Fair Labor Standards Act
- sortizmontoya
- Dec 22, 2025
- 5 min read
I believe these are the most important laws every HR professional should know. Understanding these laws not only protects workers but also empowers HR professionals to confidently support their teams.
Many young people I know don't know what protections they have, and rather than having their employers clarify them, they often hear, "Don't worry about it," or "I don't know." Laws like the Fair Labor Standards Act (FLSA) exist to protect employees’ wages, hours, and working conditions, and understanding them also helps organizations avoid costly lawsuits, penalties, and compliance issues.
This post focuses specifically on the FLSA, including minimum wage, overtime, tip rules, and child labor protections. Future posts will cover other key employment laws every HR professional should know.
My goal is to break these topics down in a clear, approachable way so you can lead with knowledge, care, and transparency.
1- Fair Labor Standards Act (FLSA)
Enacted in 1938, signed by President Roosevelt. It was created to fight poverty, exploitation, and economic instability during the Great Depression.
Today, the FLSA establishes core federal protections related to:
Minimum wage
Overtime pay
Child labor
Recordkeeping requirements
Minimum Wage
The federal minimum wage is $7.25/hr and has remained unchanged since July 24, 2009. Other states also have their own minimum wage laws; they cannot be less than the federal minimum wage.
Tipped Employees & the Tip Credit
Under the FLSA, a tipped employee is someone who regularly gets more than $30 per month in tips. For these workers, the law allows employers to take a tip credit.
Meaning:
Employers may pay a cash wage as low as $2.13 per hour.
Tips are expected to make up the difference to reach at least $7.25 per hour.
If an employee's tips + $2.13/hour doesn't = the minimum wage, the employer MUST pay the difference.
The tip credit was added to the FLSA through amendments in 1966.
Many states require higher cash wages for tipped employees or eliminate the tip credit, but federal law sets the minimum floor.
Tip Protection Rules:
Employers cannot:
Keep any portion of the employee's tips.
Allow managers or supervisors to participate in tip pools.
Important rules to know:
Employers who pay the full minimum wage and take no tip credit may allow non-tipped employees (like cooks or dishwashers) to participate in tip pools.
Tips collected in a tip pool must be redistributed within the same pay period.
Employers must keep accurate payroll and tip records.
Why does the Tip Credit Exist?
The tip credit was largely designed to lower labor costs for employers under the assumption that customers already provide tips. It was believed this system would make service better by tying pay to performance.
However, tipping culture in the U.S. has a troubling history. After the Civil War, many hospitality and railroad employers hired formerly enslaved Black workers and paid them little or nothing, expecting customers' tips to replace wages. This legacy continues to influence wage structures today.
Overtime Pay
Under the FLSA, non-exempt employees must receive overtime pay for hours worked over 40 in a workweek at a rate of 1.5 times their regular rate of pay.
Overtime is not required simply because work occurs on:
Weekends
Holidays
Regular days of rest
Overtime is strictly tied to hours worked over 40 in a workweek, unless state law provides additional protections.
Exempt vs. Non-Exempt Employees
A common misconception is that being salaried automatically makes someone exempt from overtime; this is not true.
To be classified as exempt, an employee must:
Be paid on a salary basis.
Earn at least the minimum salary threshold.
Meet a duties test based on their actual job responsibilities.
Non-exempt Employees
Eligible for overtime.
Often hourly (but can be salaried).
Examples include: retail associates, front desk staff, baristas, servers, lab technicians, and many entry-level office roles.
Exempt Employees
NOT eligible for overtime.
Typically salaried.
Common categories include executive, administrative, and professional roles.
Examples include: HR Generalists, accountants, engineers, teachers, and marketing managers.
Exempt = No over time ; Non-Exempt = Overtime
What does "Time and a Half" Mean?
Time and a half means 1.5 times your regular hourly rate.
Example:
Regular Pay: $15/hour
Overtime rate: $15 x 1.5 = $22.50/hour (This is the rate you get for working beyond your standard hours)
So, if you worked 45 hours in one week (remember, standard working hours are 40 hours per week):
First 40 regular hours: 40x $15 = $600
5 overtime hours: 5 x $22.50 = $112.50
Your total pay: $712.50
Child Labor Laws
The FLSA also includes child labor protections to make sure young workers are not placed in unsafe jobs or scheduled in ways that interfere with their education or well-being. These rules apply until a worker turns 18.
Child labor laws regulate:
Minimum age to work.
Permitted job types.
Maximum hours.
Allowed work times.
Under Age 14
Generally prohibited from most jobs.
Allowed exceptions:
Babysitting.
Delivering newspapers.
Working for a non-hazardous, family-owned business.
Ages 14-15
May work limited hours and only in non-hazardous jobs.
During school weeks:
Max 3 hours on a school day.
Max 18 hours in a school week.
Between 7 a.m. and 7 p.m.
(Until 9 p.m. from June 1–Labor Day)
Prohibited from:
Operating heavy machinery.
Working near open flames.
Construction or warehouse jobs.
Ages 16-17
No federal limits on hours. They may work late shifts or on school nights.
Still prohibited from hazardous jobs, including:
Roofing.
Forklifts.
Meat slicers.
Heavy machinery.
Mining, demolition, and logging.
Age 18+
Child labor laws no longer apply to you. Adult labor laws govern wages and your hours.
*Disclaimer: State laws might provide extra protections, so be sure to inquire or research that information.
Why should HR care?
Why should we care?
First, because it's the law, compliance with wage, hour, and child labor regulations protects organizations from costly fines, back pay lawsuits, and reputational damage. When HR understands and enforces these standards, we reduce the risk before it becomes a legal problem.
Second, it builds trust and credibility with employees. When workers see that HR understands wage laws and takes them seriously, it tells them that their pay, time, and protections matter. Clear guidance and accessible resources enable employees to recognize issues and raise concerns without fear.
By setting a clear expectation that violations of laws like FLSA are not tolerated, HR creates a culture of accountability and transparency. Employees know where to go, what their rights are, and that concerns will be handled properly, not brushed aside. That trust is what turns HR from a compliance function into a true employee advocate.
Sources and further reading:
Wages and the Fair Labor Standards Act
Tip Regulations under the Fair Labor Standards Act (FLSA)
Fact Sheet #15: Tipped Employees Under the Fair Labor Standards Act (FLSA)
Economic Policy Institute - Twenty-Three Years and Still Waiting for Change
Economic Policy Institute - Tipping
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