The Fair Labor Standards Act (FLSA) enacted in 1938, is the nation’s basic law regulating the wages and hours of employees for private and public sector employers.
The FLSA has four primary purposes
- To set a minimum wage which employees’ pay cannot fall below.
- To encourage full employment by establishing a maximum number of hours employees can work before an employer must pay an overtime premium.
- To safeguard child workers.
The FLSA, administered by the U.S. Department of Labor, Wage & Hour Division (DOL), is one of the most misunderstood employment statutes. Although the Act may appear simple on the surface, compliance with all of its provisions can be complicated. Employers who fail to comply with the FLSA can be subject to significant back-pay liability, plus liquidated damages and the plaintiff’s attorney fees. It is important to note that state and local laws covering wage and hour laws, plus child labor laws, may require higher standards than those set by the FLSA and may even impose greater penalties.
IMPORTANT: Employees cannot waive their legal right to minimum wage or overtime pay and contracts, whether verbal or written, claiming to do so are invalid.
Before we can discuss in detail the purpose of FLSA, it is important to know who is covered by the FLSA.
Who is covered by FLSA?
The U.S. Department of Labor defines enterprise as activities performed through unified operation or common control by any person or persons for a common business purpose and —
- whose annual gross volume of sales made or business done is not less than $500,000 (exclusive of excise taxes at the retail level that are separately stated); or
- is engaged in the operation of a hospital, an institution primarily engaged in the care of the sick, the aged, or the mentally ill who reside on the premises; a school for mentally or physically disabled or gifted children; a preschool, an elementary or secondary school, or an institution of higher education (whether operated for profit or not for profit); or
- is an activity of a public agency.
Employees can be covered by the FLSA in two ways:
- They may be employees of an enterprise engaged in interstate commerce or in the production of goods for commerce.
- The individual employee may be engaged in commerce or in the production of goods for commerce.
The minimum wage, overtime and time-keeping provisions of the FLSA apply only to employees of the employer, not to independent contractors, volunteers, or others not in an employment relationship with the employer.
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