Fair Labor Standards Act

The Fair Labor Standards Act (FLSA) was enacted in 1938 as part of President Franklin D. Roosevelt’s New Deal legislation. This foundational labor law in the United States establishes minimum wage, overtime pay eligibility, recordkeeping, and child labor standards affecting full-time and part-time workers in the private sector and in Federal, State, and local governments.

History and Purpose

Historical Context

The FLSA was passed during the Great Depression, a period characterized by extensive economic hardship, with high unemployment rates and poor working conditions. The Act was designed to rectify the labor market’s most egregious inequalities, mitigate the exploitation of workers, and stabilize the national economy.

Objectives

The primary objectives of the FLSA are to:

1. Provide a minimum standard of living for workers by ensuring a baseline wage.
2. Protect workers from unfair exploitation by regulating work hours and conditions.
3. Promote fair competition by establishing uniform labor standards.

Key Provisions

Minimum Wage

The FLSA establishes a federal minimum wage that all covered employers must pay to their employees. As of 2023, the federal minimum wage is $7.25 per hour, though many states and cities have set higher local minimum wages.

Overtime Pay

Under the FLSA, covered employees must receive overtime pay for hours worked over 40 in a workweek at a rate not less than time and one-half their regular rates of pay. There are exemptions for certain types of employees, which will be discussed later.

Recordkeeping

Employers are required to maintain accurate records of hours worked and wages paid to employees. This includes:

• Employee’s full name and Social Security number.
• Address, including zip code.
• Birth date, if under 19 years of age.
• Sex and occupation.
• Time and day of week when employee’s workweek begins.
• 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”).
• 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.
• Total wages paid each pay period.
• Date of payment and the pay period covered by the payment.

Child Labor

The FLSA contains child labor provisions that aim to protect the educational opportunities of minors and prohibit their employment in jobs and under conditions detrimental to their health or well-being. These rules vary depending on the age of the minor and the kind of work being performed.

Exemptions

Certain employees are exempt from the minimum wage and overtime pay provisions of the FLSA. Common exemptions include:

1. Executive, Administrative, Professional Employees: These are often referred to as “white-collar” exemptions. To qualify, employees must meet specific criteria related to their job duties and be paid on a salary basis at not less than $684 per week.

2. Outside Sales Employees: Those who make sales or obtain orders or contracts for services or for the use of facilities for which a consideration will be paid by the client or customer.

3. Computer Employees: Includes systems analysts, computer programmers, software engineers, or other similarly skilled workers in the computer field.

4. Highly Compensated Employees (HCE): Employees who perform one or more exempt duties or responsibilities of an executive, administrative, or professional employee and who earn total annual compensation of $107,432 or more.

Enforcement and Penalties

The Wage and Hour Division (WHD) of the U.S. Department of Labor is responsible for enforcing the FLSA. Employers found to be in violation of the FLSA may face:

• Civil Penalties: For child labor violations, employers may be fined up to $11,000 per minor involved. For willful or repeated violations of the minimum wage or overtime pay provisions, civil money penalties of up to $1,100 per violation may be assessed.
• Back Pay and Liquidated Damages: Employees who were unlawfully underpaid can be awarded back pay, and in certain cases, liquidated damages equal to the back pay amount.
• Injunctions and Restitution: Courts may issue injunctions to prevent future violations and require employers to pay employees their owed wages.

State Laws and the FLSA

The FLSA sets the federal standard; however, state laws can provide additional protections or higher standards. When both federal and state laws apply, the law more favorable to the employee prevails.

FLSA and Modern Workforce Challenges

Gig Economy

The rise of the gig economy, characterized by short-term contracts or freelance work as opposed to permanent jobs, has posed challenges for FLSA enforcement. Gig economy workers often fall into a gray area concerning their status as employees or independent contractors. The U.S. Department of Labor has issued guidance and rules to address these ambiguities, but controversies and legal battles persist.

Remote Work

The increase in remote working arrangements due to advancements in technology and the COVID-19 pandemic has also impacted the application of the FLSA. Recordkeeping, hours of work, and compliance with minimum wage and overtime provisions have become more complex in a remote work environment.

Automated and Algorithmic Management

The use of automated and algorithmic management in workplaces, which includes computer-driven schedules and performance monitoring, has raised questions about the fairness and transparency of work practices. The FLSA’s existing framework must adapt to ensure these technologies do not lead to exploitative labor practices.

Notable FLSA Cases

IBP, Inc. v. Alvarez (2005)

In this case, the Supreme Court held that the time employees spend walking between changing areas and their workstations must be compensated under the FLSA.

Encino Motorcars, LLC v. Navarro (2018)

The Supreme Court ruled that service advisors at car dealerships are exempt from overtime pay requirements under the FLSA.

Tyson Foods, Inc. v. Bouaphakeo (2016)

The Court upheld a judgment against Tyson Foods for failing to pay employees for time spent donning and doffing protective gear, stating that statistical evidence can be used to prove hours worked.

Resources

For additional information, you can visit the Department of Labor’s Wage and Hour Division website: WHD Website