No, the Fair Labor Standards Act does not apply to every employer. Federal coverage kicks in when a business meets a revenue and interstate-commerce test, when it belongs to a category Congress covered by statute, or when an individual worker’s own job touches interstate commerce. Small farms, certain seasonal recreation businesses, and the purely charitable side of nonprofits sit outside the law. Even then, state wage laws almost always fill in.
The $500,000 Revenue Test
Most employers come under the FLSA through what the statute calls enterprise coverage. A business qualifies as a covered enterprise if it has employees engaged in interstate commerce (or handling goods that moved through interstate commerce) and its annual gross revenue is at least $500,000.1Office of the Law Revision Counsel. 29 USC 203 – Definitions That figure is total revenue before expenses or taxes, and excludes separately stated retail excise taxes.
The test looks at the business as a whole, not one department or one storefront. A restaurant chain earning $600,000 across three locations under common ownership is covered even if no single location clears $500,000 on its own. Once a business crosses the threshold, all of its employees get FLSA protections, whether or not each worker personally handles interstate goods.
Employers Covered No Matter Their Size
Some employers are covered by the FLSA regardless of revenue:
- Hospitals and institutions primarily engaged in caring for people who are sick, elderly, or have mental or physical disabilities and who reside on the premises.
- Preschools, elementary and secondary schools, schools for children with disabilities, and colleges and universities, whether public, private, for-profit, or nonprofit.
- Federal, state, and local government agencies.
These employers are treated as covered enterprises by statute. They must follow federal minimum wage, overtime, and recordkeeping rules no matter their size or budget.2U.S. Department of Labor. Handy Reference Guide to the Fair Labor Standards Act
When the Employer Isn’t Covered but You Are
Even if your employer does not meet the enterprise threshold, you may still be protected through individual coverage. This applies when your own work directly involves interstate commerce or the production of goods for interstate commerce.3Office of the Law Revision Counsel. 29 US Code 206 – Minimum Wage The analysis runs workweek by workweek: in any week you perform covered tasks, you’re entitled to the federal minimum wage and overtime for hours beyond 40.4Office of the Law Revision Counsel. 29 US Code 207 – Maximum Hours
Activities that trigger individual coverage include handling mail sent to or received from other states, making phone calls to out-of-state vendors or customers, processing credit card transactions that cross state lines, and shipping products to buyers in other states.5eCFR. 29 CFR Part 779 Subpart B – Employment to Which the Act May Apply Workers who maintain vehicles used in interstate transportation, guard facilities where goods are produced for shipment, or prepare reports transmitted across state lines are also individually covered.6Department of Labor. Chapter 11 Individual Coverage FLSA
In practice this reach is broad. Office workers who regularly use email, phone, or the internet to communicate across state lines are engaged in interstate commerce. Remote employees performing digital tasks for an out-of-state employer, sending emails, transmitting data, or using cloud-based tools that route through servers in other states, generally satisfy the interstate commerce requirement.
Employers Left Out of the FLSA
Some employers fall entirely outside FLSA coverage based on what they do. When an employer is excluded, it has no obligation to follow federal minimum wage, overtime, or recordkeeping rules, though state law may still apply.
Small Farms
A farm that used no more than 500 “man-days” of agricultural labor in any calendar quarter of the preceding year is exempt from FLSA minimum wage and overtime requirements. A man-day is any day in which a worker performs at least one hour of farm labor.7eCFR. 29 CFR Part 780 – Exemptions Applicable to Agriculture Immediate family members of the owner (a parent, spouse, or child) are not counted toward that 500 man-day total. The exemption keeps smaller, family-run farms from facing the same rules as large commercial operations.
Seasonal Amusement and Recreational Businesses
An amusement or recreational establishment is exempt from both minimum wage and overtime if it either does not operate for more than seven months in a calendar year, or its average revenue for any six months does not exceed one-third of its average revenue for the remaining six months.8Office of the Law Revision Counsel. 29 US Code 213 – Exemptions Organized camps and religious or nonprofit educational conference centers can also qualify. Private businesses providing services inside a national park, national forest, or National Wildlife Refuge under a government contract cannot claim this exemption.
Nonprofit Charitable Work
Nonprofit charitable organizations are not automatically covered. Enterprise coverage applies only to their commercial activities, not to their charitable, religious, or educational work. The Department of Labor looks only at revenue generated through business-purpose activities, such as operating a gift shop or charging fees for services, to determine whether the $500,000 threshold is met.9U.S. Department of Labor. Fact Sheet 14A – Non-Profit Organizations and the Fair Labor Standards Act Contributions, membership dues, and donations used to further the charitable mission don’t count toward that threshold. If the commercial side does exceed $500,000, only employees working on those commercial activities are covered on an enterprise basis. Employees engaged solely in charitable work are not.
A Boundary Worth Knowing: Independent Contractors
The FLSA protects employees, not independent contractors. Employers who classify workers as contractors when they should be employees deny those workers minimum wage, overtime, and other protections. The Department of Labor uses an “economic reality” test, not the label on a contract, to decide whether a worker is truly in business for themselves or economically dependent on an employer.10U.S. Department of Labor. US Department of Labor Proposes Rule Clarifying Employee, Independent Contractor Status
The two most important factors are the degree of control the employer has over how the work is performed, and whether the worker has a genuine opportunity for profit or loss based on their own initiative and investment. Additional factors include the level of skill the work requires, how permanent the relationship is, and whether the work is part of the employer’s core production process. What actually happens on the job matters more than what a contract says.
State Laws Fill the Gap
Employers who fall outside FLSA coverage aren’t necessarily free from wage and hour obligations. Nearly every state has its own minimum wage and overtime laws, and many set lower revenue thresholds, or no revenue threshold at all. When both federal and state law apply to the same employee, the employer must follow whichever standard offers greater protection.11U.S. Department of Labor. Wages and the Fair Labor Standards Act
As of 2026, the federal minimum wage remains $7.25 per hour, but a majority of states and the District of Columbia have set higher rates. State overtime rules can also reach further than the federal 40-hour weekly standard. A handful of states require daily overtime after eight hours in a single day, and some mandate premium pay when employees work seven consecutive days in a workweek. An employer that tracks only the federal 40-hour rule could unknowingly violate stricter state requirements. State enforcement penalties vary widely, with some states authorizing damages of two or three times the unpaid wages plus administrative fines. If your employer doesn’t fall under the FLSA, the state labor department is the next place to look.