What Every Employee Needs to Know About the Fair Labor Standards Act

Federal labor laws, such as the Fair Labor Standards Act, are complex in a way that could leave workers wondering what their rights under those laws actually are. This opens employees up to the potential for unscrupulous employers to take advantage of them, because the workers might not even know that they're being denied income owed to them.

For example, while the FLSA spells out minimum wage and overtime protections, and employers’ related obligations, it may often appear confusing and difficult to comprehend who qualifies for those protections. This means it’s important that employees understand just what they are entitled to so, they can receive the proper compensation for the work they do.

Learn If You're Entitled to Overtime Pay

To help, we’ve organized an easy-to-read guide that will help hardworking employees across the country understand their rights and and clarify any questions they may have regarding the FLSA.

The FLSA is a very important means for protecting the rights of employees in this country. Its protections ensure that workers get paid a basic minimum wage and, if they’re eligible, earn overtime for work performed for their employer over 40 hours a week.

The thing is the law is dense and can be impenetrable for most people to understand. This means that people’s questions about the law’s protections don’t always go answered. Here, we seek to fix that by answering some of the most common questions people have about the FLSA.

What is the Fair Labor Standards Act?

Established in 1938, the Fair Labor Standards Act is a federal law that established minimum wage, overtime pay eligibility, the concept of “time-and-a-half” compensation for work exceeding 40 hours a week, accurate record-keeping, and child labor standards that affects both full- and part-time workers in the private sector and in federal, state, and local governments. Should an employer withhold proper payments, an employee has a right to file a claim against them.

While the FLSA sets basic wage and overtime standards, it does not regulate certain components. These include sick, vacation, or holiday pay; rest and meal periods, holidays off or vacations; pay raises or fringe benefits; premium pay for holiday or weekend work; and discharge notice/reason for a lay off.

Just as the passage of the New Deal affected millions of employees in the 1930s, its impact still rings true today, as the FLSA remains a long-lasting law that undergoes constant amendments to better benefit workers across the nation.

How Do I Know If I’m Covered by the FLSA?

Workers classified as employees under the law (as opposed to independent contractors, regardless of the duties they perform, are eligible for coverage.

Enterprises consist of federal, state, or local government agencies, hospitals or institutions, schools, and companies or organizations with annual dollar volume of sales or receipts of $500,000 or more. Those not working in such enterprises may still be covered if the employee’s duties meet certain interstate commerce requirements. Interstate commerce workers are engaged in manufacturing, processing, and distributing goods for interstate or foreign commerce. If the employer’s business meets the dollar volume mentioned above, the employee qualifies for coverage but if not, they are covered on an individual basis.

Does the FLSA Guarantee That I Receive Overtime Pay?

No. Employees must meet certain requirements to be considered for overtime pay. For example, employees must be classified as nonexempt to receive overtime pay — this means they are not exempt from overtime eligibility. Nonexempt employees are defined as workers paid on an hourly-wage basis. These types of workers include customer service representatives, food servers, and retail sales associates, in addition to employees in certain positions in an office.

Exempt employees, on the other hand, are exempt from receiving overtime and therefore not eligible for overtime pay. These positions include certain administrative, executive, professional, and computer professionals — employees who generally supervise other employees, make high-level decisions, and use a certain skill set to perform their duties.

To be considered an exempt employee, you must be paid on a salary basis and earn a certain amount of money per week — this value can change, depending on regulations handed down by the U.S. Department of Labor. While some may think farmworkers, domestic caretakers, and certain commissioned employees of retail or service establishment are entitled to overtime, the FLSA in fact does not consider these as nonexempt.

How Does It Calculate Overtime?

There are various ways in which overtime is calculated and this all depends on an employee’s classification — whether he/she is paid an hourly wage or an annual salary. All U.S.-based businesses are required to pay overtime to eligible staff who have worked over 40 hours in the workweek.

A workweek may vary for each individual or industry. For example, a retail sales employee may operate on a Saturday to Friday workweek, instead of a Monday to Sunday workweek. While this ranges across multiple fields, the FLSA sets the standard workweek limit at 40 hours.

All U.S.-based businesses are required to pay overtime to eligible employees who have worked over 40 hours in a workweek, known as “time-and-a-half.” This means employers must pay 1.5 times the amount of the employee’s regular rate should he/she exceed work hours in the week.

But employers are not permitted to average out hours over two or more weeks. For example, averaging a 60-hour workweek with a 20-hour workweek that totals a 40-hour week to evade overtime pay requirements is prohibited.

Which Industries Have the Most Problems with FLSA Violations?

Unfortunately, many industries violate the FLSA and withhold wage and overtime payments. One of the biggest is the restaurant business, about which more than 4,000 cases were initiated in 2015 alone, according to a U.S. Department of Labor report. The healthcare and agriculture industries come in close second and third, while hotel/motels, janitorial services, day care, guard services, and garment manufacturing, and financial services follow.

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