What Is the Fair Labor Standards Act (FLSA)?

The Fair Labor Standards Act (FLSA) is a U.S. law that is intended to protect workers against certain unfair pay practices. As such, the FLSA sets out various labor regulations regarding interstate commerce employment, including minimum wages, requirements for overtime pay, and limitations on child labor. The Fair Labor Standards Act, which was passed in 1938 but has seen numerous changes and is one of the most important laws for employers to understand since it sets out a wide array of regulations for dealing with employees.

Key Takeaways

  • The FLSA protects workers against unfair practices.
  • FLSA rules specify when workers are considered on the clock and when workers should be paid overtime.
  • Employees can be considered exempt or non-exempt.

How the Fair Labor Standards Act (FLSA) Works

The Fair Labor Standards Act specifies at which times workers are "on the clock" and which times are not paid hours. There are also elaborate rules concerning whether employees are exempt or non-exempt from the Fair Labor Standards Act overtime regulations. The FLSA requires overtime to be paid at 1.5 times the regular hourly rate ("time-and-a-half") for all hours worked in excess of 40 hours during a seven-day workweek.

The Fair Labor Standards Act applies to employees who are employed by an employer, and who are engaged in interstate commerce or in the production of goods for commerce, or who are employed by an enterprise engaged in commerce or the production of goods for commerce. It does not apply to independent contractors or volunteers because they are not considered employees. Employers that have at least $500,000 per year in gross sales or other business are subject to the requirements of the FLSA, which means that their employees are eligible for FLSA protections.

Fair Labor Standards Act: Exempt and Non-Exempt

Employees are divided into two categories under the FLSA: exempt and non-exempt. Non-exempt employees are entitled to overtime pay, while exempt employees are not. Most FLSA-covered employees are nonexempt. Some hourly workers are not covered by the FLSA, but instead other regulations. For example, railroad workers are governed by the Railway Labor Act and truck drivers by the Motor Carriers Act.

Fair Labor Standards Act and Workers

White-collar workers (executive, professional, and administrative workers) are not protected by FLSA rules when it comes to overtime. Farmworkers may be considered jointly employed by a labor contractor, who recruits, organizes, transports, and pays them, and a farmer, who needs their services and pays the labor contractor for their services. Such situations see employers falsely categorize such workers as volunteers when they meet the description of "employee" under the FLSA.

The FLSA also sets the groundwork for how to treat jobs that are primarily compensated by way of tipping. In such a case, an employer must pay the minimum wage to the employee unless they regularly receive over $30 per month from gratuities. If that employee's pay (tips included) does not equal minimum wage, then the employer must make up the difference. Such workers must either receive all their tips or be included in a tip pool, which the FLSA sets guidelines for. Busboys are meant to be included in a tip pool under FLSA rules because of the customer-visible nature of their work.

Fair Labor Standards Act Rules and Compliance

The U.S. Department of Labor provides a reference guide to help with compliance with the Fair Labor Standards Act. The law that provides the groundwork for the FLSA can be found under Section 29 of the United States Code under Chapter 8, Subsection 203. Information on FLSA coverage may be found here.