Federal Wage Law: The Fair Labor Standards Act

Federal wage law, overtime pay, child labor standards and recordkeeping rules for all private and public sector workers in the U.S. are established by the Fair Labor Standards Act (FLSA). The Wage and Hour Division of the Dept. of Labor (DOL) administers and enforces FLSA regulations.

FLSA Wage Standards

Covered workers who are not determined to be exempt from federal wage and overtime laws (see "Exempt Employees vs. Nonexempt Employees") must be paid the minimum wage, currently $7.25. Keep in mind that state minimum wage laws may apply. Covered workers also must be paid overtime at a rate of time and one-half for each hour worked beyond 40 hours in a given week.

Wages must be paid on the regular payday for the covered pay period. Paycheck deductions made for required uniforms, work-related tools, merchandise shortages and similar items are legal as long as these deductions do not reduce the weekly pay to below the FLSA-mandated minimum wage. Check with the DOL or an employment lawyer to learn about exceptions to this rule.

Likewise, the reasonable cost of room and board or other required facilities may be considered part of wages.

The FLSA does not require the following, with respect to wages (check your state's laws for local regulations):

• Vacation, holiday, sick leave or severance pay
• Rest or meal periods
• Premium pay for working weekends or holidays
• Fringe benefits or pay raises
• Discharge notice, reason for termination, immediate payment of final wages upon termination

FLSA does not limit the number of hours per day or days per weeks an employee may be required to work (if employee is at least 16 years of age).

Employees under the age of 20 may be paid $4.25 per hour during their first 90 consecutive days. However, it is unlawful to take any action to displace a worker in order to hire another employee at the youth minimum wage.

Who is Covered by the FLSA?

Most workers are covered by FLSA regulations, although the DOL lists exhaustive guidelines in order to justify coverage as falling within its constitutional mandate for regulating interstate commerce.

For example, employers that generate annual gross sales of at least $500,000 are bound by FLSA rules. But employees at companies whose sales fall below that threshold still may be covered if the company engages in interstate commerce, conditions that would be met simply by using the telephone or mail for interstate communication or shipping.

Housekeepers, nannies, day workers and other domestic service workers are covered if they meet just one of the following two conditions:

• Cash wages from one employer are at least $1,000 within a calendar year
• More than eight hours per week are worked for at least one employer

Employers with tipped employees are responsible for making sure they earn at least the minimum wage each week. Employers must pay tipped employees a minimum of $2.13 per hour when complying with the tip credit provision. See "Tipped Employees Under the FLSA" for more information.

Exemptions from Minimum Wage and Overtime Pay

Employees in certain positions or under special circumstances are exempt from federal overtime and/or minimum wage laws. See "Exempt Employees vs. Nonexempt Employees" or speak with an employment lawyer for more detailed information, but the following should serve as general guidelines.

Exemptions from Overtime:

• Some commissioned employees in retail or service jobs; auto, truck or farm implement salespeople, parts clerks and mechanics
• Taxi drivers, railroad and airplane employees, seamen and local delivery employees
• New editors, announcers and chief engineers of non-metropolitan broadcasting stations
• Domestic service workers living on employer's premises
• Motion picture theater employers
• Farmworkers

Partial Exemptions from Overtime:

• Certain employees working on agricultural commodities and those working for bulk petroleum distributors
• With the agreement of the employees, hospitals and other health care employers may adopt a 14-day work period (instead of the usual 7-day week) as long as the employee is paid time and one-half for each hour worked over eight per day or 80 per 14-day period.
• Employees lacking a high school diploma may be required to spend up to 10 hours engaged in basic skills instruction (math, reading) without receiving time and one-half for overtime

Exemptions from Minimum Wage and Overtime:

• Executive, administrative and professional employees (i.e. teachers, office managers), outside sales staff, employees in some computer-related jobs
• Seasonal or recreational employees (in some cases), small newspaper employees, seamen on foreign vessels, fishing operation employees and newspaper delivery workers
• Farm workers whose employer used 500 "man days" or less of labor in any calendar quarter of the preceding year
• Babysitters and those employed as companions to the elderly or infirm

Child Labor

FLSA's child labor provisions are meant to protect the educational opportunities, safety, health and general well-being of minors. The two main categories for child labor regulations are nonagricultural jobs and farm jobs.

Nonagricultural Jobs:

• 18 years or older - may perform any job, whether or not it is hazardous, for unlimited hours
• 16 and 17 years old - may perform any nonhazardous job for unlimited hours
• 14 and 15 years old - may work outside school hours in most nonhazardous jobs; no more than 3 hours on a school day, 18 hours in a school week, 8 hours on a nonschool day or 40 hours in a nonschool week; work may not begin before 7 a.m. nor end after 7 p.m., except between June 1 and Labor Day (9 p.m. ending time)

Agricultural Jobs:

• 16 years and older - may perform any job, whether or not it is hazardous, for unlimited hours
• 14 and 15 years old - may perform any nonhazardous job outside of school hours
• 12 and 13 years old - may perform any nonhazardous job outside of school hours, with either a parent's written consent or on the same farm as the parents
• 12 years and younger - may perform jobs on farms owned and operated by parents or with parents' written consent, outside of school hours in nonhazardous jobs not covered by minimum wage requirements

Recordkeeping

Employers are required to keep records of wages, hours and related information typically already maintained in an ordinary business. The following records must be kept for nonexempt employees:

• Personal information (i.e. name, home address, occupation, gender, birth date if under 19 years of age)
• Hour and day when workweek begins
• Total hours worked
• Total daily or weekly earnings
• Regular pay rate for any week when overtime is incurred
• Total overtime pay for the week
• Deductions from/additions to wages
• Total wages paid
• Date of payment and period covered