The Fair Labor Standards Act is a federal law that seeks to protect employees by requiring that qualifying businesses maintain basic wage standards, provide a certain level of overtime compensation and keep reliable records on worker performance and pay. While smaller companies may not be subject to FLSA regulations, employers that are subject to the law may face criminal penalties, including steep fines and even imprisonment, if they do not comply.
When it comes to potentially violating federal law, prevention through preparation is essential for any business. Here is a quick overview of FLSA standards to help employers understand their rights and responsibilities.
What businesses does the FLSA cover?
Businesses that must adhere to FLSA law include any consolidated operation that engages directly or indirectly in interstate commerce, as well as organizations that:
- Act as part of a public agency
- Primarily perform health-related services in the form of a hospital or care facility for the elderly, mentally ill or physically disabled
- Engage in preschool, elementary, secondary or higher-level education
- Have a gross annual business income of $500,000 or more, excluding excise taxes
What type of recordkeeping does the FLSA require?
While successful businesses tend to keep careful records as a matter of course, it is important to remember that such documentation is also essential for maintaining federal compliance. The FSLA specifically expects employers to keep clear employee records subject to minimum wage expectations and/or overtime pay compensation, including:
- Total hours worked per workday, per workweek and total daily/weekly straight-time earnings
- The time and day when the workweek begins and total overtime pay for that period
- Total wages paid per period, along with any deductions or additions regarding wages
- Employee information, including name, occupation, sex, home address and date of birth
What are the basic wage standards under the FLSA?
Currently, employers must provide eligible workers who are not exempt from FLSA law with a minimum hourly wage of at least $7.25. After an employee has completed 40 hours in a workweek, employers must also offer overtime pay at a rate of at least one and one-half times the regular rate.
Maintaining a proactive business approach
It is in the best interest of business owners in any industry to do due diligence beforehand to ensure compliance with federal law. While the FLSA has strict requirements about overtime and minimum wage pay for specific types of employees, there are also many exceptions. Consulting with a legal expert before an individual worker, group of workers or the Department of Labor brings a suit may be a smart precaution to prevent unexpected liability.