Fair Labor Standards Act Summary: Wages, Overtime, and Exemptions

A Fair Labor Standards Act summary comes down to five things the federal law does: it sets a $7.25 hourly minimum wage, requires time-and-a-half pay for hours over 40 in a workweek, limits when and how minors can work, requires employers to keep payroll records, and protects workers who complain about violations. The Department of Labor’s Wage and Hour Division enforces the act, and workers can recover unpaid wages plus an equal amount in liquidated damages when employers break the rules.¹

Who the Law Covers

The FLSA reaches workers through two paths. Enterprise coverage applies to businesses with employees involved in interstate commerce that bring in at least $500,000 in annual gross sales. Hospitals, schools, government agencies, and residential care facilities are covered regardless of revenue.²

Even if an employer falls below that threshold, individual workers are protected when their own work involves interstate commerce or the production of goods for it. That covers anyone who regularly handles goods shipped from other states, uses the phone or email for out-of-state business, or crosses state lines for work. The bar is low enough that most workers end up protected one way or the other.

What the FLSA Does Not Require

The federal law does not require vacation time, sick leave, holiday pay, severance, or meal and rest breaks.³ Those benefits are left to employer policies, union contracts, or state and local laws. If you are looking for a rule on paid time off or lunch breaks under federal law, it is not here.

Federal Minimum Wage

The federal minimum wage is $7.25 per hour for non-exempt workers and has not changed since 2009.⁴ When a state or city sets a higher minimum, employers must pay the higher amount. As of 2026, roughly 30 states and the District of Columbia have minimum wages above the federal floor, ranging from around $8.75 to $17.95 per hour.⁵

Tipped Workers

Employers may pay tipped workers a direct cash wage as low as $2.13 per hour, as long as that amount plus tips received equals at least $7.25. This is called a tip credit. To use it, the employer must tell the worker in advance, and the employee must keep all tips except amounts contributed to a valid tip pool.² If tips fall short in any workweek, the employer makes up the difference.

Youth Minimum Wage

Workers under 20 may be paid $4.25 per hour during their first 90 consecutive calendar days on the job. Once the 90 days end or the employee turns 20, whichever comes first, the full minimum wage applies.⁶ The employer cannot use this lower rate to displace existing workers.

Overtime Pay

Non-exempt employees who work more than 40 hours in a single workweek must be paid at least one and a half times their regular rate for every extra hour.⁷ A workweek is any fixed, recurring period of seven consecutive days. It does not have to match the calendar week or a pay period.

A common employer mistake is averaging hours across a two-week pay period. That is not allowed. Each seven-day workweek stands alone. If someone works 50 hours one week and 30 the next, the employer owes 10 hours of overtime for the first week even though the two-week average is 40.

What Counts as Hours Worked

The clock runs for all time an employee is required to be on the employer’s premises, on duty, or at a designated workplace. It also includes work the employer “suffers or permits,” meaning if the employer knows or should know that an employee is working, those hours count even if nobody explicitly asked. Travel between job sites during the workday and short rest breaks under 20 minutes are compensable.

Normal commuting does not count. Activities before or after a shift, like changing clothes or gathering equipment, are compensable only when they are essential to the job itself rather than a prerequisite for showing up. Courts look at whether the activity is integral to the worker’s core responsibilities.

Exempt Employees

Some workers are excluded from minimum wage and overtime protections. The most common exemptions are the white-collar categories: executive, administrative, professional, computer, and outside sales employees.⁸ Each has both a salary test and a duties test, and both must be met. Job titles are irrelevant. What matters is how much the person earns and what they actually do.

Salary Threshold

After a federal court vacated the Department of Labor’s 2024 update, the salary threshold reverted to the 2019 level: $684 per week, or $35,568 per year.⁹ Anyone earning below that cannot be classified as exempt, regardless of duties. A separate highly compensated employee exemption applies to workers earning at least $107,432 per year, who need to meet only a minimal duties test.

Exempt employees must be paid on a salary basis, meaning a fixed amount each week regardless of hours worked. Deductions are allowed only in limited situations: full-day absences for personal reasons, certain disciplinary suspensions, or unpaid FMLA leave, among a few others. An employer that routinely makes improper deductions risks losing the exemption, which would trigger overtime obligations.¹⁰

Duties Tests

Meeting the salary threshold alone is not enough. Each exemption category has its own duties requirement:¹¹

Executive employees primarily manage the business or a recognized department, regularly direct at least two full-time employees, and have genuine authority over hiring and firing.
Administrative employees primarily perform office or non-manual work directly tied to management or general business operations and exercise independent judgment on significant matters.
Professional employees do work that requires advanced knowledge in a specialized field, typically acquired through extended formal education. Doctors, lawyers, and teachers are exempt from the salary test but must still meet the duties requirement.
Computer employees work as systems analysts, programmers, or software engineers, and can qualify at the standard salary or at an hourly rate of at least $27.63.
Outside sales employees primarily make sales or obtain orders away from the employer’s place of business. This is the only white-collar exemption with no salary requirement.

Employee or Independent Contractor

FLSA protections apply only to employees, not independent contractors. Whether someone is an employee depends on the economic reality of the relationship, not what a contract says. A worker who is economically dependent on one employer is likely an employee, while someone genuinely running their own business is likely a contractor.¹²

The Department of Labor evaluates several factors, including how much control the employer has over the work, whether the worker has a real opportunity for profit or loss based on their own initiative, and whether the relationship is permanent or project-based. No single factor is decisive. Labeling someone a 1099 contractor, signing an independent contractor agreement, or paying off the books does not change legal status if the actual working conditions look like employment. Misclassified workers can recover all unpaid minimum wages and overtime they should have received, plus potential liquidated damages.

Child Labor

The general minimum working age is 14 for most non-farm jobs, with tighter restrictions on younger workers.

Fourteen- and fifteen-year-olds may work only outside school hours, capped at three hours on a school day and 18 hours during a school week. During non-school periods, they can work up to eight hours a day and 40 hours a week. All work must fall between 7 a.m. and 7 p.m., except from June 1 through Labor Day, when the evening cutoff extends to 9 p.m.

At 16, there is no cap on hours, but minors still cannot perform work the Department of Labor has declared hazardous. Hazardous occupations include operating heavy machinery, working with explosives or radioactive materials, and most roofing or excavation work. The hazardous-work restriction lifts at 18.⁸

Employers who violate child labor provisions face civil penalties of up to $16,035 for each child affected, adjusted annually for inflation.¹³ When a violation causes the death or serious injury of a minor, the maximum penalty jumps significantly higher.

Break Time for Nursing Employees

The PUMP for Nursing Mothers Act amended the FLSA in 2022 to require covered employers to provide reasonable break time for a worker to express breast milk for up to one year after a child’s birth. The employer must also provide a private space that is not a bathroom, is shielded from view, and is free from intrusion.¹⁴ The PUMP Act extended these protections beyond hourly workers to include salaried employees, teachers, nurses, and agricultural workers who were previously excluded.

Recordkeeping and Posting

Employers must keep detailed payroll records for every non-exempt employee, including full name, home address, regular hourly rate, hours worked each workday and workweek, straight-time and overtime earnings, deductions, and total wages paid per pay period.¹⁵ Payroll records must be preserved for at least three years, and basic time cards and wage rate tables for at least two years.

Employers must also display the official Department of Labor poster in a visible location. Records and the poster are the first things investigators check when an employee files a complaint.

Enforcement, Remedies, and Retaliation

When an employer violates the wage rules, workers can recover the full amount of unpaid minimum wages or overtime, plus an equal amount in liquidated damages, effectively doubling the recovery. The employer also pays the worker’s attorney’s fees and court costs.¹

An employer can avoid liquidated damages only by proving it acted in good faith with reasonable grounds to believe it was complying. That is a tough standard. The Wage and Hour Division can also file suit on workers’ behalf. Willful violations carry criminal penalties of fines up to $10,000 and up to six months in prison for a first offense.

Firing, demoting, or otherwise punishing a worker for filing a complaint, cooperating with an investigation, or participating in an FLSA proceeding is illegal.¹⁶ A worker who faces retaliation can recover lost wages plus an equal amount in liquidated damages, and may be entitled to reinstatement. Complaints are confidential. You can file by calling the Wage and Hour Division at 1-866-487-9243, and the agency will not disclose your name or the existence of a complaint to the employer during its initial review.¹⁷

How Long You Have to File

Claims for unpaid wages or overtime must be filed within two years of the violation. If the employer’s violation was willful, the deadline extends to three years.¹⁸ Each missed paycheck starts a new clock, so ongoing violations allow recovery for up to two or three years of back pay depending on whether the employer acted intentionally. Keep your own records of hours worked. Waiting too long means forfeiting wages you are legally owed.

1
Office of the Law Revision Counsel. 29 USC 216 – Penalties
2
Office of the Law Revision Counsel. 29 USC 203 – Definitions
3
U.S. Department of Labor. Vacation Leave
4
Office of the Law Revision Counsel. 29 USC 206 – Minimum Wage
5
U.S. Department of Labor. State Minimum Wage Laws
6
U.S. Department of Labor. Fact Sheet 32 – Youth Minimum Wage – Fair Labor Standards Act
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Office of the Law Revision Counsel. 29 US Code 207 – Maximum Hours
8
Office of the Law Revision Counsel. 29 USC 213 – Exemptions
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U.S. Department of Labor. Earnings Thresholds for the Executive, Administrative, and Professional Exemption
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U.S. Department of Labor. Fact Sheet 17G – Salary Basis Requirement and the Part 541 Exemptions Under the Fair Labor Standards Act
11
eCFR. 29 CFR Part 541 – Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Computer and Outside Sales Employees
12
U.S. Department of Labor. Fact Sheet 13 – Employment Relationship Under the Fair Labor Standards Act
13
U.S. Department of Labor. Civil Money Penalty Inflation Adjustments
14
U.S. Department of Labor. FLSA Protections to Pump at Work
15
eCFR. 29 CFR Part 516 – Records to Be Kept by Employers
16
Office of the Law Revision Counsel. 29 USC 215 – Prohibited Acts
17
U.S. Department of Labor. How to File a Complaint
18
Office of the Law Revision Counsel. 29 USC 255 – Statute of Limitations