Enacted in 1938, the Fair Labor Standards Act (FLSA), also known as the Wages and Hours Bill, created a national labor standard that applied to every state. Through these federal laws, employers are obligated to pay a federal minimum wage per hour and provide employees with overtime compensation, with some exceptions.
Through federal law, all employees are entitled to overtime pay for any hours they work in excess of 40 hours in one seven-day period, with some exceptions. Overtime is calculated as one-and-a-half times' the employees normal hourly rate. If an employee is paid salary, the salary per week is divided by 40 hours to determine the regular hourly wage.
Well-paid salary professionals, meaning individuals who work at a desk and are not employed primarily in a manual labor capacity, are exempt from overtime under the FLSA. The act expressly notes salaried managers, executives, and other administers are exempt from the general overtime if they earn at least $455 per week in salary.
Small Business Exemptions
Additionally, under the FLSA, small business that earn less than $500,000 each year are not obligated to pay overtime or minimum wage to their employees, regardless of job position.