Wage and Hour Laws

Wage and hour laws establish minimum standards for employee compensation and working time. The primary federal law is the Fair Labor Standards Act (FLSA), supplemented by state laws that often provide greater protections.

Minimum Wage

The federal minimum wage is set by the FLSA. Many states and cities have enacted higher minimums. When federal and state rates differ, the higher rate applies.

Key rules:

Tipped employees may be paid a lower base wage if tips bring total compensation to the minimum wage

Youth minimum wage — employers may pay workers under 20 a lower rate for the first 90 days

Some states index their minimum wage to inflation, adjusting annually

Overtime

The FLSA requires employers to pay non-exempt employees at least 1.5 times their regular rate for all hours worked over 40 in a workweek. There is no federal requirement for daily overtime, though some states (like California) mandate it.

Exempt vs. Non-Exempt

Exempt employees are not entitled to overtime. To qualify for exemption, an employee must:

Be paid on a salary basis above a minimum threshold

Perform duties meeting one of the FLSA's white-collar exemptions: executive, administrative, professional, computer employee, or outside sales

Misclassifying employees as exempt is a common source of wage-and-hour litigation.

Recordkeeping

Employers must maintain accurate records of:

Hours worked each day and week

Regular rate of pay

Total wages paid each pay period

Deductions from pay

Common Wage Violations

Failing to pay overtime to non-exempt employees

Making illegal deductions from pay (e.g., for uniforms or breakage)

Requiring off-the-clock work (working through breaks, pre-shift or post-shift tasks)

Tip theft or illegal tip pooling arrangements

Misclassifying employees as independent contractors or exempt

Enforcement

Employees can file complaints with the Department of Labor's Wage and Hour Division or bring private lawsuits under the FLSA. Successful plaintiffs may recover unpaid wages, liquidated damages (double damages), and attorney's fees.

Wage and Hour Laws