Employer Insights

Fair Labor Standards Act (FLSA) - The Complete Guide for 2024

by Employer Pass, on Apr 15, 2022 6:05:58 PM

The Fair Labor Standards Act (FLSA) is the backbone of federal labor law. Covering topics such as employee classification, minimum wage, overtime, child labor, and more. It is critical that employers understand the FLSA in and out.

The Fair Labor Standards Act (FLSA) provides guidance across areas such as employee classification, minimum wage, overtime, the definition of hours worked, recordkeeping requirements, posting requirements, pay schedules, final pay, and provisions regarding child labor.

The FLSA is a federal labor law is enforced by the Wage and Hour Division of the Department of Labor (DOL), whose duty is to recover back wages and assess penalties. These penalties can be up to $1,000 per violation.

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A core part of the FLSA and compliance with it is ensuring proper Employee Classification, there are three different types of classifications that workers or employees can be classified as:

  • Non-exempt employees
  • Exempt employees
  • Independent contractors

Update 01.19.24: To maintain a more consistent approach to the determination of employee classification status, the U.S. Department of Labor has published a final rule on independent contractor classification which goes into effect March 11, 2024. The new rule provides a more accurate analysis for determining if a worker is an employee or independent contractor so that FLSA status is more consistent with longstanding judicial precedent.

Employers need to know which category each employee or worker falls under. A misclassification of a worker may have significant state and federal monetary consequences. In fact, in the 2023 fiscal year, the DOL recovered over 274 million in total back wages due to the misclassification of workers. 

To learn more about FLSA Employee Classification Guidelines, how to classify employees, and the associated '"tests" with FLSA status, click here.  

Federal Minimum Wage

The (FLSA) set the Federal Minimum Wage to $7.25 per hour. Yet, many states have enacted their own minimum wage laws. When a state law sets its minimum wage higher than the federal, the state wage applies.

Most states that don’t have a higher minimum wage than the federal value, usually states have a minimum of the same value ($7.25). Some, however, just do away with a state minimum entirely. 

In rare cases, like Georgia, the state minimum wage is actually lower than the federal minimum. In this instance, employers must pay all employees covered by the FLSA the federal minimum wage (at the least). Any employees who are not covered by the FLSA may be paid less than $7.25 an hour.

To see a minimum wage chart by state across the United States, click here.

Overtime

Non-exempt employees must be paid overtime for hours worked in excess of 40 in a single workweek (a workweek can be any seven consecutive 24-hour periods).

Overtime pay rate must be at least 1.5 times the employee's regular rate of pay.

For Example: a non-exempt worker making $7.25 an hour would make $10.86 per hour of overtime.

For employees ages 16 and older, there is no limit on the number of hours they may work in a workweek. 

The FLSA does not require overtime pay for work on weekends, holidays, or regular days of rest unless an employee also goes over the 40-hour mark.

Definition of Hours Worked

Generally, the definition of hours worked includes all the time during which an employee is required to be on the employer’s premises, on duty, or at a prescribed workplace.

Other specific instances that count as hours worked include:

  • Waiting Time
    • Counts when an employee is engaged to wait (example: a fireman playing checkers while waiting for an alarm to sound).
  • On-Call Time
    • Typically on-call time is only considered hours worked if the on-call shift is spent on-premise. There are some exceptions.
  • Rest & Meal Periods
    • Rest periods that are 20 minutes or less are paid for as working time. Meal periods where an employee is not completely relieved of all duties are also considered hours worked.
  • Sleeping Time & Other Activities
    • An employee who works for less than 24 hours in a shift, and is allowed to sleep or engage in other personal activities when not busy during that shift, shall be compensated for all hours of their shift, whether they sleep/engage in said activities or not.
  • Lectures, Meetings & Training
    • Any of the aforementioned events are considered hours worked unless the event is outside of normal hours, is voluntary, is unrelated to the job, and does not require any concurrent work to be performed.
  • Travel Time
    • Depends on the type of travel.

Wage & Hour Recordkeeping Requirements

Employers covered by the FLSA must keep certain employee records for non-exempt employees. While the act does not require any particular format for these records, a specific set of information is required to be kept recorded.

Recorded information must include:

  • Employees' full names and social security numbers
  • Address, including zip code
  • Birth date, if the employee is younger than 19
  • Sex and occupation
  • Time and day of the week when the employee’s workweek begins
  • Hours worked each day
  • Total hours worked each workweek
  • The basis of how employee compensation is determined
  • Regular hourly pay rate
  • Total daily or weekly straight-time earnings
  • Total overtime earnings for each workweek
  • All additions to or deductions from the employee’s wages
  • Total wages paid each pay period
  • Date of payment and the pay period covered by the payment

Records shall be kept for at least three years when pertaining to payroll, collective bargaining agreements, sales, and purchases. Records shall be kept for two years when pertaining to what wage computations are based upon.

All records must be kept open for inspection by the Division’s representatives.

Pay Schedules & Final Pay Requirements

The FLSA requires employees to be paid on a regular, predetermined payday, each pay period. 

An employer may not deduct from an employee’s wages for cash or merchandise shortages, employer-required uniforms, or tools of the trade when doing so brings total compensation below the minimum wage or reduce the amount of overtime pay.

To look at pay schedule requirements by state, click here.

Employers are not required by law to give employees their final paycheck immediately. However, final pay must be received by the first regular payday of the last pay period the employee worked. 

It's becoming increasingly common for states to have requirements for final pay rules, which may require immediate payment than the FLSA requirement.

Child Labor Laws

Federal child labor provisions authorized by the FLSA ensure that young employees are able to work in a safe environment that does not jeopardize their health, well-being, or educational opportunities. 

As a general rule, the FLSA sets 14 years old as the minimum age for employment and limits the number of hours worked by minors under the age of 16. The FLSA also prohibits the employment of a minor in work declared hazardous by the Secretary of Labor.

Each state also has its own laws relating to the employment of minors. If state law and the FLSA overlap, the law which is more protective of the minor will apply. 

The DOL also has separate guidelines for minors when it comes to specific industries of employment, such as:

  • Amusement parks
  • Restaurants, cooking, and baking
  • Driving
  • Agriculture
  • Grocery stores
  • Healthcare
  • Lifeguards
  • And more

Wage & Hour Posting Requirements

Employers must display an official poster outlining the provisions of the FLSA. These are available at no cost from your local office of the Wage and Hour Division of the Department of Labor.

However, for easier compliance with minimal risk, employers may want to consider a federal labor law subscription service. Providing for consistent compliance and minimal risk. 

Final Thoughts on the FLSA

The FLSA is only one of the many federal labor laws that companies across the country must comply with. It is very important that employers everywhere familiarize themselves with the FLSA as well as the other federal labor laws that apply to their business such as equal opportunity employment laws, or the Family and Medical Leave Act. Understanding the history and progression of federal labor law can be helpful as well.

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Topics:Federal Labor Laws

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Did You Know...

Federal labor laws are always subject to change?

If your federal or state labor law posters haven't been updated recently, you may be out of compliance. 

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