Ultimate Guide to the Fair Labor Standards Act (29 U.S.C. Section 201)
The Fair Labor Standards Act (FLSA) applies to most employers in the private sector. This guide covers everything that covered employers need to know about FLSA compliance.
The Fair Labor Standards Act (FLSA) is one of several federal laws that establishes standards and requirements for private employers. Unlike many other federal labor and anti-discrimination laws, the FLSA does not cover employers based on the size of their workforce. Instead, nearly all employers are covered, and this means that nearly all employers need to implement FLSA compliance programs that duly observe their employees’ rights.
There are several aspects to FLSA compliance. When developing FLSA compliance programs, employers must ensure that they have a comprehensive understanding of what the law requires. This Ultimate Guide to the Fair Labor Standards Act (29 U.S.C. Section 201) provides an overview of what employers need to know.
The Fair Labor Standards Act (29 U.S.C. Section 201): A Comprehensive Overview of the FLSA’s Requirements
Here are the key aspects of the Fair Labor Standards Act for private-sector employers in the United States:
1. Employers Covered By the FLSA
Pursuant to 29 U.S.C. Section 203(s), the Fair Labor Standards Act covers all employers that either (i) have employees engaged in interstate commerce, or (ii) have an “annual gross volume of sales made or business done” of not less than $500,000. Given the broad definition of interstate commerce and the inherently interstate nature of doing business online, this means that nearly all private-sector employers in the United States must comply with the FLSA’s requirements. While individual employees may be exempt under certain provisions of the FLSA, employers must assess these exemptions case-by-case; and, when in doubt, they should generally default to compliance with the statute’s requirements.
2. The Federal Minimum Wage
The Fair Labor Standards Act establishes the federal minimum wage—which has remained at $7.25 per hour since 2009. However, as noted by the U.S. Department of Labor (DOL), “In cases where an employee is subject to both state and federal minimum wage laws, the employee is entitled to the higher minimum wage.” Roughly half of the states have adopted minimum wages that exceed the federal minimum wage, and the minimum wage in several states is now more than double the federal requirement.
The federal minimum wage is established in Section 206 of the FLSA; and, notably, this section of the FLSA contains various anti-discrimination provisions as well. This is important, as the FLSA’s coverage is broader than that of other federal anti-discrimination statutes (such as Title VII of the Civil Rights Act of 1964, which only applies to companies with 15 or more employees).
3. The Federal Overtime Pay Requirement
The FLSA also establishes overtime pay requirements for most private-sector employers. Under 29 U.S.C. Section 207, covered employers must pay one-and-a-half times non-exempt employees’ hourly wages for all hours worked in excess of 40 during a workweek.
As the DOL explains, “An employee’s workweek is a fixed and regularly recurring period of 168 hours — seven consecutive 24-hour periods. It need not coincide with the calendar week.” This means that if a non-exempt employee works more than 40 hours in any seven-day period, the employee is entitled to overtime under the FLSA.
Non-exempt employees are generally those who work in individual-contributor roles and receive an hourly wage. In contrast, exempt employees are generally salaried workers in executive, administrative, and professional occupations. But, there are other exemptions as well; and, when it comes to FLSA overtime compliance, employers need to ensure that they have a clear understanding of which of their employees are (and aren’t) eligible for overtime pay.
4. “Hours Worked” Under the FLSA
The FLSA entitles employees to compensation for “hours worked.” The definitions section of the FLSA further clarifies that employers must compensate employees for time that they “suffer or permit . . . work.” This means that employers must pay employees not only for time worked during their assigned work schedules, but for additional hours as well. The DOL provides the following example: “[A]n employee may voluntarily continue to work at the end of the shift to finish an assigned task or to correct errors. The reason is immaterial. The hours are work time and are compensable.”
Of course, not all scenarios involve employees working extra hours after their shifts. Questions regarding what constitutes an hour “worked” can arise under various other scenarios as well. For example, the FLSA specifically addresses the following scenarios (quotes reflect guidance from the DOL):
- Waiting Time – “Whether waiting time is hours worked under the [FLSA] depends upon the particular circumstances. . . . [T]he facts may show that the employee was engaged to wait (which is work time) or . . . that the employee was waiting to be engaged (which is not work time).”
- On–Call Time – “An employee who is required to remain on call on the employer’s premises is working while ‘on call.’ An employee who is required to remain on call at home, or who is allowed to leave a message where he/she can be reached, is not working (in most cases) while on call.”
- Rest and Meals – “Rest periods of short duration, usually 20 minutes or less, are common in industry . . . and are customarily paid for as working time. These short periods must be counted as hours worked. . . . Bona fide meal periods (typically 30 minutes or more) generally need not be compensated as work time. The employee must be completely relieved from duty for the purpose of eating regular meals.”
These are just examples. Employers must carefully address the FLSA’s “hours worked” provisions with respect to training, employee travel, sleep during 24-hour shifts, and various other scenarios as well. If employers fail to duly compensate their employees under the FLSA, not only can they face liability in private civil litigation, but they can potentially face DOL audits and enforcement actions as well.
5. FLSA Recordkeeping Compliance
Along with establishing requirements that pertain to employee compensation, the FLSA also establishes several recordkeeping requirements for private-sector employers. When facing scrutiny during a DOL audit or investigation, being able to demonstrate compliance with documentation that employers have readily available on-hand can be essential for avoiding unnecessary consequences.
As summarized by the DOL, employers’ recordkeeping obligations under the FLSA include (but are not limited to) maintaining records of the following information for all employees:
- Birth date (if younger than 19) and sex
- Hours worked each day and each workweek
- The basis for the employee’s compensation (i.e., per hour or per week)
- Regular hourly pay rate
- Total weekly earnings (including overtime)
- Any additions to or deductions from employee compensation
- Total pay each pay period and the date of payment
Under the FLSA, covered employers must keep most of these records (among others) for at least three years. With this in mind, covered employers should adopt policies and procedures for generating and storing these records as a matter of course. Covered employers should also have policies and procedures in place for gathering these records in the event of a DOL audit or investigation—though employers should work with their counsel when gathering their records in order to avoid costly mistakes.
6. Child Labor Under the FLSA
Under 29 U.S.C. Section 212 of the FLSA, employers are prohibited from using “oppressive child labor.” The statute defines oppressive child labor as:
“[A] condition of employment under which (1) any employee under the age of sixteen years is employed . . . in any occupation, or (2) any employee between the ages of sixteen and eighteen years is employed . . . in any occupation which the Secretary of Labor . . . declare[s] to be particularly hazardous for the employment of children between such ages or detrimental to their health or well-being.”
However, the FLSA contains an exception for children between the ages of 14 and 16, provided that their work is “confined to periods which will not interfere with their schooling and to conditions which will not interfere with their health and well-being.” In any case, due to the substantial risks involved, employers must be very careful when employing any employees who are under the federal age of majority.
7. Penalties for FLSA Non-Compliance
From failure to pay the minimum wage to non-payment of overtime, and from failing to keep adequate records to utilizing “oppressive child labor,” all violations of the FLSA carry serious consequences. Under 29 U.S.C. Section 216, these consequences can even include criminal prosecution in some cases. Once again, employers need to prioritize FLSA compliance, and they must work closely with their counsel to ensure that they are doing everything the law requires.
Request a Confidential Consultation with an FLSA Lawyer at Oberheiden P.C.
If you need to know more about what the FLSA requires of covered employers, we invite you to contact us for a complimentary consultation. We represent employers of all sizes nationwide. To schedule an appointment with an FLSA lawyer at Oberheiden P.C., please call 888-680-1745 or get in touch online today.
Dr. Nick Oberheiden, founder of Oberheiden P.C., focuses his litigation practice on white-collar criminal defense, government investigations, SEC & FCPA enforcement, and commercial litigation.