How to Make Sure Your Business Is in Compliance with the FLSA

Introduction

The Fair Labor Standards Act of 1938 (FLSA) is a federal law that establishes minimum wage, overtime pay, recordkeeping, and child labor standards affecting employees in the private sector and in Federal, State, and local governments.

The purpose of the FLSA is to protect the health and well-being of workers, promote economic security, and stabilize the national economy. The FLSA has been amended several times since it was enacted, most recently in 2019.

The key provisions of the FLSA include:

• A minimum wage of $7.25 per hour for most employees.

• Overtime pay of 1.5 times the regular rate of pay for hours worked in excess of 40 hours in a workweek.

• Child labor restrictions that prohibit the employment of children under the age of 14 in most occupations.

• Recordkeeping requirements that employers must keep to ensure compliance with the FLSA.

The FLSA applies to all employers who engage in interstate commerce or in the production of goods for interstate commerce. There are a few exemptions to the FLSA, such as employers of agricultural workers, domestic workers, and certain types of small businesses.

The FLSA is enforced by the Wage and Hour Division of the United States Department of Labor. The Wage and Hour Division investigates complaints of FLSA violations and can assess civil penalties against employers who violate the law.

The FLSA is an important law that protects the rights of workers in the United States. It has helped to improve the lives of millions of workers and has made a significant contribution to the economic security of the nation.

Key Provisions

Here are the key provisions of the Fair Labor Standards Act (FLSA):

• Minimum wage: The FLSA establishes a federal minimum wage of $7.25 per hour for most employees. However, there are a few exceptions to the minimum wage, such as tipped employees, who are only required to be paid $2.13 per hour plus tips.

• Overtime pay: Employees who work more than 40 hours in a workweek must be paid overtime pay of 1.5 times their regular rate of pay. For example, if an employee's regular rate of pay is $10 per hour, they would be paid $15 per hour for any hours they work in excess of 40 hours in a workweek.

• Child labor restrictions: The FLSA prohibits the employment of children under the age of 14 in most occupations. Children under the age of 16 are only allowed to work in certain occupations, such as agriculture, and are subject to strict hours restrictions.

• Recordkeeping requirements: Employers must keep certain records to ensure compliance with the FLSA, such as timesheets, payroll records, and child labor records.

Here are some additional details about each of these provisions:

• Minimum wage: The minimum wage is the lowest hourly wage that an employer can pay an employee. The federal minimum wage is $7.25 per hour. However, many states have their own minimum wage laws, which may be higher than the federal minimum wage.

• Overtime pay: Overtime pay is pay that an employee receives for working more than 40 hours in a workweek. The FLSA requires employers to pay overtime pay of 1.5 times the employee's regular rate of pay for all hours worked in excess of 40 hours in a workweek.

• Child labor restrictions: The FLSA prohibits the employment of children under the age of 14 in most occupations. Children under the age of 16 are only allowed to work in certain occupations, such as agriculture, and are subject to strict hours restrictions. These restrictions are designed to protect children from the harmful effects of long hours of work and dangerous working conditions.

• Recordkeeping requirements: Employers must keep certain records to ensure compliance with the FLSA. These records must include the employee's name, address, Social Security number, date of employment, hourly rate of pay, total hours worked, and any overtime pay paid. Employers must also keep records of child labor hours worked.

If you believe that your employer is violating the FLSA, you can file a complaint with the Wage and Hour Division of the United States Department of Labor. You can find more information about filing a complaint on the Wage and Hour Division's website: https://www.dol.gov/agencies/whd

Examples in Court

Let’s explore some examples of how the Fair Labor Standards Act (FLSA) has been applied in court cases over the years:

• In 2021, the Ninth Circuit Court of Appeals ruled that Uber drivers are employees under the FLSA, not independent contractors. This means that Uber drivers are entitled to minimum wage, overtime pay, and other benefits that are guaranteed to employees under the FLSA.

• In 2011, the Supreme Court ruled in the case of Walmart v. Dukes that a class-action lawsuit filed by Walmart employees alleging that the company violated the FLSA by failing to pay them for all hours worked could not proceed. The Court found that the plaintiffs did not have enough in common to form a class.

• In 2014, the United States Department of Labor (DOL) sued Domino's Pizza for violating the FLSA by failing to pay its delivery drivers for all hours worked. The DOL alleged that Domino's drivers were misclassified as independent contractors when they were actually employees. The case was settled in 2015, with Domino's agreeing to pay $89 million to its delivery drivers.

These are just a few examples of how the FLSA has been applied in court cases. The FLSA is a complex law with many different provisions, and the courts have interpreted it in a variety of ways over the years. If you believe that your employer is violating the FLSA, you should consult with an attorney to discuss your legal options.

Business Impact of the Law

The Fair Labor Standards Act (FLSA) has a significant impact on businesses of all sizes. The law establishes minimum wage, overtime pay, and recordkeeping requirements for most employees in the United States.

The FLSA's minimum wage requirement means that businesses must pay their employees at least $7.25 per hour. This can be a significant cost for businesses, especially those that operate on a tight budget.

The FLSA's overtime pay requirement means that businesses must pay their employees 1.5 times their regular rate of pay for all hours worked in excess of 40 hours in a workweek. This can also be a significant cost for businesses, especially those that have employees who work long hours.

The FLSA's recordkeeping requirements mean that businesses must keep certain records to ensure compliance with the law. These records can be time-consuming and expensive to maintain.

Despite the challenges, the FLSA can also be a benefit to businesses. The law helps to ensure that businesses are paying their employees fairly and that they are not violating child labor laws. This can help to create a more stable and productive workforce.

Here are some specific examples of how the FLSA can impact businesses:

• A small business that employs five employees might have to pay an additional $1,000 per year in overtime pay if one of its employees works an extra 10 hours per week.

• A large retailer might have to pay millions of dollars in back wages to its employees if it is found to have violated the FLSA by failing to pay them for all hours worked.

• A restaurant might have to change its hours of operation if it finds that it cannot afford to pay its employees overtime.

The impact of the FLSA on businesses can vary depending on the size of the business, the industry, and the location of the business. However, the law can have a significant impact on the bottom line of all businesses.

If you are a business owner, it is important to understand the FLSA and its requirements. You can find more information about the FLSA on the website of the United States Department of Labor: https://www.dol.gov/agencies/whd/flsa

Additional Resources

Here are some additional resources where you can find more information about the Fair Labor Standards Act (FLSA):

• United States Department of Labor: The Wage and Hour Division (WHD) of the United States Department of Labor is responsible for enforcing the FLSA. You can find more information about the FLSA on the WHD's website: https://www.dol.gov/agencies/whd/flsa

• DOL's Compliance Assistance Office: The Compliance Assistance Office of the Wage and Hour Division provides free information and assistance to employers and employees on the FLSA. You can contact the Compliance Assistance Office by phone at 1-866-4-US-WAGE (1-866-487-9243) or by email at dol.whd.gov/contact/.

• DOL's Wage and Hour Division's publications: The Wage and Hour Division has published a number of helpful publications on the FLSA, including:

  • "The Fair Labor Standards Act: A Summary"

  • "Fact Sheet #28: Overtime Pay"

  • "Fact Sheet #79: Child Labor Laws"

  • "Fact Sheet #15: Minimum Wage Laws"

• DOL's Wage and Hour Division's blog: The Wage and Hour Division's blog, "The Blog," provides updates on the FLSA and other labor law topics. You can find the blog at dol.gov/whd/blog.

How Businesses Can Comply with the FLSA

Example 1: A small business in New York City

A small business in New York City that employs five people must pay its employees at least $15 per hour. The business must also pay overtime pay to its employees at a rate of 1.5 times their regular rate of pay for all hours worked in excess of 40 hours in a workweek. The business must keep records of its employees' hours worked and pay.

In addition to the federal FLSA, New York City has its own minimum wage law that requires employers to pay their employees at least $15.50 per hour. The city also has a law that requires employers to pay overtime pay to their employees at a rate of 1.5 times their regular rate of pay for all hours worked in excess of 39 hours in a workweek.

Example 2: A large retailer in Los Angeles

A large retailer in Los Angeles that employs 1,000 people must pay its employees at least $14 per hour. The business must also pay overtime pay to its employees at a rate of 1.5 times their regular rate of pay for all hours worked in excess of 40 hours in a workweek. The business must keep records of its employees' hours worked and pay.

In addition to the federal FLSA, the state of California has its own minimum wage law that requires employers to pay their employees at least $15 per hour. The state also has a law that requires employers to pay overtime pay to their employees at a rate of 1.5 times their regular rate of pay for all hours worked in excess of 40 hours in a workweek.

Example 3: A restaurant in New Orleans

A restaurant in New Orleans that employs 20 people must pay its employees at least $10.25 per hour. The business must also pay overtime pay to its employees at a rate of 1.5 times their regular rate of pay for all hours worked in excess of 40 hours in a workweek. The business must keep records of its employees' hours worked and pay.

In addition to the federal FLSA, the state of Louisiana has its own minimum wage law that requires employers to pay their employees at least $7.25 per hour. The state does not have a law that requires employers to pay overtime pay.

These are just a few examples of how businesses can comply with the FLSA. The specific requirements for compliance will vary depending on the size of the business, the industry, and the location of the business.

What Are Your Thoughts?

Are you a business owner? Do you have any questions about how to comply with the FLSA? Share your thoughts on social media with the hashtag #theindustryleader, or by sharing a post to LinkedIn and tagging us @TheIndustryLeader.

We would love to hear your thoughts on the FLSA and how it impacts your business. By sharing your thoughts on social media, you can help to raise awareness of this important law and encourage other businesses to comply with its requirements.

Here are some specific questions that you could ask on social media:

• What are the biggest challenges that you face in complying with the FLSA?

• What resources have been helpful to you in understanding the FLSA?

• What advice would you give to other business owners about complying with the FLSA?

We hope that you will join the conversation about the FLSA. By sharing your thoughts on social media, you can help to ensure that all workers in the United States are treated fairly and paid a fair wage.

How to avoid FLSA violations and protect your business.

Related Content