The Fair Labor Standards Act — the US federal law that establishes minimum wage, overtime pay, recordkeeping, and child-labor standards for nearly every American employer.
The Fair Labor Standards Act (FLSA) is the foundational US federal labor law, enacted in 1938 in the wake of the Great Depression and codified at 29 U.S.C. §§201–219. Signed by President Franklin D. Roosevelt, it ended widespread practices like sub-survival wages, unlimited working hours, and child labor in industrial settings. Today it remains the single most-litigated employment statute in the United States and the framework every HR team has to navigate.
The FLSA establishes four core protections that apply to most US employers:
• Federal minimum wage — currently $7.25 per hour, unchanged since 2009. Many states (California, New York, Washington, Massachusetts, and others) and dozens of cities (Seattle, San Francisco, Denver, New York City) set higher minimums. Where state or local minimums are higher, employers must pay the higher rate. The federal $7.25 floor still applies in states that do not set their own minimum (Alabama, Louisiana, Mississippi, Tennessee, South Carolina) and as a fallback for federal contractors.
• Overtime pay — non-exempt employees must be paid at 1.5x their regular rate for any hours worked beyond 40 in a single fixed workweek. Some states impose stricter rules: California, Alaska, and Nevada require daily overtime after 8 hours in a workday; California adds double-time after 12 hours and after 8 hours on the seventh consecutive day worked. The 'regular rate' is broader than just the hourly wage — it includes non-discretionary bonuses, commissions, shift differentials, and longevity pay, all of which must be folded in before computing the 1.5x multiplier.
• Recordkeeping — under 29 CFR Part 516, employers must keep accurate records for each non-exempt employee including full name and Social Security number, address, occupation, time and day the workweek begins, hours worked each day, total hours each workweek, regular hourly pay rate, total daily or weekly straight-time earnings, total overtime earnings, deductions, total wages paid each pay period, and pay date covered. Time-card records must be kept for 2 years; payroll records for 3 years.
• Child labor restrictions — the FLSA caps and limits the hours and types of work for minors. 14- and 15-year-olds may work limited hours outside school in non-hazardous occupations. 16- and 17-year-olds may work unlimited hours but cannot work in hazardous jobs (mining, logging, roofing, meat-packing). Under-14 work is prohibited except for narrow categories (newspaper delivery, family farms, performance roles).
The FLSA is enforced by the US Department of Labor's Wage and Hour Division (WHD), which conducts targeted and complaint-driven investigations. Penalties for willful violations can include back pay, an equal amount as liquidated damages, attorneys' fees, and civil penalties up to $2,506 per violation. Class-action lawsuits over FLSA violations routinely settle in the millions; Walmart, FedEx, Walgreens, Bank of America, and Domino's have all faced 8- and 9-figure settlements over off-the-clock work, miscalculated regular rate, or misclassification.
The most expensive area of FLSA non-compliance is misclassification — labeling an employee as exempt (no overtime owed) when they should be non-exempt. Exempt status requires both a salary basis test (currently $1,128/week or $58,656/year as of 2026) and a duties test specific to the relevant exemption (Executive, Administrative, Professional, Computer Employee, Outside Sales, Highly Compensated Employee). Job titles do not determine exempt status — actual duties do. Common misclassification traps include calling junior team leads 'managers,' classifying inside sales as outside sales, or treating low-level supervisors as executives.
Key state-level overlays employers should track alongside the FLSA: California's daily overtime + meal/rest break premiums + reporting time pay; New York's spread-of-hours rule; Massachusetts's blue-laws Sunday premium; Oregon's predictability pay for retail and food-service shift changes; and Connecticut's electronic-monitoring notice requirement (which interacts with FLSA recordkeeping). Cities pile additional rules on top — Seattle's secure scheduling, NYC's fast-food fair workweek, San Francisco's formula-retail predictable scheduling.
For remote and hybrid teams, FLSA compliance is more complex than ever. The 'continuous workday' doctrine treats the time between an employee's first and last work activities as compensable, even if interrupted by breaks. Email checked at 7 AM before commuting, a Slack ping answered at 9 PM after dinner — both can extend a non-exempt employee's workday and trigger overtime. The DOL's 'de minimis' doctrine (small amounts of time can be disregarded) has been narrowed in recent years; what was 10 minutes of unpaid prep work is now compensable in most circuits.
Modern HR platforms automate FLSA-critical workflows: weighted-average regular rate calculation that correctly folds in bonuses, multi-state daily overtime engines, time-record retention for the FLSA's 2- and 3-year minimums, audit trails showing every edit to a time record, classification review prompts when a job title or salary changes, and worker-classification flags when a contractor's hours, supervision, or duties suggest employee status. The cost of getting FLSA wrong runs from tens of thousands for a small employer to nine figures for a Fortune 500 — making automation a clear ROI win.
Under the FLSA, our non-exempt warehouse staff earn 1.5x their regular rate for any hours worked beyond 40 in a workweek, and the regular rate includes their quarterly performance bonus prorated across the period it covers.
Peoplifi unifies HR, payroll, time tracking, and performance into one modern platform — so concepts like FLSA stay handled, not stuck in spreadsheets.
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