When you become an employer, you can’t always play by your own rules. There are certain federal, as well as state and local, standards you must follow. The FLSA is one set of federal regulations you need to know about and comply with. What is the FLSA?
What is the FLSA?
The Fair Labor Standards Act (FLSA) protects employee rights by establishing the minimum wage, overtime, and child labor laws. It was enacted by Congress in 1938 and has been amended frequently to stay current. Essentially, the FLSA is a rulebook that covers how employers must properly and fairly treat employees.
Who enforces FLSA? The United States Department of Labor (DOL) enforces the Fair Labor Standards Act.
As an employer, you must know about FLSA regulations. FLSA rules affect payroll processing and recordkeeping. If you are not in compliance with the Fair Labor Standards Act, you will be penalized.
What does the FLSA do?
The FLSA maintains and enforces employment law. Here is an in-depth look at what the FLSA does.
1. Minimum wage
The FLSA sets a federal minimum wage, which is the lowest amount you can pay an employee per hour. Currently, the federal minimum wage is $7.25 per hour.
Many states and localities also have minimum wage laws. You must pay employees the highest amount between the applicable federal, state, and local minimum wages.
To comply with the FLSA minimum wage law, pay your employees at least the federal minimum wage. And if your state or locality has a higher minimum wage than the federal, pay the highest minimum wage.
For example, California has a minimum wage of $14.00 per hour for employers with fewer than 26 employees in 2022. And, San Francisco has a minimum wage of $16.32 per hour. If your employees work in San Francisco, you must pay them at least $16.32 per hour because it is higher than the federal and state minimum wages.
If your employees can receive tips, the FLSA may allow you to take a tip credit. A tip credit lets you pay tipped employees a lower wage than the federal minimum wage. But, the employee’s wages plus tips must be at least the minimum wage amount.
When an employee works more than 40 hours in a workweek, they might be entitled to overtime wages. Overtime pay is one and one-half times their regular hourly rate. For each hour a qualifying employee works over 40 hours, you must multiply their hourly rate by 1.5.
The FLSA overtime pay laws require that you provide overtime wages to your employees unless they are exempt. Exempt employees are those who earn at least $35,568 per year or $684 per week; earn a salary; and have executive, administrative, or professional job duties.
Let’s say a nonexempt employee works 45 hours per week and receives an hourly pay of $10. For the five additional hours past 40, you must pay the employee an overtime rate of $15 per hour. The employee’s total overtime wages would be $75 ($15 X 5). Add the employee’s regular ($10 X 40) and overtime wages ($75) to get their total pay of $475.
3. Hours worked
What is compensable time? Are you supposed to pay employees when they’re on breaks or on call? The Fair Labor Standards Act has the answers to these types of questions.
Use the FLSA hours worked rules to determine when employees are working. That way, you can pay them for the correct hours worked.
Determining which work activities count toward hours worked can be difficult. You might need to pay employees for the following work activities:
- Waiting time
- On-call time
- Rest and meal breaks
- Sleeping time
- Lectures, meetings, and training programs
- Travel time
Your state might set more restrictive rules, so check with your state government for more information.
The FLSA sets recordkeeping rules, including what kinds of records you must keep, how long you need to store them for, and FLSA timekeeping requirements.
Under the FLSA, you are required to maintain the following records:
- Employee’s name and Social Security number
- Full address
- Birth date
- Sex and occupation
- Time and day of the week when workweek begins
- Hours worked each day
- Total hours worked each week
- How the employee is paid (e.g., per hour, per week, salary)
- Hourly pay rate
- Total daily or weekly straight-time earnings
- Overtime earnings each week
- Payroll deductions from or additions to wages
- Total wages paid each pay period
- Date of payment and pay period covered by the payment
According to the FLSA, you must keep records like timecards, wage deduction amounts, and work schedules for two years. And, store other employee-related records, such as payroll records, for at least three years.
You can use any method you want to track your employees’ time. However, make sure your timekeeping is complete, consistent, and accurate.
5. Child labor
Child labor laws protect minors who are under 18 years old. This part of the FLSA ensures that businesses cannot jeopardize a minor’s health, education, or general well-being.
Under child labor laws, you cannot employ a minor to work hazardous jobs. And depending on their age, a minor can only have certain non-hazardous jobs or responsibilities. For example, youths age 14 and 15 can prepare food, but they cannot perform baking activities. And, their cooking tasks are limited. For more information on jobs and responsibilities that youth can have, visit the DOL’s website.
Child labor laws also limit the number of hours per day and week that minors can work. To encourage minors to stay in school, 14- and 15-year olds can only work the following hours:
- 3 hours on a school day
- 18 hours in a school week
- 8 hours on a non-school day
- 40 hours in a non-school week
- Between 7 a.m. and 7 p.m. (Labor Day-May 31), or between 7 a.m. and 9 p.m. (June 1-Labor Day)
Your state might have stricter child labor laws than the federal provisions. Before hiring minors, you must do your due diligence by consulting your state department of labor. And, collect the proper documents, like work permits, from minors before employing them.
Complying with the FLSA: Labor law posters
You must hang labor law posters around your business. Labor law posters are federal and state notices that describe employee rights.
The federal labor law poster explains FLSA regulations. This poster lists regulations including the federal minimum wage, overtime pay rules, child labor laws, and the federal minimum wage for tipped employees.
You are required to hang the federal labor law poster in English. You can hang up non-English posters in addition to the English copy. Make sure employees can see and read the sign.
Consequences of FLSA violations
As stated, failing to comply with FLSA regulations will result in penalties for your business. The FLSA sets maximum penalties for each type of violation and assigns fines on a case-by-case basis.
Per the Department of Labor, the maximum penalty for repeatedly or willfully violating FLSA minimum wage and overtime laws is $2,074, per employee.
The maximum penalty for violating child labor standards is $13,227; $60,115 if the violation causes serious injury or death of a minor; or $120,230 for willful or repeated violations that cause serious injury or death to the minor.
Avoid FLSA violations by setting fair wages, tracking employee time, monitoring overtime, correctly classifying employees as either exempt or nonexempt, and following child labor laws.
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This article has been updated from its original publication date of December 7, 2015.