FLSA (Fair Labor Standards Act)
The 1938 federal law that establishes minimum wage, overtime pay, recordkeeping, and child labor standards.
The Fair Labor Standards Act (FLSA, 29 U.S.C. §201 et seq.) is the 1938 federal law that establishes the U.S. minimum wage, overtime pay, recordkeeping, and child labor standards. The FLSA is enforced by the U.S. Department of Labor's Wage and Hour Division and by the federal courts via private right of action.
For small-business payroll, the FLSA's most consequential provisions are: the federal minimum wage ($7.25/hour as of 2024, with state minimums often higher); the overtime requirement (1.5× the regular rate for hours worked over 40 in a defined seven-day workweek); the white-collar exemptions (executive, administrative, professional, computer, outside sales) that determine which employees are exempt from overtime; the salary basis test ($684/week minimum as of 2024, scheduled to rise); and the recordkeeping requirements (payroll records for three years, time records for two).
FLSA violations are expensive. The standard remedy is back wages plus an equal amount of liquidated damages plus attorney's fees, plus state-law penalties in many jurisdictions. Misclassifying a non-exempt employee as exempt or paying overtime incorrectly are the two most common violations small businesses commit; both are usually preventable with modern payroll software and a quarterly classification review.