The FLSA established the minimum wage, regulated child labor, and mandated overtime pay.
© zimmytws/stock.adobe.com
- Also Known As:
- Wages and Hours Act
Before 1938, workers could be paid any amount and be required to work any number of hours. Children were regularly employed in dangerous jobs and were kept out of school to work. The Fair Labor Standards Act (FLSA) set minimum standards that are still in effect today to prevent these abuses.
The FLSA was the first act in the United States to prescribe nationwide compulsory federal regulation of wages and hours. It was sponsored by Sen. Robert F. Wagner of New York and signed on June 14, 1938, effective October 24.
Key Points
- The Fair Labor Standards Act of 1938 regulated child labor, set the federal minimum wage, and required overtime pay for certain workers.
- The FLSA classifies workers as exempt from overtime rules (salaried workers) or nonexempt (hourly wage earners who must be paid overtime).
- Under the FLSA, nonexempt employees are entitled to 1œ times their regular pay for any hours worked more than 40 a week.
What do you think?
Explore the ProCon debate
What is the Fair Labor Standards Act?
The FLSA was enacted in 1938 to regulate child labor, set a minimum hourly wage, and cap the workweek at 44 hours. The initial hourly wage sounds unbelievable to us today: 25 cents. The minimum wage and other provisions have been updated over the years, including in 1940, when the standard workweek was reduced to 40 hours.
Matters not covered by the FLSA
The FLSA neither mandates nor regulates vacation, holidays, severance, sick pay, meal or rest periods, extra pay for weekend or holiday work, pay raises, fringe benefits, or payments to terminated employees. It also places no limit on the hours employees age 16 and older are scheduled to work in a day or week. These matters are addressed, if at all, through state regulation.
Employers not covered by the FLSA
Employers with annual sales of $500,000 generally must abide by the rules of the FLSA. If a smaller business engages in interstate commerce (between states or over state lines), it is usually covered by FLSA.
Certain types of businesses arenât required to follow the FLSA rules:
- Hospitals
- Nursing homes and other residential facilities to care for sick, elderly, or mentally ill
- Public agencies such as federal, state, or local government and schools
Child labor regulations
The FLSA sets various rules for workers under age 18. It covers the hours they can work, the types of employers they may work for, and the types of jobs they are permitted to do.
Jobs exempt from the FLSA
Jobs governed by specific federal laws are usually excluded from FLSA rules. Positions excluded or fully or partially exempt from FLSA rules include:
- Transportation workers, such as truck drivers and employees of railroads, airlines, taxis, motor carriers, sea vessels (including fishers), and delivery companies
- Commission sales employees and mechanics for cars, trucks, farm equipment, boats, and aircraft
- Most agricultural workers
- Newspaper and newspaper delivery workers, workers at movie theaters, and radio personnel (depending on the size of the metropolitan area served)
- Domestic workers, such as housekeepers, chauffeurs, cooks, or full-time babysitters who live in an employerâs residence
- Casual babysitters or elder care companions
- Full-time students and vocational education students
- Workers with physical or mental disabilities
Wage rules for tipped employees
Employers can include tips as part of employeesâ wages, but the combination of hourly wages plus tips must equal or exceed minimum wage. The employer must make up the difference should tips plus wages fail to meet the minimum wage.
The FLSA categorizes workers as either exempt or nonexempt. Nonexempt employees are entitled to overtime pay. Under the FLSA, workers are presumed to be nonexempt unless they receive a guaranteed minimum salary (regulated by the FLSA) and perform certain job duties.
Exempt workers have no rights under FLSA overtime rules. They may have to work a certain schedule set by their employers, or work hours beyond 40 a week for no additional pay.
Salary test. Exempt employees receive the same salary no matter how many hours they work. Exempt employees can be docked pay in full-day increments for personal leave or sick time, but are fully paid even if they worked less during the pay period because of a lack of work.
Although the FLSA was amended in 2024 to increase the minimum annual wage for salaried workers beginning July 1, 2024, with additional wage increases starting January 1, 2025, the amendment was struck down by a federal judge in Texas on November 15, 2024. The minimum annual wage for exempt employees remains at $35,568, set in 2019.
Duties test. Executive, professional, and administrative job duties are exempt from overtime. Even if a job title indicates an executive, professional, or administrative level, it is the type of work that determines exempt status:
- An executive is an employee considered part of management who regularly supervises two or more other employees and helps to determine their assignments, promotions, hiring, and firing.
- A professional worker is defined as someone with specialized knowledge, typically working in one of these capacities: outside sales (outside the place of business), computer specialists (such as systems analysts, programmers, or software engineers), lawyers, doctors, teachers, architects, clergy, dentists, registered nurses, accountants, engineers, scientists, pharmacists, and actuaries, as well as actors, musicians, composers, writers, cartoonists, and some journalists.
- Workers in administrative roles exercise discretion and independent judgment on important matters while performing office work or tasks that donât involve physical labor, all related to managing the employerâs business or customers.
Highly compensated employees
Workers who perform at least one duty associated with an executive, administrative, or professional role but donât otherwise fulfill the duties test must be paid at least $109,432 a year.
Employees who donât qualify as exempt are nonexempt. This group includes blue-collar workers, bookkeepers, secretaries, police officers, firefighters, paramedics, and other first responders.
Under the FLSA, nonexempt employees are entitled to 1œ times their regular pay for any hours worked more than 40 per week. If the employer has set a 37œ hour workweek or another standard, hours up to 40 are paid at the regular rate, with the overtime rate applicable to hours worked beyond 40. Employers may require work on holidays or weekends. No overtime is due if the total number of hours worked that week is less than 40.
What is considered nonexempt work time?
Whenever an employee is required to be at work, that time is considered âwork timeâ even if no tasks are performed. For example, if you must remain at your desk waiting for a customer, those hours count as work time, even if youâre watching videos on your phone.
Activities that are considered part of work time include:
- Breaks
- Work done at home or away from the employerâs location
- Work over lunch
- Coming in early or staying late
- Phone calls, emails, or texts answered while away from the job site
- Training
- Travel time if doing work while traveling, picking up items off-site, or transporting items or people for work-related purposes
An employer can provide time off so that regular work hours donât exceed 40 per week, but the time off must be granted during the same week.
The Fair Labor Standards Act established rules to prevent the abuse of workers. Before its enactment, workers could be required to work unlimited hours for minimal pay; children could be kept out of school to do dangerous work. The law sets minimum age requirements, ensures workers are paid for the hours they work, and requires overtime be paid to those who earn hourly wages.
The law established two classifications of workers: exempt and nonexempt. Exempt employees are salaried workers typically holding managerial, specialized, or professional roles who arenât eligible for overtime pay. Nonexempt workers earn an hourly wage and are employed in various positions and skill levels.
The FLSA governs many aspects of work, but it doesnât regulate vacation time, holidays, severance pay, or other benefits, leaving those decisions to employers or state laws. Some workers are fully or partially exempt from its provisions, including farm and transportation workers.
To better understand your rights as an employee and whether youâre eligible for overtime wages, familiarize yourself with the rules that govern exempt and nonexempt workers. Knowing the law can help ensure youâre being paid properly for the work you do.
This article was most recently revised and updated by Nancy Ashburn
