Fair Labor Standards Act (FLSA) (US)

The federal law enacted in 1938 that establishes minimum wage, overtime pay requirements (time-and-a-half after 40 hours), child labor standards, and recordkeeping obligations for most private and public sector employers in the United States.

What Is the Fair Labor Standards Act (FLSA)?

Key Takeaways

  • ✓The FLSA is the foundational federal wage and hour law. It establishes the minimum wage ($7.25/hour federal), overtime pay at 1.5x the regular rate for hours over 40 per workweek, child labor restrictions, and employer recordkeeping requirements.
  • ✓It applies to enterprises with annual gross sales of $500,000+ and to individual workers engaged in interstate commerce or producing goods for interstate commerce, which covers the vast majority of US workers.
  • ✓The FLSA classifies every covered worker as either 'exempt' (salaried, meeting specific duties tests, not entitled to overtime) or 'non-exempt' (entitled to minimum wage and overtime). Misclassification is the single most common and costly FLSA violation.
  • ✓The DOL Wage and Hour Division recovered $274 million in back wages for over 163,000 workers in FY 2023 from FLSA violations, and that's just the government enforcement side. Private litigation adds billions more.
  • ✓30 states plus DC have minimum wages above the federal $7.25/hour. When state and federal rates differ, the higher rate applies.

The FLSA is the law that says you must pay workers a minimum wage and time-and-a-half for overtime. Passed in 1938 during the Great Depression, it was a direct response to exploitative labor practices: 12-hour days, 7-day workweeks, child labor in factories, and wages too low to survive on. The law established the 40-hour workweek as the American standard. Today, the FLSA generates more employment litigation than any other federal statute. Wage and hour lawsuits consistently rank as the most common type of employment case in federal court. The reason is straightforward: FLSA violations affect every paycheck, multiply across every affected employee, and extend backward for two to three years. A single misclassification affecting 50 employees over three years can produce a seven-figure liability before you add liquidated damages and attorney fees. For HR and payroll professionals, the FLSA touches every payroll cycle. Getting exempt vs non-exempt classification right, calculating the regular rate correctly, tracking hours accurately, and maintaining compliant records aren't optional. They're the difference between a clean payroll operation and a class action lawsuit.

$7.25Federal minimum wage since July 24, 2009, the longest period without an increase in the law's history
$274MBack wages recovered by the DOL Wage and Hour Division for FLSA violations in FY 2023 (DOL)
$43,888New salary threshold for overtime-exempt status under the DOL's 2024 rule (effective July 1, 2024)
163,000+Workers for whom the DOL recovered back wages in FY 2023 from wage and hour violations (DOL)

FLSA Coverage: Which Employers and Employees

The FLSA uses two types of coverage, and either one can trigger the law's requirements.

Enterprise coverage

The FLSA applies to enterprises (businesses) with annual gross sales or business volume of at least $500,000, plus hospitals, schools, and government agencies regardless of revenue. If the enterprise is covered, all employees of that enterprise are covered. This captures the vast majority of US businesses by revenue, even though many small businesses fall below the threshold.

Individual coverage

Even if the enterprise doesn't meet the $500,000 threshold, individual employees are covered if their work involves interstate commerce or the production of goods for interstate commerce. Courts interpret this broadly. Using a credit card machine, sending emails across state lines, making interstate phone calls, or handling goods that have moved in interstate commerce can all trigger individual coverage. In practice, very few workers in the modern economy fall outside FLSA coverage entirely.

Exempt employees and industries

Certain employees and industries are wholly or partially exempt from the FLSA. Outside salespeople, certain agricultural workers, and certain seasonal amusement or recreational establishments are exempt from both minimum wage and overtime. Motor carrier employees, railroad workers, and airline employees are exempt from overtime under separate statutes. Small newspapers and fishing operations have partial exemptions. But the most significant exemption category is the 'white collar' exemptions for executive, administrative, professional, computer, and outside sales employees who meet specific salary and duties tests.

Exempt vs Non-Exempt Classification

Getting this classification right is the single most important FLSA compliance task. Every covered employee must be correctly classified as exempt (not entitled to overtime) or non-exempt (entitled to overtime).

The three-part test for exemption

To qualify for a white-collar exemption, an employee must meet all three requirements: (1) Salary basis: the employee must be paid a predetermined, fixed salary that isn't subject to reduction based on quality or quantity of work. (2) Salary level: the salary must meet the minimum threshold ($684/week, or $35,568/year under current rules; $844/week, or $43,888/year under the DOL's 2024 rule effective July 1, 2024). (3) Duties test: the employee's primary duty must meet the specific test for executive, administrative, professional, computer, or outside sales exemptions. All three parts must be satisfied. A highly paid employee performing non-exempt duties is still non-exempt.

Executive exemption

Primary duty is managing the enterprise or a recognized department. The employee must customarily and regularly direct the work of at least two full-time employees (or their equivalent). The employee must have authority to hire or fire, or their recommendations on hiring, firing, or promotion must carry particular weight. This exemption covers managers, directors, and supervisors who spend the majority of their time managing people and operations.

Administrative exemption

Primary duty is office or non-manual work directly related to management or general business operations of the employer or its customers. The employee must exercise discretion and independent judgment on matters of significance. This is the most litigated exemption because 'discretion and independent judgment' is subjective. Employees who follow detailed procedures or make routine decisions typically don't qualify. The work must relate to running the business itself (HR, finance, IT, marketing strategy), not producing the employer's product or service.

Professional exemption

Two types exist. Learned professionals have a primary duty requiring knowledge of an advanced type in a field of science or learning, customarily acquired through a prolonged course of specialized intellectual instruction. Doctors, lawyers, engineers, teachers, architects, and accountants qualify. Creative professionals have a primary duty requiring invention, imagination, originality, or talent in a recognized artistic or creative field. Writers, musicians, composers, and graphic designers may qualify, depending on the nature of their work.

Overtime Calculation Under the FLSA

Overtime sounds simple: 1.5x the regular rate for hours over 40 in a workweek. But calculating the 'regular rate' correctly is where many employers make costly errors.

The regular rate of pay

The regular rate isn't necessarily the employee's hourly wage. It includes all remuneration for employment: base hourly rate, shift differentials, non-discretionary bonuses, commissions, and piece rates. It excludes discretionary bonuses (true year-end bonuses where the amount isn't predetermined), gifts, vacation/sick pay, expense reimbursements, and contributions to benefit plans. When a non-exempt employee earns a non-discretionary bonus, the employer must recalculate the regular rate for any workweeks in the bonus period where overtime was worked, then pay the additional overtime premium.

The workweek

A workweek is a fixed, regularly recurring period of 168 hours (seven consecutive 24-hour periods). Each workweek stands alone. You can't average hours over two or more weeks. If an employee works 50 hours in week one and 30 hours in week two, you owe 10 hours of overtime for week one. The employer can set the workweek to begin on any day and at any time, but once established, it can't be changed to avoid overtime obligations. There's no daily overtime requirement under federal law (though California and a few other states require it).

Common overtime calculation errors

Failing to include non-discretionary bonuses in the regular rate. Using a biweekly pay period instead of a workweek for overtime calculation. Averaging hours across multiple workweeks. Excluding time spent on pre-shift activities (booting up computers, putting on required safety gear). Not counting training time that's mandatory and during normal hours. Rounding time entries in a way that consistently favors the employer. Each of these errors affects every affected employee's paycheck and can extend back two to three years in a lawsuit.

FLSA Child Labor Provisions

The FLSA restricts the types of work minors can perform and the hours they can work. These restrictions vary by age.

Age GroupPermitted WorkHour Restrictions (Non-Agricultural)Hazardous Work
Under 14Very limited: newspaper delivery, acting, family business (non-mining, non-manufacturing)N/A (virtually no employment permitted)Prohibited
14-15Office, retail, food service, gasoline dispensing, and other non-hazardous work3 hrs/day on school days, 8 hrs/day non-school days; 18 hrs/week during school, 40 hrs/week non-school; 7AM-7PM (9PM June 1-Labor Day)Prohibited
16-17Any non-hazardous workNo hour restrictionsProhibited (17 specified hazardous orders: mining, meatpacking, roofing, etc.)
18+Any workNo restrictionsNo restrictions

FLSA Recordkeeping Requirements

The FLSA requires employers to maintain specific records for all employees. These records are the first thing DOL investigators request during an audit.

  • Employee's full name and Social Security number.
  • Home address, including zip code.
  • Date of birth (if under 19).
  • Sex and occupation.
  • Time and day the workweek begins.
  • Hours worked each day and total hours worked each workweek.
  • Basis on which wages are paid (hourly rate, salary, piece rate, etc.).
  • Regular hourly pay rate for any week overtime is worked.
  • Total daily or weekly straight-time earnings.
  • Total overtime earnings for the workweek.
  • All additions to or deductions from wages.
  • Total wages paid each pay period.
  • Date of payment and the pay period covered.

FLSA Penalties and Enforcement

FLSA violations carry significant financial consequences, and the law is designed to make employees whole with damages that effectively double or triple the unpaid wages.

Violation TypePenalty/RemedyAdditional Consequences
Minimum wage violationBack pay for the difference + equal amount in liquidated damages (2x total)Attorney fees, court costs, DOL supervision
Overtime violationBack pay for unpaid overtime + liquidated damages (2x total)Class/collective actions multiplying liability across all affected workers
Willful violation3-year statute of limitations (vs 2 years non-willful) + liquidated damagesCriminal prosecution: fines up to $10,000, imprisonment up to 6 months (repeat)
Child labor violationCivil penalty up to $15,138 per violationUp to $68,801 per violation causing serious injury or death
Retaliation for filing a complaintReinstatement + back pay + liquidated damagesAdditional damages for emotional distress in some circuits
Recordkeeping violationNo direct penalty, but shifts burden of proof to employerWithout records, courts often accept the employee's testimony on hours worked

FLSA Enforcement Statistics [2026]

Data on DOL enforcement activity and the financial impact of FLSA violations.

$274M
Back wages recovered by DOL Wage and Hour Division in FY 2023US Department of Labor, 2023
163,000+
Workers for whom back wages were recovered in FY 2023DOL Wage and Hour Division, 2023
$29.3M
Average wage and hour class action settlement in 2023Seyfarth Shaw, 2024
$7.25
Federal minimum wage, unchanged since July 2009 (15+ years)DOL

Frequently Asked Questions

Does the FLSA require employers to give breaks or meal periods?

No. The FLSA doesn't require employers to provide meal or rest breaks. However, if an employer chooses to provide short breaks (typically 5-20 minutes), the FLSA considers them compensable hours worked and they must be paid. Bona fide meal periods (typically 30 minutes or more) aren't compensable if the employee is completely relieved of duties. Many states have their own break requirements that exceed the FLSA. California requires a 30-minute meal break for shifts over 5 hours and a paid 10-minute rest break for every 4 hours worked.

Can an employer pay a non-exempt employee a salary instead of an hourly rate?

Yes. Non-exempt employees can be paid a salary, but they're still entitled to overtime for hours over 40 per workweek. The salary simply becomes the basis for calculating the regular rate. If a non-exempt employee earns a $1,000 weekly salary for a 40-hour workweek, their regular rate is $25/hour, and overtime is $37.50/hour. Paying a salary doesn't make someone exempt. Only meeting the salary threshold AND the duties test creates an exemption.

What is a collective action under the FLSA?

Unlike class actions under Rule 23 of the Federal Rules of Civil Procedure (where members are automatically included unless they opt out), FLSA collective actions under Section 16(b) require employees to affirmatively opt in. An employee must file written consent to join the lawsuit. While this typically results in smaller groups than class actions, FLSA collective actions still regularly involve hundreds or thousands of plaintiffs when a company-wide policy is challenged. Courts first grant 'conditional certification' allowing notice to potential plaintiffs, then the employer can challenge certification at the summary judgment stage.

How does the FLSA apply to remote workers?

The same way it applies to everyone else. Remote employees must be paid at least minimum wage and overtime for hours over 40 per workweek. The challenge is tracking hours. Employers must establish a system for remote non-exempt employees to record all hours worked, and the employer can't turn a blind eye to off-the-clock work. If the employer knows or has reason to know that remote employees are working extra hours (checking email at night, logging into systems after hours), those hours must be compensated even if the employee didn't report them.

What is the 'fluctuating workweek' method?

The fluctuating workweek (FWW) method is an alternative overtime calculation for non-exempt salaried employees whose hours fluctuate above and below 40 per week. Under FWW, the fixed salary covers all straight-time hours worked. Overtime is paid at 0.5x (not 1.5x) the regular rate because the salary already includes 1.0x for the overtime hours. The regular rate drops as hours increase because the same salary is divided by more hours. Not all states recognize FWW, and the DOL's regulations require a 'clear mutual understanding' that the salary covers all hours worked.

Can an employer require mandatory overtime?

Yes, under the FLSA. There's no federal limit on the number of hours an adult employee can work per week, and employers can require overtime as a condition of employment. The only requirement is that non-exempt employees must be paid 1.5x for hours over 40. Some states limit mandatory overtime in specific industries, particularly healthcare, where nurse overtime mandates have been linked to patient safety concerns. Union contracts also commonly restrict mandatory overtime through negotiated provisions.
Adithyan RKWritten by Adithyan RK
Surya N
Fact-checked by Surya N
Published on: 25 Mar 2026Last updated:
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