Fair Labor Standards Act (FLSA) Meaning

Fair Labor Standards Act Meaning

 

The Fair Labor Standards Act is a federal law in the United States that establishes standards for minimum wages, overtime pay, recordkeeping, and youth employment. It was enacted in 1938 and aims to guarantee fair wages and working conditions for all employees.

 

Key provisions include:

 

1. Minimum Wage: This sets the federal minimum wage that employers must pay their employees. The federal minimum wage will be $7.25 an hour by 2024. However, many cities and states have higher minimum wages.
2. Paying overtime: Employers are required to pay an additional 1.5 times their regular rate for any hours worked in excess of 40 during a week unless they have a valid exemption due to the employee’s job duties or level of salary.
3. Recordkeeping: Requires employers to keep accurate records about the hours worked by employees and their wages.
4. Youth employment: Regulates minors’ employment, including restrictions regarding the type of work they can do and the hours that they are allowed to work.

 

The U.S. Department of Labor administers the FLSA.

 

Fair Labor Standards Act Exempt vs Non-Exempt

 

The Fair Labor Standards Act (FLSA) classifies employees as “exempt” and “nonexempt.” This classification affects overtime pay, benefits, and other protections.

 

Here’s a breakdown of the differences:

 

Non-Exempt Employees:

 

• Eligibility for Overtime: Non-exempt employees are entitled to receive overtime pay (usually 1.5 times their regular hourly rate) for any hours worked beyond 40 in a workweek.
• Minimum wage: The minimum wage must be at least the federal minimum or the state minimum, if higher.
• Recordkeeping: Employers are required to keep detailed records about their employees’ hours worked and wages.

 

Exempt Employees:

 

• Eligibility for Overtime: Exempt employees are not entitled to overtime pay, regardless of how many hours they work beyond 40 in a workweek.
• Salary: Exempt employees are paid a weekly salary rather than hourly and must earn at least a certain amount (e.g., $684 as of 2024).
• Job duties: They must perform specific job duties defined by the FLSA. These include administrative, professional, and outside sales roles, as well as executive, administrative, and computer-related positions.

 

Categories of Exempt Employees:

 

1. Executives: The primary duty of the executive is to manage the enterprise or department. They must supervise two or more full-time workers and have the power to hire or dismiss.
2. Administrative: Primary duties include office or non-manual tasks related to management and general business operations.
3. Professional: The primary duty is to perform work that requires advanced knowledge of a science or field of learning. This knowledge is typically acquired through a long course of specialized training.
4. Outside sales: The primary duty is to make sales or obtain orders/contracts for services away from the employer’s business.
5. Computer Employees: Include employees in certain computer-related occupations who meet specified criteria.

 

Both the employee’s salary and job duties will determine whether an employee is exempt or not. Misclassification of employees can result in legal issues or back-pay liability for employers.

 

Also See: Federal Unemployment Tax Act (FUTA)