The Fair Labor Standards Act (FLSA) regulates wages and hours in the workplace. It establishes a minimum wage and regulates overtime pay, record-keeping, and youth employment. The FLSA applies to employment in the private sector and to employment in federal, state, and local governments. Under the act, a workweek is 40 hours and federal minimum wage is $7.25 per hour (July 24, 2009). The FLSA does not require an employer to offer vacation time, sick leave, or pay raises. Local and state wage and hour laws may also apply.
The FLSA's wage and hour laws apply to employers that earn $500,000 in annual gross sales and to employers that engage in interstate commerce or produce goods for interstate commerce. Interstate commerce includes sending mail through the U.S. Postal Service, the use of telephones or computers for interstate communication, or the shipping, handling, or receipt of goods through interstate commerce. Because of its broad coverage, the FLSA applies to virtually all employers. The act, however, does exempt small farms that meet certain requirements.
The FLSA allows an employer to pay an employee that receives some wages from tips less than minimum wage if:
According to some states' laws, employers must pay tipped employees at least minimum wage or must pay a higher minimum wage for tipped employees than required by federal law.
The FLSA requires that employers pay employees at least minimum wage and overtime pay equal to one-half of the employee's regular pay rate for hours that exceed a 40-hour workweek. However, FLSA regulations of minimum wage and overtime pay does not apply to exempt workers, including executives, administrative employees, professionals, computer specialists, and outside sales people.
The executive exemption applies if the worker:
This executive exemption also applies to an employee that engages in the management of a business and has at least a 20% equity interest in the business.
The administrative exemption applies if the worker:
The professional exemption applies if the worker:
The computer specialist exemption applies if the worker:
The exemption applies if the worker:
Other exempt workers include those employed by a seasonal or recreational business, causal babysitters, and newspaper delivery workers.
Federal law prohibits private employers from giving employees "comp" time (an hour of time off for every hour worked) for hours that exceed a 40-hour workweek. Instead, an employer may arrange an employee's workweek so that the time worked does not exceed 40 hours. This means that an employee could work four ten-hour days for a total accumulation of 40 hours for the week. This arrangement does not require an employer to pay overtime.
If traveling is part of the job, the employer must pay for the time the employee spends commuting during the workday to conduct business for the company. This may include time spent visiting clients to make sales, but does not include the time an employee spends commuting to the workplace. An employer may have to compensate an employee for time spent traveling on a business trip if wage and hour laws apply based on the length of the trip and when the traveling occurs.