Fair Labor Standards Act Labor Law (Minimum Wage)

Who is Covered

The Fair Labor Standards Act (FLSA) establishes standards for minimum wages, overtime pay, recordkeeping and child labor. These standards affect more than 100 million workers, both full-time and part-time, in the private and public sectors.

The Act applies to enterprises with employees who engage in interstate commerce, produce goods for interstate commerce, or handle, sell or work on goods or materials that have been moved in or produced for interstate commerce. For most firms, a test of not less than $500,000 in annual dollar volume of business applies (i.e., the Act does not cover enterprises with less than this amount of business).

However, the Act does cover the following regardless of their dollar volume of business: hospitals; institutions primarily engaged in the care of the sick, aged, mentally ill or disabled who reside on the premises; schools for children who are mentally or physically disabled or gifted; preschools, elementary and secondary schools and institutions of higher education; and federal, state and local government agencies.

Employees of firms that do not meet the $500,000 annual dollar volume test may be covered in any workweek when they are individually engaged in interstate commerce, the production of goods for interstate commerce, or an activity that is closely related and directly essential to the production of such goods.

The Act covers domestic service workers, such as day workers, housekeepers, chauffeurs, cooks, or full-time babysitters, if they receive at least $1,300 (2001) in cash wages from one employer in a calendar year, or if they work a total of more than eight hours a week for one or more employers.

An enterprise that was covered by the Act on March 31, 1990, and that ceased to be covered because of the increase in the annual dollar volume test to $500,000, as required under the 1989 amendments to the Act, continues to be subject to the overtime pay, child labor and recordkeeping requirements of the Act.

The Act exempts some employees from its overtime pay and minimum wage provisions, and it also exempts certain employees from the overtime pay provisions alone. Because the exemptions are narrowly defined, employers should check the exact terms and conditions for each by contacting their local Wage and Hour Division office. These offices are listed in most telephone directories under U.S. Government, Department of Labor, Wage and Hour Division.

The following are examples of employees exempt from both the minimum wage and overtime pay requirements:

• Executive, administrative and professional employees (including teachers and academic administrative personnel in elementary and secondary schools), outside sales employees, and certain skilled computer professionals (as defined in the Department of Labor's regulations);
• Employees of certain seasonal amusement or recreational establishments;
• Employees of certain small newspapers and switchboard operators of small telephone companies;
• Seamen employed on foreign vessels;
• Employees engaged in fishing operations;
• Employees engaged in newspaper delivery;
• Farm workers employed on small farms (i.e., those that used less than 500 "man-days" of farm labor in any calendar quarter of the preceding calendar year); and
• Casual babysitters and persons employed as companions to the elderly or infirm

The following are examples of employees exempt from the overtime pay requirements only:

• Certain commissioned employees of retail or service establishments;
• Auto, truck, trailer, farm implement, boat or aircraft salespersons employed by non-manufacturing establishments primarily engaged in selling these items to ultimate purchasers;
• Auto, truck, or farm implement parts-clerks and mechanics employed by non-manufacturing establishments primarily engaged in selling these items to ultimate purchasers;
• Railroad and air carrier employees, taxi drivers, certain employees of motor carriers, seamen on American vessels, and local delivery employees paid on approved trip rate plans;
• Announcers, news editors and chief engineers of certain non-metropolitan broadcasting stations;
• Domestic service workers who reside in their employers' residences;
• Employees of motion picture theaters; and
• Farmworkers

Certain employees may be partially exempt from the overtime pay requirements. These include:

• Employees engaged in certain operations on agricultural commodities and employees of certain bulk petroleum distributors;
• Employees of hospitals and residential care establishments which have agreements with the employees that they will work 14-day periods in lieu of 7-day workweeks (if the employees are paid overtime premium pay within the requirements of the Act for all hours worked over eight in a day or 80 in the 14-day work period, whichever is the greater number of overtime hours); and
• Employees who lack a high school diploma, or who have not completed the eighth grade, who spend part of their workweeks in remedial reading or training in other basic skills that are not job-specific. Employers may require such employees to engage in these activities up to 10 hours in a workweek. Employers must pay normal wages for the hours spent in such training but need not pay overtime premium pay for training hours.

Wages and Hours of Work

The Fair Labor Standards Act (FLSA) prescribes minimum wage and overtime pay standards as well as recordkeeping and child labor standards for most private and public employment, including work conducted in the home. The Wage and Hour Division of the Employment Standards Administration (ESA) administers this Act.

The minimum wage and overtime provisions of the FLSA require the following from employers of covered employees who are not otherwise exempt:

• As of September 1, 1997, employers must pay covered employees a minimum wage of not less than $5.15 an hour. Employers may pay employees on a piecerate basis and, under some circumstances, may consider tips as part of wages.
• Youths under 20 years of age may be paid a minimum wage of not less than $4.25 an hour during the first 90 consecutive calendar days of employment with an employer. Employers may not displace any employee to hire someone at the youth minimum wage.
• Although the Act does not place a limit on the total hours which may be worked by an employee who is at least 16 years old, it does require that covered employees, unless otherwise exempt, be paid not less than one and one-half times their regular rates of pay for all hours worked in excess of 40 in a workweek.

In addition, the FLSA sets forth special rules for working out of the home. For example, in certain manufacturing industries, the employer must first obtain a certification permitting homework from the Wage and Hour Division of the Department of Labor.

As noted above, the FLSA's child labor provisions for nonagricultural work include restrictions on the hours of work and occupations for youths under age 16 and restrictions on employment of 16 and 17 year olds in occupations found to be hazardous by the Department.

Other generally applicable statutes that set workplace standards include:

• Under the Immigration and Nationality Act (INA), foreign workers may work in the U.S. ESA's Wage and Hour Division enforces rules pertaining to the employment of nonimmigrant workers in four visa classifications:
  • D-1 (Crewmembers);
  • H-1C (Registered Nurses);
  • H-1B (workers employed in a “specialty occupation” or as fashion models); and
  • H-2A (workers employed in temporary agricultural jobs).
  Under the INA, employers must verify the identity and employment authorization of all employees, including foreign workers.
• Garnishment of wages by employers is regulated under the Consumer Credit Protection Act. ESA's Wage and Hour Division administers this Act.