Summary of the Fair Labor Standards Act

Congress passed the Fair Labor Standards Act on June 25, 1938. Its job was to eliminate labor conditions that led to low standards of living. The act, known as FLSA, was originally enacted during the Great Depression. The belief was that maintaining higher living standards helped to keep workers efficient and healthy.

FLSA sets minimum wage, overtime pay, equal pay, record keeping and child labor standards. The provisions originally applied to private sector employees only, but now generally apply to public sector as well. Some specific cities and towns still have exempt employees. The Wage and Hour Division enforces FLSA for private employment, state and local governments and federal employees from the Library of Congress, United State Postal System, Postal Rate commission and the Tennessee Valley Authority. The U.S. Office of Personnel Management handles other executive branch employees and U.S. Congress enforces it for legislative branch employees.

Read More: Sweatshop Labor Laws

All employees of any enterprise that matches one of the following three criteria are covered under FLSA. First, if the business has an annual gross volume of sales of at least $500,000. Second, if the business is a hospital or otherwise engaged in caring for the sick, elderly or mentally disabled or if it is a educational institution including preschools, elementary, secondary schools or higher education institutions. Third, employees are covered if the enterprise is an activity of a public agency. FLSA covers domestic service workers such as housekeepers, cooks, nannies and groundskeepers if their annual wages are at least a yearly minimum set by the Social Security Administration--$1,500 in 2007--or if they work more than eight hours in one week.

FLSA sets the federal minimum wage standard, although many states set their minimum requirements higher. In 2008, federal minimum wage was $6.55, and it rose to $7.25 in July 2009. Overtime pay must be at least 1.5 times an employee’s regular hourly pay and applies to any additional hours worked past 40 in a normal workweek. The FLSA does not regulate all employment practices, including severance or sick pay; meal or rest periods; holidays or vacations; pay raises or bonuses; or premium pay for weekend or holiday work.

The FLSA sets a lower minimum for workers younger than age 20 during their first three months of employment with a given employer: $4.25 per hour as of 2009. Employers must not replace over-aged workers with youth workers in order to pay lower wages. They are also prohibited from reducing hours, wages or benefits in order to hire younger workers.

Some individuals are exempt from the minimum wage standards in specific situations. These include student learners, such as vocational education students, full-time students in retail or service establishments or those that work in institutes of higher education. Employers may also pay lower wages to employees whose productivity is limited due to physical or mental disability, including those related to age or injury.