- Employment Law Guide
Wages and Hours Worked: Minimum Wage and Overtime Pay
DOL Agency Assistance
Updated: December 2016
Fair Labor Standards Act of 1938 (FLSA)(http://www.dol.gov/whd/regs/statutes/FairLaborStandAct.pdf), as amended
(29 USC §201 et seq(http://www4.law.cornell.edu/uscode/29/201.html).; 29 CFR Parts 510 to 794(http://www.dol.gov/dol/cfr/Title_29/Chapter_V.htm))
Who is Covered
The Fair Labor Standards Act (FLSA or Act) is administered by the Wage and Hour Division (WHD). The Act establishes standards for minimum wages, overtime pay, recordkeeping, and child labor. These standards affect more than 135 million workers, both full time and part time, in the private and public sectors.
The Act covers enterprises with employees who engage in interstate commerce, produce goods for interstate commerce, or handle, sell, or work on goods or materials that have been moved in or produced for interstate commerce. For most firms, a threshold of $500,000 in annual dollar volume of business applies to be covered (i.e., the Act does not cover enterprises with less than this amount of business).
In addition, the Act covers the following regardless of their dollar volume of business: hospitals; institutions primarily engaged in the care of the sick, aged, mentally ill, or disabled who reside on the premises; schools for children who are mentally or physically disabled or gifted; preschools, elementary and secondary schools, and institutions of higher education; and Federal, state, and local government agencies.
Employees of firms that do not meet the $500,000 annual dollar volume threshold may be covered in any workweek when they are individually engaged in interstate commerce, the production of goods for interstate commerce, or an activity that is closely related and directly essential to the production of such goods.
In addition, the Act covers domestic service employees, such as housekeepers, cooks, gardeners, nurses, or home health aides, if they receive at least $1,900 in 2015 from one employer in a calendar year, or if they work a total of more than eight hours a week for one or more employers. (This calendar year wage threshold is set by the Social Security Administration each year.) For additional coverage information, see the Wage and Hour Division Fact Sheet #14: Coverage Under the FLSA.
The Act exempts some employees from its overtime pay and minimum wage provisions, and it also exempts certain employees from the overtime pay provisions only. Because the exemptions are narrowly defined, employers should check the exact terms and conditions for any applicable exemption by contacting their local Wage and Hour Division office.
The following are examples of employees exempt from both the minimum wage and overtime pay requirements:
- Executive, administrative, and professional employees (including teachers and academic administrative personnel in elementary and secondary schools), outside sales employees, and certain skilled computer professionals (as defined in the Department of Labor's regulations)
- Employees of certain seasonal amusement or recreational establishments
- Employees of certain small newspapers and switchboard operators of small telephone companies
- Seamen employed on foreign vessels
- Employees engaged in fishing operations
- Employees engaged in newspaper delivery
- Farm workers employed on small farms (i.e., those that used less than 500 "man days" of farm labor in any calendar quarter of the preceding calendar year)
- Casual babysitters
- Persons employed solely by the individual receiving services (not an agency, non-profit, or other third party employer) primarily providing fellowship and protection (companionship services) to seniors and/or individuals with injuries, illnesses, or disabilities
The following are examples of employees exempt from the overtime pay requirements only:
- Certain commissioned employees of retail or service establishments
- Auto, truck, trailer, farm implement, boat, or aircraft salespersons employed by non manufacturing establishments primarily engaged in selling these items to ultimate purchasers
- Auto, truck, or farm implement parts clerks and mechanics employed by non-manufacturing establishments primarily engaged in selling these items to ultimate purchasers
- Railroad and air carrier employees, taxi drivers, certain employees of motor carriers, seamen on American vessels, and local delivery employees paid on approved trip rate plans
- Announcers, news editors, and chief engineers of certain non metropolitan broadcasting stations
- Domestic service employees solely employed by the individual, family, or household receiving services (not an agency or other third party employer) who reside in the private home where they provide services
- Employees of motion picture theaters
Certain employees may be partially exempt from the overtime pay requirements. These include:
- Employees engaged in certain operations on agricultural commodities and employees of certain bulk petroleum distributors
- Employees of hospitals and residential care establishments that have agreements with the employees that they will work 14 day periods in lieu of 7 day workweeks (if the employees are paid overtime premium pay as required by the Act for all hours worked over eight in a day or 80 in the 14 day work period, whichever is the greater number of overtime hours)
- Employees who lack a high school diploma, or who have not completed the eighth grade, who spend part of their workweeks in remedial reading or training in other basic skills that are not job specific. Employers may require such employees to engage in these activities up to 10 hours in a workweek. Employers must pay regular wages for the hours spent in such training but need not pay overtime premium pay for training hours
The Act requires employers of covered employees who are not otherwise exempt to pay these employees a minimum wage of not less than $7.25 per hour. Youths under 20 years of age may be paid a minimum wage of not less than $4.25 per hour during the first 90 consecutive calendar days of employment with an employer. Employers may not displace any employee to hire someone at the youth minimum wage. For additional information regarding the use of the youth minimum wage provisions, see the Wage and Hour Division Fact Sheet #32: Youth Minimum Wage – FLSA.
Employers may pay employees on a piece rate basis, as long as they receive at least the equivalent of the required minimum hourly wage rate and overtime for hours worked in excess of 40 hours in a workweek. Employers of tipped employees (i.e., those who customarily and regularly receive more than $30 a month in tips) may consider such tips as part of their wages, but employers must pay a direct wage of at least $2.13 per hour if they claim a tip credit. They must also meet certain other requirements. For a full listing of the requirements an employer must meet to use the tip credit provision, see the Wage and Hour Division Fact Sheet #15: Tipped Employees Under the FLSA.
The Act also permits the employment of certain individuals at wage rates below the statutory minimum wage under certificates issued by the Department of Labor:
- Student learners (vocational education students);
- Full time students in retail or service establishments, agriculture, or institutions of higher education; and
- Individuals whose earning or productive capacities for the work to be performed are impaired by physical or mental disabilities, including those related to age or injury.
The Act does not limit either the number of hours in a day or the number of days in a week that an employer may require an employee to work, as long as the employee is at least 16 years old. Similarly, the Act does not limit the number of hours of overtime that may be scheduled. However, the Act requires employers to pay covered employees not less than one and one half times their regular rate of pay for all hours worked in excess of 40 in a workweek, unless the employees are otherwise exempt. For additional information regarding overtime pay requirements, see the Wage and Hour Division Fact Sheet #23: Overtime Pay Requirements of the FLSA.
The Act prohibits performance of certain types of work in an employee's home unless the employer has obtained prior certification from the Department of Labor. Restrictions apply in the manufacture of knitted outerwear, gloves and mittens, buttons and buckles, handkerchiefs, embroideries, and jewelry (where safety and health hazards are not involved). Employers wishing to employ homeworkers in these industries are required to provide written assurances to the Department of Labor that they will comply with the Act's wage and hour requirements, among other things.
The Act generally prohibits manufacture of women's apparel (and jewelry under hazardous conditions) in the home except under special certificates that may be issued when the employee cannot adjust to factory work because of age or disability (physical or mental), or must care for a disabled individual in the home.Special wage and hour provisions apply to state and local government employment. For more information regarding these special provisions, see the Wage and Hour Division Fact Sheet #7: State and Local Governments Under the FLSA.
Employees may find out how to file a complaint by contacting the local Wage and Hour Division office(http://www.dol.gov/whd/america2.htm), or by calling the program's toll-free help line at 1-866-4USWAGE (1-866-487-9243). In addition, an employee may file a private suit, generally for the previous two years of back pay (three years in the case of a willful violation) and an equal amount as liquidated damages, plus attorney's fees and court costs.
It is a violation of the Act to fire or in any other manner discriminate against an employee for filing a complaint with an employer or the Wage and Hour Division or for participating in a legal proceeding under the Act.
Recordkeeping, Reporting, Notices and Posters
Notices and Posters
Every employer of employees subject to the FLSA’s minimum wage provisions must post, and keep posted, a notice(http://www.dol.gov/whd/regs/compliance/posters/flsa.htm) explaining the Act in a conspicuous place in all of their establishments. Although there is no size requirement for the poster, employees must be able to readily read it. The FLSA poster is also available in Spanish(http://www.dol.gov/whd/regs/compliance/posters/flsaspan.htm), Chinese(http://www.dol.gov/whd/regs/compliance/posters/minwagecn.pdf), Russian(http://www.dol.gov/whd/regs/compliance/posters/FLSAPosterRuss.pdf), Thai,(http://www.dol.gov/whd/regs/compliance/posters/MinWageThai.pdf) Hmong,(http://www.dol.gov/whd/regs/compliance/posters/MinWageHmong.pdf) Vietnamese(http://www.dol.gov/whd/regs/compliance/posters/minwageViet.pdf), and Korean(http://www.dol.gov/whd/regs/compliance/posters/minwageKorean.pdf). There is no requirement to post the poster in languages other than English(http://www.dol.gov/whd/regs/compliance/posters/flsa.htm).
Covered employers are required to post the general Fair Labor Standards Act poster. However, certain industries have posters designed specifically for them. Employers of Agricultural Employees (PDF)(http://www.dol.gov/whd/regs/compliance/posters/wh1386Agrcltr.pdf) and State & Local Government Employees (PDF)(http://www.dol.gov/whd/regs/compliance/posters/wh1385State.pdf) can either post the general Fair Labor Standards Act poster(http://www.dol.gov/whd/regs/compliance/posters/flsa.htm) or their specific industry poster. There are also posters for American Samoa (PDF)(http://www.dol.gov/whd/minwage/americanSamoa/ASminwagePoster.pdf) and Northern Mariana Islands (PDF)(http://www.dol.gov/whd/regs/compliance/posters/cnmi.pdf).
Every employer who employs workers with disabilities under special minimum wage certificates is also required to post the Employee Rights for Workers with Disabilities/Special Minimum Wage Poster(http://www.dol.gov/whd/regs/compliance/posters/disab.htm).
Every employer covered by the FLSA must keep certain records for each of its covered employees. Employers must keep records on wages, hours, and other information as set forth in the Department of Labor's regulations. Most of this data is the type that employers generally maintain in ordinary business practice.
There is no required form for the records. However, the records must include accurate information about the employee and data about the hours worked and the wages earned. The following is a listing of the basic payroll records that an employer must maintain:
- Employee's full name, as used for Social Security purposes, and on the same record, the employee's identifying symbol or number if such is used in place of name on any time, work, or payroll records
- Address, including zip code
- Birth date, if younger than 19
- Sex and occupation
- Time and day of week when employee's workweek begins Total wages paid each pay period
- Date of payment and the pay period covered by the payment
The following is a listing of some additional information that an employer must maintain unless the employee is an executive, administrative, or professional employee (including teachers and academic administrative personnel in elementary and secondary schools) or outside sales employee who is exempt from the Act’s minimum wage and overtime requirements:
- Hours worked each day and total hours worked each workweek
- Basis on which employee's wages are paid (e.g., "$9 per hour", "$440 a week", "piecework")
- Regular hourly pay rate
- Total daily or weekly straight-time earnings
- Total overtime earnings for the workweek
- All additions to or deductions from the employee's wages
For a full listing of the basic records that an employer must maintain, see the Wage and Hour Division Fact Sheet #21: Recordkeeping Requirements Under the FLSA. Employers are required to preserve for at least three years payroll records, collective bargaining agreements, and sales and purchase records. Records on which wage computations are based should be retained for two years. These include time cards and piecework tickets, wage rate tables, work and time schedules, and records of additions to or deductions from wages.
The FLSA does not contain any specific reporting requirements; however, the above referenced records must be open for inspection by the Wage and Hour Division's representatives, who may ask the employer to make extensions, computations, or transcriptions. The records may be kept at the place of employment or in a central records office.
In addition to the rights and remedies available to persons through private suits for violations of the Act, the Department of Labor uses a variety of remedies to enforce compliance with the Act's requirements. When Wage and Hour Division investigators encounter violations, they recommend changes in employment practices to bring the employer into compliance, and they request the payment of any back wages due to employees.
Willful violators may be prosecuted criminally and fined up to $10,000. A second conviction may result in imprisonment. Employers who willfully or repeatedly violate the minimum wage or overtime pay requirements are subject to civil money penalties found here [insert link to CMP website page] for each violation.
For child labor violations, employers are subject to a civil money penalty for each violation. In addition, employers are subject to a civil money penalty for each violation that causes the death or serious injury of any minor employee – such penalty may be doubled when the violations are determined to be willful or repeated.
When the Department of Labor assesses a civil money penalty, the employer has the right to file an exception to the determination within 15 days of receipt of the notice. If an exception is filed, it is referred to an Administrative Law Judge for a hearing and determination as to whether the penalty is appropriate. If an exception is not filed, the penalty becomes final.
The Department of Labor may also bring suit for back pay and an equal amount in liquidated damages, and it may obtain injunctions to restrain persons from violating the Act.
The Act also prohibits the shipment of goods in interstate commerce that were produced in violation of the minimum wage, overtime pay, child labor, or special minimum wage provisions. The Department of Labor may seek to enjoin such shipments.
Relation to State, Local, and Other Federal Laws
State laws on wages and hours also apply to employment subject to this Act. When both this Act and a state law apply, the law setting the higher standards must be observed. For example, if a state law requires a minimum wage higher than the minimum wage required by the Act, the employer must pay the higher minimum wage.
Compliance Assistance Available
More detailed information about the FLSA, including copies of explanatory brochures and regulatory and interpretative materials, is available on the Wage and Hour Division's Web site(http://www.dol.gov/whd/), or by contacting a local Wage and Hour Division office(http://www.dol.gov/whd/america2.htm). Another compliance assistance resource, the elaws Fair Labor Standards Act Advisor(/elaws/flsa.htm), helps answers questions about workers and businesses that are subject to the FLSA.
The Department of Labor provides employers, workers, and others with clear and easy-to-access information and assistance on how to comply with the FLSA. Among the many resources available are:
- The Handy Reference Guide to the FLSA(http://www.dol.gov/whd/regs/compliance/hrg.htm)
- Fair Labor Standards Act (FLSA) Coverage and Employment Status Advisor(/elaws/whd/flsa/scope/screen9.asp): Helps employers and employees understand and determine coverage of employees under the FLSA.
- Fair Labor Standards Act (FLSA) Hours Worked Advisor(/elaws/whd/flsa/hoursworked/default.asp): Helps employers and employees determine which work-related activities are considered "hours worked" and thus hours for which employees must be paid.
- Fair Labor Standards Act (FLSA) Overtime Security Advisor(/elaws/overtime.htm): Helps employees and employers determine whether a particular employee is exempt from the FLSA's minimum wage and overtime pay requirements.
- Fair Labor Standards Act (FLSA) Overtime Calculator Advisor(/elaws/otcalculator.htm): Helps employers and employees compute the amount of overtime pay due in a sample pay period based on information from the user.
- FLSA Fact Sheets: Topical Fact Sheet Index(http://www.dol.gov/whd/fact-sheets-index.htm)
- Comprehensive FLSA Presentation (Microsoft® PowerPoint®)(http://www.dol.gov/whd/flsa/comprehensive.ppt)
The Employment Law Guide is offered as a public resource. It does not create new legal obligations and it is not a substitute for the U.S. Code, Federal Register, and Code of Federal Regulations as the official sources of applicable law. Every effort has been made to ensure that the information provided is complete and accurate as of the time of publication, and this will continue. Later versions of this Guide will be offered at www.dol.gov/compliance or by calling our Toll-Free Help Line at 1-866-4-USA-DOL (1-866-487-2365) (1-866-487-2365).