It would almost seem that the list of rules and regulations businesses need to comply with is nearly endless. Of course, many, if not all, of these regulations serve their purpose and are there for a reason, but still, it can become easy for things to slip through the cracks. However, when it comes to government regulations surrounding workplace safety, wages, and child labor laws, you don’t want things to slip through the cracks. When it comes to managing all of this compliance with all of your other day-to-day responsibilities, though, it can become very overwhelming.
Here at Payday HCM, we are very familiar with the struggle of maintaining compliance. We have seen numerous potential clients approach us with this exact issue, and we’ve helped guide many current clients on their compliance journey. Without knowing where to start—and what rules or regulations you may not be compliant with—it can be a troubling task. A great place to start, then, is the Fair Labor Standards Act.
In this article, we’ll go over what the FLSA is and what you need to know about it. We’ll go over the history of the FLSA, the regulations that it sets, and what you need to do to ensure compliance. We’ll also review potential penalties for not being compliant with the FLSA. By the end of this article, you’ll have all the knowledge you need to get your business started on its compliance journey.
In this article, you will learn:
- What Is The Fair Labor Standards Act?
- Who Is Covered Under The FLSA?
- How To Ensure Compliance With The FLSA
What Is the Fair Labor Standards Act?
Before we get into the details of the FLSA, we’ll first start out by outlining the history of the FLSA and its general purpose.
The History Of The FLSA
At the time of the Great Depression, working conditions were a hot topic. A few different laws and regulations attempting to establish a minimum wage or improved conditions bounced through Congress and the Supreme Court to no avail.
It wouldn’t be until 1938 when congress and former President Franklin D. Roosevelt would pass the Fair Labor Standards Act of 1938. The FLSA established a few key things: a minimum wage of $0.25 (which would increase to $0.40 by 1945), an overtime payment system where employers would pay employees one and a half times their base rate of pay when working more than 44 hours, and stricter laws surrounding child labor.
The Evolution Of The FLSA
The FLSA has remained largely the same since its enactment in 1938. Under the FLSA, the federal minimum wage is $7.25, with tipped employees having a minimum wage of $2.13. Of course, most states have established a minimum wage higher than that outlined in the FLSA.
The FLSA retains the same overtime rules, with employers required to pay time-and-a-half to employees who work more than 40 hours instead of the original 44. The FLSA also prohibits oppressive child labor and establishes a minimum working age of 16 for jobs in non-hazardous environments and 18 for potentially hazardous environments.
Who Is Covered Under the FLSA?
Now that we understand more about what the FLSA actually is and how it came to be, we can get more into the details of who the FLSA applies to.
Coverage Under The FLSA
The FLSA applies to most workers in the private and public sectors. Two main criteria typically determine coverage:
- Enterprise Coverage: Businesses with at least two employees and annual gross sales or revenue of $500,000 or more are generally covered. Hospitals, schools, and government agencies are also included regardless of revenue.
- Individual Coverage: Employees engaged in interstate commerce, production of goods for commerce, or working in specific roles such as domestic service are also protected by the FLSA.
Exempt vs. Non-Exempt Employees
A key distinction under the FLSA is between exempt and non-exempt employees.
- Non-Exempt Employees: These workers are entitled to minimum wage and overtime pay protections.
- Exempt Employees: Certain categories, such as executive, administrative, professional, and outside sales employees, may be exempt from these protections if they meet specific salary and job duty requirements.
How To Ensure Compliance With The FLSA
Of course, understanding the FLSA and what it requires is one thing, but actually ensuring your business is compliant with the FLSA is another.
Tips For Ensuring FLSA Compliance
For employers, staying compliant with the FLSA involves several steps. For starters, you’ll want to determine whether employees are exempt or non-exempt to apply the correct wage and hour rules. On top of this, you’ll want to accurately track working hours and implement systems to monitor and record employee work hours diligently.
As stated above, some states have stricter wage and hour laws than the federal government. Employers must comply with the law that provides greater protection to employees. You’ll also want to train your HR and leadership on the ins and outs of the FLSA to help avoid violations.
Consequences of FLSA Violations
Non-compliance with the FLSA can result in a variety of consequences, including back pay, penalties, and reputational damage. Under the FLSA, the Wage and Hour Division of the U.S. Department of Labor is authorized to carry out investigations into whether employers are in violation of the FLSA.
For any violations under the FLSA, there is the possibility of civil penalties that businesses must pay. These penalties vary depending on the violation and can range anywhere from $1,240 to $142,062.
Maintaining The Standard Of Fair Labor
Compliance issues can be tough. Whether be a state regulation or federal law, it can be tricky to keep track of all the various rules and regulations your business needs to remain compliant with. When it comes to the Fair Labor Standards Act, these issues can result in costly penalties and a drop in your reputation. With the information provided in this article, though, you’ll have all the knowledge you need to ensure your business stays on top of all the things it needs to be compliant with.
Of course, the FLSA isn’t the only federal set of regulations you’ll need to ensure your business is compliant with. Learn more about the Affordable Care Act and ensure your business complies with the ACA.
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