Blog
October 10, 2024
Learn about the Fair Labor Standards Act (FLSA)

As an employer, it might feel like you’re constantly juggling rules and regulations. Sure, you may dream of running your business with your own set of rules, but when it comes to labor standards, you’ve got to play by the book—especially when that book is the Fair Labor Standards Act (FLSA). Employers who fail to comply with the FLSA risk facing costly penalties, and potential damage to their reputations, and their workforce morale. Ensuring adherence to FLSA regulations is crucial for all businesses, from timekeeping to payroll.
What is the FLSA?
The Fair Labor Standards Act (FLSA) is a cornerstone of employment law in the United States, enforced by the United States Department of Labor (DOL). The FLSA was passed in 1938 and designed to protect workers from exploitative labor practices and establish baseline labor standards. Initially created during the Great Depression, the law aimed to reduce long working hours, prevent child labor, and ensure fair wages. The FLSA has been updated over the years to reflect changes in the economy and workforce, but its core objective remains the same—safeguarding workers’ rights while promoting healthy labor practices.
For employers and managers, the FLSA is critical because it shapes how they compensate and manage employees. From determining which employees are eligible for overtime to tracking accurate work hours, employers must comply with FLSA requirements or risk legal and financial consequences.
What employment practices are regulated by the FLSA?
The FLSA regulates key workplace practices that impact employee wages, health, and safety. Some of the most significant areas covered include:
1. Minimum wage
The federal minimum wage sets a baseline that employers must follow. Currently set at $7.25 per hour, it confirms that employees receive fair compensation for their work. However, many states and local governments have enacted higher minimum wage rates, which employers must also comply with if applicable. For employers, it’s crucial to stay aware of both federal and local wage laws to avoid violations.
2. Overtime pay
Under the FLSA, non-exempt employees are entitled to overtime pay for any hours worked over 40 in a workweek, at a rate of one and a half times their regular pay. From a management perspective, accurately tracking employee hours and calculating overtime is vital to staying compliant. Certain employees, such as those in executive, administrative, or professional roles, may be exempt from overtime pay, but employers must make sure these exemptions are applied correctly. In addition, many state and local jurisdictions have their own overtime laws, which may provide greater protections than the federal standard. For instance, California requires overtime pay not only for hours worked over 40 in a week but also for any hours worked over 8 in a single day. In these cases, employers must follow the law that provides the greatest benefit to the employee, which is often the state or local law.
Is your organization struggling with overtime accuracy? Learn how timekeeping software can automate overtime calculations and track when employees are close to overtime thresholds.
3. Recordkeeping
The FLSA sets specific recordkeeping requirements for employers. Businesses must keep detailed records of employee data, including:
- Employee’s name and Social Security number
- Address, birthdate, sex, and occupation
- Workweek start time
- Hours worked each day and each week
- Wage rate and method of payment
- Overtime earnings, deductions, and total wages paid
These records must be kept for at least three years, while wage calculation documents like timecards and work schedules must be stored for two years. Employers can use any method to track employee hours, but the records must be accurate, consistent, and complete. Additionally, employers are required to display these records at the place of employment or central records office and be available for inspection by the DOL’s division representative.
4. Child Labor
The FLSA also sets restrictions on the employment of minors, aiming to protect young workers from hazardous conditions. These child labor laws prevent children under 18 from working in dangerous environments and limit the hours that minors under 16 can work. Youth minimum wage is also regulated by the FLSA with an amendment passed in 1996 that allows employers pay a youth minimum wage of not less than $4.25 an hour to employees who are under 20 years of age during the first 90 consecutive calendar days after initial employment. The law contains certain protections for employees that prohibit employers from displacing any employee in order to hire someone at the youth minimum wage. State and local child labor laws may also differ, and employers must maintain compliance with all applicable regulations.
Why is the FLSA Important?
The FLSA is a critical safeguard for employees, ensuring that they are fairly compensated and not subjected to unsafe working conditions. By regulating wages and working hours, the law promotes a healthy work-life balance, supporting both the well-being and productivity of employees.
For employers, the FLSA is essential in preventing disputes and maintaining operational compliance. Failing to comply with FLSA standards can result in severe consequences. Common violations include misclassifying employees as exempt from overtime pay, failing to pay for all hours worked, and not keeping accurate time records. These issues can result in legal challenges, financial fines, and strained employee relations, making compliance a top priority for any business.
The FLSA has evolved over the years, most recently with the DOL’s latest update to the Final Rule on overtime. The revised Final Rule introduces a gradual adjustment to the salary threshold determining overtime eligibility for exempt and non-exempt employees, with changes beginning in July 2024, and January 2025, and the goal of updating the thresholds every three years.
What does the FLSA not require?
While the FLSA regulates many employment practices, several areas fall outside its scope, such as (but not limited to):
- Meal periods or rest breaks
- No set number of hours or days employees must work (excluding those under 16)
- Pay raises or employee benefits
- Vacation, holiday, severance, or sick pay
- Premium pay for weekend or holiday work
- Pay stubs or W-2 forms
- Termination notices, reasons for termination, or immediate payment of wages upon termination
These matters are generally left to agreements between employers and employees or covered by state and local regulations.
Discover everything you need to know about how to construct the right PTO policy for your organization to support compliance and improve operational efficiency.
Complying with the FLSA
One of the primary responsibilities for employers is posting labor law notices that detail employee rights under the FLSA. These posters, available in both English and non-English versions, should be displayed in an area where employees can easily read them. Depending on state regulations, employers may also need to post state-specific labor law notices.
Non-compliance with the FLSA can result in hefty penalties. For instance, repeated violations of minimum wage or overtime rules can cost employers up to $2,374 per affected employee. Child labor violations can incur even steeper fines, ranging from $15,138 to $137,602, depending on the severity of the violation. To avoid these penalties, businesses should verify they are classifying employees correctly, tracking time accurately, and following child labor laws.
Stay FLSA compliant with TCP Software
Avoiding FLSA violations and costly penalties is easier with the right timekeeping tools. TCP provides automated timekeeping solutions designed to maintain compliance with FLSA regulations. We offer a suite of flexible time capture options and robust rules engines that can be configured to the unique needs of each customer—no matter how complex. With actionable insights delivered instantly, it eliminates payroll bottlenecks and unexpected overtime, equipping leaders to make informed decisions that keep budgets on track, payroll in check, and stay on top of compliance requirements like overtime, wage calculations, and rest and meal breaks.
TimeClock Plus, TCP’s leading time and attendance solution, automates payroll calculations, affirming accuracy across complex payroll rules such as federal and state overtime regulations. TimeClock Plus integrates seamlessly with payroll providers, streamlining processes and minimizing errors. Features like Short Break Confirmation automate the tracking of rest periods, maintaining compliance and reducing the need for constant oversight.
In addition to timekeeping, TCP’s employee scheduling solution, Humanity, uses AI-powered forecasting to optimize employee schedules and reduce overtime. This dynamic tool allows employers to predict labor needs and create schedules that keep operations running smoothly.
TCP’s robust timekeeping software solutions empower organizations to maintain compliant break practices, enhance employee well-being, and optimize operational efficiency. Explore how TCP’s flexible tools can support your organization’s unique needs, or consult with an expert to discover how we can streamline your time and attendance processes. Speak to an expert today to see how TCP can help you streamline your time and attendance processes.
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