond 40 hours in a workweek. Employers are not required to pay overtime for work on weekends or holidays unless overtime thresholds are met.

Workweek

The FLSA defines a workweek as a fixed and recurring period of 168 hours, or seven consecutive 24-hour days. This period can start on any day and at any hour as determined by the employer, but it must remain consistent.

Hours Worked

Under the FLSA, hours worked generally include all the time an employee must be on duty, whether on the employer’s premises or at a designated work location. This includes time spent on training, travel (under specific conditions), and waiting periods controlled by the employer.

Exempt vs. Nonexempt Employees

Executive, Administrative, and Professional Exemptions (EAP)

These exemptions—often called “white collar” exemptions—apply to employees who meet specific job duty requirements and are paid a minimum salary. Following recent legal developments, the FLSA enforces the 2019 thresholds, which set the standard salary level at $684 per week and the total compensation for Highly Compensated Employees (HCE) at $107,432 per year.

Highly Compensated Employees (HCE)

An HCE is an employee who performs non-manual office work and earns total annual compensation above the defined threshold. While exempt from overtime under the FLSA, HCEs must still perform a limited set of exempt duties.

Independent Contractor

Under the Fair Labour Standards Act, independent contractors are not considered employees and are therefore not covered by FLSA protections, such as minimum wage or overtime. The Department of Labor issued updated guidelines in 2024 that clarify classification using an economic realities test.

Tipped Employees and Tip Credit

The FLSA allows employers to pay tipped employees a lower direct wage, provided the total wage plus tips equals at least the federal minimum wage. This is known as a tip credit. Employers must meet specific conditions to claim this credit.

Recordkeeping Requirements

Employers must maintain accurate time and pay records for all nonexempt workers. This includes information such as hours worked, wages paid, overtime hours, and deductions. Employers are also required to display the official FLSA poster in the workplace.

Child Labour Provisions

The FLSA imposes strict regulations on the employment of minors. These provisions limit the types of jobs and hours young people can work to protect their health, safety, and educational opportunities. Penalties for violating child labour laws can be severe, especially when they involve injury or fatality.

Direct Care Workers

Direct care workers, such as home health aides and personal care attendants, are generally covered by FLSA wage and hour protections. They are entitled to minimum wage and overtime pay, even if employed through third-party agencies.

Wage Garnishment

FLSA standards also address limits on wage garnishment, ensuring that a certain portion of an employee’s wages remains protected. These rules apply when deductions are made to satisfy debts such as child support, taxes, or court judgments.

FLSA Compliance Tools

Enforcement and Penalties

Violations of the Fair Labour Standards Act can result in civil monetary penalties, back wage payments, and legal action. For instance, willful violations of child labour laws that result in a minor’s serious injury or death can lead to penalties exceeding $140,000.

Misclassification of Employees

One of the most common FLSA violations is the misclassification of workers as independent contractors or exempt employees. Misclassification can result in unpaid wages, overtime liabilities, and penalties. Regular compliance audits are recommended to avoid costly errors.

Break Time for Nursing Mothers

Under the FLSA, employers must provide reasonable break time and a private location (other than a bathroom) for nursing mothers to express breast milk for up to one year after childbirth.

Poster Requirements

Employers must display a current version of the FLSA Minimum Wage Poster in a conspicuous place at the worksite. Multilingual versions are available for workplaces with non-English-speaking employees.

Legal Updates and Rulings

The Fair Labour Standards Act is periodically updated through federal rulemaking and court decisions. For example, a 2024 final rule updating the EAP exemptions was vacated by a federal court, meaning the 2019 rule remains in effect for enforcement purposes. Ongoing litigation may affect future enforcement standards.

Summary

Understanding the provisions of the Fair Labour Standards Act (FLSA) is essential for maintaining legal compliance and protecting employee rights. From minimum wage to exempt status, each term in this glossary contributes to a broader framework of fair and equitable labour standards. As employment practices evolve and new legal interpretations emerge, staying informed about FLSA requirements remains critical for HR professionals, payroll teams, and business leaders alike.