Fair Labor Standards Act (FLSA)
The federal law establishing minimum wage, overtime pay, recordkeeping, and youth employment standards for workers in the United States.
What Is the Fair Labor Standards Act?
The Fair Labor Standards Act (FLSA) is the foundational federal law governing wages and hours in the United States. Enacted in 1938 and enforced by the U.S. Department of Labor's Wage and Hour Division, the FLSA establishes minimum wage, overtime pay requirements, recordkeeping obligations, and child labor standards for covered employers and employees.
For California employers, the FLSA creates a baseline of federal requirements that apply alongside California's more stringent state laws. While California law generally provides greater worker protections, understanding the FLSA remains important because it applies to all covered employers, establishes certain rights that California law does not address, and governs multi-state operations.
FLSA Coverage
Enterprise Coverage
The FLSA applies to enterprises that:
| Criterion | Requirement | Notes |
|---|---|---|
| Annual gross sales | $500,000 or more | Includes all business activities |
| Interstate commerce | Engaged in commerce or production of goods for commerce | Broadly interpreted |
| Type of business | Hospitals, schools, government agencies (regardless of size) | Automatic coverage |
Individual Coverage
Even without enterprise coverage, individual employees may be covered if their work involves:
- Interstate commerce (handling goods that cross state lines)
- Communications across state lines
- Travel between states for work
- Production of goods for interstate commerce
Practical Impact: Most California employers are covered by the FLSA because nearly any business today has some connection to interstate commerce.
FLSA Minimum Wage
Federal Minimum Wage
| Effective Date | Federal Minimum Wage | California Minimum Wage |
|---|---|---|
| July 24, 2009 | $7.25/hour | Higher (state rate applies) |
| Current | $7.25/hour | $16.00/hour (as of 2024) |
Key Point: Because California's minimum wage significantly exceeds the federal minimum, California employers must pay the higher state rate. However, the FLSA minimum remains relevant for:
- Understanding federal compliance requirements
- Multi-state employers comparing obligations
- Federal contractor requirements
Tipped Employees
The FLSA allows a "tip credit" against minimum wage for tipped employees:
| FLSA Provision | Federal Rule | California Rule |
|---|---|---|
| Cash wage minimum | $2.13/hour | Full minimum wage |
| Tip credit | Up to $5.12/hour | Not permitted |
| Total with tips | Must equal $7.25/hour | N/A |
California Difference: California does not permit tip credits, so tipped employees must receive the full state minimum wage before tips.
FLSA Overtime Requirements
Standard Overtime Rule
| FLSA Requirement | Details |
|---|---|
| Threshold | Over 40 hours in a workweek |
| Rate | 1.5 times regular rate of pay |
| Calculation | Based on total compensation, not just hourly rate |
Comparison with California Overtime
| Overtime Trigger | FLSA | California |
|---|---|---|
| Daily overtime | Not required | After 8 hours |
| Weekly overtime | After 40 hours | After 40 hours |
| Double time | Not required | After 12 hours daily, 7th consecutive day |
| 7th day premium | Not required | 1.5x first 8 hours, 2x after 8 hours |
California Difference: California's overtime rules are more generous, requiring daily overtime and double time that the FLSA does not mandate. California employers must follow state law.
Regular Rate of Pay
Under the FLSA, the "regular rate" for overtime calculations includes:
| Included | Excluded |
|---|---|
| Hourly wages | Gifts/discretionary bonuses |
| Non-discretionary bonuses | Expense reimbursements |
| Commissions | Premium pay for overtime |
| Piece-rate earnings | Pay for time not worked (vacation) |
| Shift differentials | Contributions to benefit plans |
Calculation Example: An employee works 45 hours and earns:
- Regular wages: 40 hours × $20 = $800
- Non-discretionary bonus: $100
Regular rate = ($800 + $100) ÷ 40 hours = $22.50/hour Overtime pay = 5 hours × $22.50 × 1.5 = $168.75 Total pay = $800 + $100 + $168.75 = $1,068.75
FLSA Exemptions
White-Collar Exemptions
The FLSA exempts certain employees from minimum wage and overtime requirements:
| Exemption | Salary Requirement | Duties Test |
|---|---|---|
| Executive | $684/week ($35,568/year) | Primary duty is management; supervises 2+ employees; hiring/firing authority |
| Administrative | $684/week | Office/non-manual work; exercises discretion on significant matters |
| Professional | $684/week | Advanced knowledge, intellectual work, consistent exercise of discretion |
| Computer Employee | $684/week or $27.63/hour | Systems analyst, programmer, software engineer duties |
| Outside Sales | No salary requirement | Primary duty is making sales away from employer's place of business |
| Highly Compensated | $107,432/year | Performs at least one exempt duty |
California Exemption Differences
California's exemption requirements are generally stricter:
| Requirement | FLSA | California |
|---|---|---|
| Salary threshold | $684/week | 2× minimum wage ($66,560/year in 2024) |
| Salary basis | Weekly | Monthly |
| Duties test | Primary duty | More than 50% of time on exempt work |
| Computer professional | $27.63/hour minimum | Higher rate required |
Important: To be exempt in California, employees must meet BOTH federal and state requirements. The stricter California standards typically control.
Other FLSA Exemptions
| Exemption | Description | California Treatment |
|---|---|---|
| Motor carrier | Drivers subject to DOT regulations | Limited applicability in CA |
| Agricultural | Certain farm workers | Different rules in CA |
| Seasonal amusement | Seasonal recreation establishments | Limited CA exception |
| Domestic service | Live-in domestic workers | CA provides more protections |
FLSA Recordkeeping Requirements
Required Records
Employers must maintain records for each non-exempt employee:
| Record | Detail Required | Retention Period |
|---|---|---|
| Employee information | Name, address, DOB if under 19, sex, occupation | 3 years |
| Hours worked | Daily and weekly hours | 2 years |
| Wages paid | Regular rate, total wages, deductions | 3 years |
| Pay period | Start/end dates, payment date | 3 years |
California Additional Requirements
California requires additional records beyond FLSA:
- Meal period records (start and end times)
- Itemized wage statements with specific information
- Written notice at time of hire
- Paid sick leave accrual and use
FLSA Enforcement
U.S. Department of Labor
The DOL's Wage and Hour Division enforces the FLSA:
Enforcement Actions:
| Action Type | Description | Result |
|---|---|---|
| Investigation | Review of payroll and practices | Findings and back wages assessment |
| Litigation | DOL files lawsuit | Injunctions, back wages, penalties |
| Criminal prosecution | Willful violations | Fines, imprisonment |
Investigation Triggers:
- Employee complaints
- Industry-targeted initiatives
- Random audits
- Referrals from other agencies
Private Lawsuits
Employees can also enforce FLSA rights through private litigation:
| Claim Type | Statute of Limitations | Damages Available |
|---|---|---|
| Regular violation | 2 years | Back wages + equal liquidated damages |
| Willful violation | 3 years | Back wages + equal liquidated damages |
| All claims | Reasonable attorney fees |
Collective Actions
Unlike California class actions, FLSA claims proceed as "collective actions":
| Feature | FLSA Collective Action | California Class Action |
|---|---|---|
| Joinder | Opt-in required | Opt-out permitted |
| Certification | Conditional/final certification | Class certification |
| Scope | Federal claims only | State claims |
| Venue | Federal court | State or federal court |
Practical Impact: Employees must affirmatively join FLSA collective actions, which typically results in smaller groups than California class actions.
FLSA vs. California Law Comparison
When FLSA Matters Most
Even with California's more protective laws, the FLSA is particularly relevant for:
| Situation | FLSA Relevance |
|---|---|
| Multi-state employers | FLSA provides consistent baseline |
| Federal contractors | Additional FLSA-related requirements |
| Collective action litigation | Different procedures and timeline |
| Exemption analysis | Must meet both federal and state tests |
| Retaliation claims | Federal protections may supplement state |
| Certain industries | Motor carrier, agricultural exemptions |
Areas Where California Exceeds FLSA
| Topic | FLSA | California Law |
|---|---|---|
| Minimum wage | $7.25/hour | $16.00/hour (higher in some cities) |
| Daily overtime | None | After 8 hours |
| Double time | None | After 12 hours; 7th day after 8 hours |
| Meal breaks | None required | 30 minutes before 5th hour |
| Rest breaks | None required | 10 minutes per 4 hours |
| Wage statements | Basic requirements | Detailed itemized statements |
| Final pay | Next regular payday | Same day (termination) or 72 hours (quit) |
| Sick leave | None | Minimum 40 hours per year |
FLSA Compliance for California Employers
Best Practices
Classification:
- Analyze exemptions under both FLSA and California law
- Apply the more restrictive (California) standards
- Document classification decisions
- Review classifications periodically
Timekeeping:
- Track all hours worked accurately
- Include pre-shift and post-shift time
- Record meal and rest breaks
- Retain records for required periods
Pay Practices:
- Pay at least California minimum wage
- Calculate overtime using California rules
- Include all compensation in regular rate
- Provide compliant wage statements
Common FLSA Violations
| Violation | Description | How to Avoid |
|---|---|---|
| Off-the-clock work | Not paying for all hours worked | Strict timekeeping policies |
| Misclassification | Improperly treating workers as exempt | Careful duties analysis |
| Regular rate errors | Not including all compensation in OT calculation | Review bonus/commission inclusion |
| Comp time | Giving time off instead of overtime pay | Pay overtime premium |
| Deductions | Improper deductions reducing pay below minimum | Review deduction policies |
Multi-State Considerations
For employers operating in multiple states:
| Consideration | Approach |
|---|---|
| Minimum wage | Pay higher of federal, state, or local rate |
| Overtime | Apply state rules where more generous |
| Exemptions | Meet both federal and state requirements |
| Recordkeeping | Comply with strictest requirements |
| Wage statements | Meet each state's specific requirements |
FLSA Resources
Department of Labor Resources
| Resource | Description | Access |
|---|---|---|
| Wage and Hour Division | Enforcement agency | dol.gov/agencies/whd |
| Compliance Assistance | Guidance materials | dol.gov/agencies/whd/compliance-assistance |
| Opinion Letters | Written guidance on specific questions | dol.gov/agencies/whd/opinion-letters |
| Fact Sheets | Topic-specific guidance | dol.gov/agencies/whd/fact-sheets |
| Posters | Required workplace postings | dol.gov/agencies/whd/posters |
Required FLSA Poster
All covered employers must display the federal minimum wage poster:
- Available free from DOL
- Must be posted in conspicuous location
- Multiple posters may be needed for multiple worksites
- Electronic posting permitted for remote workers
Recent FLSA Developments
Salary Threshold Changes
The DOL periodically updates the salary threshold for white-collar exemptions:
| Year | Weekly Threshold | Annual Threshold |
|---|---|---|
| Pre-2020 | $455 | $23,660 |
| 2020-present | $684 | $35,568 |
| Proposed updates | Higher thresholds under consideration | Check DOL for current rules |
Worker Classification
Increased federal attention on worker classification:
- Independent contractor rules have been updated
- Economic reality test applied
- Multi-factor analysis required
- Greater coordination with state agencies
Enforcement Priorities
Current DOL enforcement focus areas include:
- Low-wage industries
- Worker misclassification
- Retaliation against complaining workers
- Prevailing wage compliance
- Joint employer relationships
Practical Application for California Employers
Compliance Checklist
| Area | Federal (FLSA) | California | Your Practice |
|---|---|---|---|
| Minimum wage | $7.25/hour | $16.00+ | Pay CA rate |
| Weekly overtime | After 40 hours | After 40 hours | Same |
| Daily overtime | None | After 8 hours | Follow CA |
| Double time | None | After 12/7th day | Follow CA |
| Meal breaks | None | Required | Follow CA |
| Rest breaks | None | Required | Follow CA |
| Exempt salary | $684/week | $1,280/week | Meet CA threshold |
| Records retention | 2-3 years | 3-4 years | Keep longer period |
When to Seek Guidance
Consider consulting with an employment attorney when:
- Classifying employees as exempt
- Designing compensation plans with bonuses or commissions
- Implementing alternative workweek schedules
- Addressing multi-state compliance
- Responding to DOL investigations
- Facing wage and hour litigation
Understanding both the FLSA and California law ensures California employers maintain complete compliance. While California law typically provides the operative standard due to its more protective provisions, the FLSA remains the foundation of federal wage and hour requirements that all covered employers must understand.
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