The Fair Labor Standards Act of 1938 (FLSA) is the federal law that created the minimum wage. Signed by President Franklin D. Roosevelt during the Great Depression, it set the first nationwide wage floor and, in the same statute, established overtime pay, child labor protections, and recordkeeping rules that still govern most American workplaces.1Office of the Law Revision Counsel. 29 USC Ch. 8: Fair Labor Standards The current federal minimum wage under the FLSA is $7.25 per hour.2Office of the Law Revision Counsel. 29 USC 206 – Minimum Wage
Why Congress Passed the FLSA in 1938
Industrialization in the early 1900s produced long hours, poverty pay, and no uniform standards across state lines. Employers in states with no wage rules could undercut competitors elsewhere by paying whatever the market allowed, and the Great Depression made those conditions worse. Congress responded with the Fair Labor Standards Act to keep interstate commerce from spreading substandard labor conditions from one state to the next.1Office of the Law Revision Counsel. 29 USC Ch. 8: Fair Labor Standards
The law is codified at 29 U.S.C. ยง 201 and the sections that follow. The Wage and Hour Division (WHD) of the U.S. Department of Labor enforces it, investigating complaints, auditing employer records, and pursuing penalties.3eCFR. 29 CFR Part 553 – Application of the Fair Labor Standards Act to Employees of State and Local Governments
The Federal Minimum Wage Today
The FLSA sets $7.25 as the mandatory hourly floor for covered workers. The rate has stood at that level since 2009, and Congress must pass new legislation to raise it. There is no automatic inflation adjustment.2Office of the Law Revision Counsel. 29 USC 206 – Minimum Wage
Many states and localities set their own minimum wages above the federal rate. When a state or local rate is higher than $7.25, employers must pay the higher amount.4U.S. Department of Labor. State Minimum Wage Laws State rates run from those that match $7.25 up to well over $15 per hour in several states. In a jurisdiction with no state minimum wage law, the federal rate applies to covered workers.
Tipped Workers
Workers who regularly receive more than $30 a month in tips can be paid a direct cash wage as low as $2.13 per hour under federal law, provided tips bring total hourly earnings to at least $7.25.5U.S. Department of Labor. Minimum Wages for Tipped Employees The $5.12 gap is called the tip credit. If tips fall short in a given workweek, the employer must make up the difference. Many states require a higher cash wage for tipped workers or disallow the tip credit entirely.
Subminimum Wage Certificates
The FLSA lets certain workers be paid below $7.25, but only if the employer holds a Wage and Hour Division certificate.6U.S. Department of Labor. Subminimum Wage The categories are:
- Student-learners in approved vocational programs, at no less than 75 percent of the minimum wage.
- Full-time students in retail, service, agriculture, or at colleges and universities.
- Workers whose productivity is affected by a physical or mental disability, under a Section 14(c) certificate. A 2024 proposal to phase out this program was withdrawn in July 2025, so these certificates remain available.
Overtime, Child Labor, and Recordkeeping in the Same Law
The FLSA does more than set a wage floor. The same statute requires employers to pay one and one-half times the regular hourly rate for every hour worked beyond 40 in a single workweek.7GovInfo. 29 USC 207 – Maximum Hours A workweek is any fixed period of seven consecutive 24-hour days, chosen by the employer and kept consistent. The overtime rule applies whether pay is hourly, salaried, piece-rate, or commission-based; the employer determines the regular rate for the week and pays 1.5 times that rate for overtime hours.
For tipped workers, the regular rate used to calculate overtime is the full minimum wage, not the reduced $2.13 cash wage.8eCFR. 29 CFR 531.60 – Overtime Payments
The FLSA also restricts child labor. The general minimum age for non-agricultural work is 16, and workers under 18 cannot perform jobs the Secretary of Labor has declared hazardous, such as operating power-driven machinery, roofing, or excavation.9U.S. Department of Labor. Fact Sheet #43: Child Labor Provisions of the Fair Labor Standards Act (FLSA) for Nonagricultural Occupations Workers aged 14 and 15 can hold certain jobs outside school hours under tight limits:10U.S. Department of Labor. Non-Agricultural Jobs – 14-15
- During school weeks, no more than 3 hours on a school day and 18 hours per week.
- When school is out, no more than 8 hours per day and 40 hours per week.
- Work only between 7:00 a.m. and 7:00 p.m., extended to 9:00 p.m. from June 1 through Labor Day.
Children of any age may work for a business owned entirely by their parents, except in mining, manufacturing, or hazardous work.
Every covered employer must keep payroll records for each employee, including full name, hours worked each week, wages paid, and overtime earnings, and preserve them for at least three years. Time clocks are not required, but employers need a reliable method for tracking hours. Employers must also display the official “Employee Rights Under the Fair Labor Standards Act” poster in a visible workplace location.11U.S. Department of Labor. Workplace Posters
Who the FLSA Covers
Coverage runs on two tracks. Enterprise coverage reaches businesses with at least two employees and at least $500,000 in annual sales or business volume. Hospitals, nursing facilities, schools, preschools, and government agencies are covered regardless of revenue.12U.S. Department of Labor. Fact Sheet #14: Coverage Under the Fair Labor Standards Act (FLSA)
Even if a workplace does not meet that threshold, individual employees may be covered if their work regularly involves interstate commerce, such as handling goods that cross state lines, making out-of-state business calls, or processing interstate transactions.12U.S. Department of Labor. Fact Sheet #14: Coverage Under the Fair Labor Standards Act (FLSA) Courts read interstate commerce broadly, so most U.S. workers are covered in practice.
One boundary matters here: the FLSA only protects employees, not independent contractors. And not every employee is entitled to the minimum wage or overtime. The most common exemptions apply to workers in executive, administrative, professional, outside sales, and certain computer-related roles, and each requires meeting both a salary test and a duties test rather than just holding a particular job title.13Office of the Law Revision Counsel. 29 USC 213 – Exemptions
Penalties and Retaliation Protections
Employers who fail to pay the required minimum wage or overtime owe the full amount of unpaid wages plus liquidated damages equal to that amount, effectively doubling what the employer owes. Successful workers can also recover attorney’s fees and court costs.14Office of the Law Revision Counsel. 29 USC 216 – Penalties Willful violations can bring criminal fines up to $10,000, up to six months in jail, or both, with imprisonment possible on a second conviction.
Child labor violations carry separate civil penalties of up to $16,035 per violation. Where a violation causes serious injury or death, the maximum penalty rises to $72,876, and to $145,752 if the violation was willful or repeated.15U.S. Department of Labor. Civil Money Penalty Inflation Adjustments
The FLSA also makes it illegal for an employer to fire or punish a worker for filing a wage complaint, participating in an investigation, or testifying in an FLSA proceeding.16Office of the Law Revision Counsel. 29 USC 215 – Prohibited Acts Retaliation is its own violation, separate from the underlying wage dispute.
How to File a Claim for Unpaid Wages
The standard deadline to sue for unpaid minimum wages or overtime is two years from the date of each violation, extended to three years if the violation was willful.17Office of the Law Revision Counsel. 29 USC 255 – Statute of Limitations Because each shortchanged paycheck can count as its own violation with its own deadline, acting quickly preserves more of any potential recovery.
Complaints go to the Wage and Hour Division at 1-866-487-9243 or through the Department of Labor’s website. The WHD keeps complaints confidential and will not disclose the complainant’s name or the existence of a complaint to the employer.18U.S. Department of Labor. How to File a Complaint An investigator can review payroll records, interview employees privately, and hold a conference with the employer to arrange payment of back wages. Workers may also file a private lawsuit instead of, or in addition to, the agency complaint.