What is the FLSA? If you've seen those letters on a paycheck stub, a job posting, or a labor law poster in your break room and wondered what they actually mean, here's the short version: the Fair Labor Standards Act (FLSA) is the federal law that sets the minimum wage, decides who gets paid overtime, and limits how young workers can be employed. Signed in 1938, it's the reason there's a wage floor at all in the United States.
The Fair Labor Standards Act of 1938 was the first federal law in US history to establish a minimum wage, overtime pay, and child labor restrictions, all in a single statute.
What Is the FLSA and What Does It Actually Cover?
The FLSA covers four main things: the federal minimum wage, overtime pay for hours worked beyond 40 in a week, recordkeeping requirements for employers, and youth employment standards (rules about how old you have to be to do certain jobs, and how many hours minors can work). It's enforced by the US Department of Labor's Wage and Hour Division.
Who is covered by the FLSA?
Most workers are covered, but the law splits coverage into two categories. "Enterprise coverage" applies to businesses with at least $500,000 in annual revenue, plus virtually all hospitals, schools, and government agencies regardless of revenue. "Individual coverage" applies to employees personally engaged in interstate commerce, even if their employer is small. In practice, this means the overwhelming majority of US employees are covered by one route or the other. Some small, purely local businesses fall outside both categories, but they're typically still bound by their state's own minimum wage law.
Exempt vs. non-exempt: the part that confuses most people
The FLSA splits workers into two groups for overtime purposes. "Non-exempt" employees must be paid 1.5 times their regular hourly rate for every hour worked beyond 40 in a week. "Exempt" employees aren't entitled to that overtime pay at all. Whether someone is exempt depends on two things, not one: they have to earn at least a minimum salary set by the FLSA, and their actual job duties have to fit one of a handful of recognized categories (executive, administrative, professional, outside sales, or certain computer roles). Paying someone a salary above the threshold does not automatically make them exempt. If their day-to-day duties don't match one of those categories, they're still owed overtime no matter what their offer letter calls them.
Does the FLSA set the minimum wage everywhere?
It sets the floor, not the ceiling. The federal minimum wage under the FLSA has been $7.25 per hour since July 24, 2009, the longest stretch without a federal increase in the law's history. States and cities are free to set a higher minimum wage, and most now do. When federal, state, and city rates disagree, employers have to pay whichever one is highest for that specific work location.
Tipped employees and the FLSA
The FLSA allows employers to pay tipped employees a lower direct cash wage, as low as $2.13 per hour federally, as long as tips make up the difference to reach the full minimum wage. This is called a "tip credit." If an employee's direct wages plus tips fall short in any given workweek, the employer is legally required to make up the gap. Several states don't allow a tip credit at all and require the full minimum wage in cash regardless of tips.
Has the FLSA been updated recently?
The FLSA itself is a 1938 law, but it gets amended and its dollar thresholds get updated over time, most recently the series of increases between 2007 and 2009 that brought the federal minimum wage to its current $7.25/hr. The salary threshold for the "white-collar" overtime exemption is set through separate Department of Labor rulemaking rather than the statute's original text, which is why that number changes independently of the minimum wage itself.
Frequently Asked Questions
What does FLSA stand for?
The Fair Labor Standards Act, the 1938 federal law establishing the minimum wage, overtime pay, and child labor protections in the United States.
Does the FLSA apply to every employer?
Most, but not all. Coverage depends on either the employer's revenue and type (enterprise coverage) or the individual employee's involvement in interstate commerce (individual coverage). See our federal minimum wage guide for more detail.
How is the FLSA enforced?
By the US Department of Labor's Wage and Hour Division, which investigates complaints and can require employers to pay back wages for violations.
Does the FLSA set a higher minimum wage than $7.25/hr?
No. The FLSA sets the federal floor at $7.25/hr; states and cities are free to set their own higher minimum wage, and most now do. See your state's current minimum wage.
For the current federal rate, the exempt salary threshold, and a full state-by-state breakdown, see our federal minimum wage guide and exempt salary threshold checker. For the official text and current enforcement guidance, the US Department of Labor's FLSA page is the authoritative source.