The FLSA, or Fair Labor Standards Act, is the 1938 federal law that sets the minimum wage, overtime pay, recordkeeping, and child labor standards for most private and public employees. It requires overtime at 1.5 times the regular rate for non-exempt employees who work more than 40 hours in a workweek.
Key takeaways
- The federal minimum wage has been $7.25 an hour since July 2009; many states set higher rates.
- Exempt employees must meet a salary test, currently $684 a week, and a duties test.
- Overtime is calculated per workweek, not per pay period or per day under federal law.
- Employees can recover two years of back wages, or three if the violation was willful, plus an equal amount in damages.
How FLSA works
The FLSA is enforced by the Department of Labor's Wage and Hour Division (US Department of Labor, Fair Labor Standards Act). It covers employers with at least $500,000 in annual sales and, separately, any employee engaged in interstate commerce, which reaches most workers. Covered non-exempt employees must get at least the federal minimum wage and overtime at 1.5 times their regular rate for hours over 40 in a workweek.
Exemptions apply to executive, administrative, professional, computer, and outside sales employees who pass both a salary test and a duties test. After a federal court vacated the 2024 overtime rule in November 2024, the salary threshold returned to $684 a week, or $35,568 a year. Several states, including California, New York, and Washington, set much higher thresholds.
Employers must keep payroll records for three years and time records for two. The law also restricts the jobs and hours of workers under 18.
FLSA example
A dental office pays a front desk coordinator a $42,000 salary and treats her as exempt. Her duties are scheduling, answering phones, and processing payments, which don't meet the administrative exemption's requirement for discretion and independent judgment on significant matters. Even though her salary is above $684 a week, she's non-exempt and owed overtime for every week she worked more than 40 hours, going back two or three years.
Why FLSA matters for employers
Wage and hour violations are among the most common employment claims. The Wage and Hour Division recovered more than $259 million in back wages for nearly 177,000 workers in fiscal year 2025 (US Department of Labor, Wage and Hour Division FY2025 results). Misclassification, off-the-clock work, and regular rate errors drive most of it.
The fix starts with classification. Review every exempt role against the duties tests, not just the job title. Our exempt vs non-exempt guide walks through each exemption, and our overtime laws by state table shows where state rules are stricter.
Common FLSA mistakes to avoid
Classifying by title or salary alone
Exemption requires both the salary test and the duties test.
Allowing off-the-clock work
Pre-shift setup, after-hours email, and short breaks are often compensable time.
Averaging hours across weeks
Each workweek stands alone for overtime.
Ignoring stricter state law
When state and federal law differ, the employee gets the more protective rule.
FLSA: questions people also ask
What is the federal minimum wage?
Who is covered by the FLSA?
What is the salary threshold for exempt employees?
Does the FLSA require breaks?
Does the FLSA require daily overtime?
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HRTally glossary entries are written by people who have run US payroll, benefits, and HR operations, then checked line by line against primary sources such as the IRS, Department of Labor, EEOC, and Bureau of Labor Statistics. Dollar limits and rates are for 2026 unless stated. We review every entry at least twice a year and whenever a rule changes. This page explains general rules and isn't legal or tax advice; state law can differ. Read our editorial standards.
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<blockquote>The FLSA, or Fair Labor Standards Act, is the 1938 federal law that sets the minimum wage, overtime pay, recordkeeping, and child labor standards for most private and public employees. It requires overtime at 1.5 times the regular rate for non-exempt employees who work more than 40 hours in a workweek.</blockquote><p>Source: <a href="https://www.hrtally.com/hr-glossary/flsa/">HRTally HR Glossary, FLSA</a></p>
Written by the HRTally Research Team
Our guides are written and reviewed by people with hands-on US HR, payroll, and HR technology experience. Legal and tax facts are checked against primary sources, such as the Department of Labor, IRS, EEOC, and USCIS, and linked at the end of each guide. Vendors never review or pay for our editorial content.