Fair Labor Standards Act

Fair Labor Standards ActThe Fair Labor Standards Act (FLSA) guarantees a number of rights, primarily aimed at ensuring that workers get paid fairly for the time they work.  Employers must pay all covered employees not less than the minimum wage—currently set at $7.25 an hour. Some states have established a minimum wage that is higher than the federal one—and you are entitled to the higher rate if your state allows for one. Employers not covered by the FLSA, such as small farm owners, are required to pay all workers the state minimum wage rate. (For information on your state’s minimum wage law, you should look into your specific state’s wage and hour requirements.)

The FLSA does not require any specific payment system, so employers may base pay on time at work, piece rates, or some other measurement. In all cases, however, an employee’s pay divided by the hours worked during the pay period must equal or exceed the minimum wage.

Some employers either become confused by the nuances and exceptions in the wage and hour law or they bend the rules to suit their own pocketbooks. Whatever the situation, you would do well to double-check your employer’s math. A few simple rules distilled from the law may help.

  • Hourly. Hourly employees must be paid minimum wage for all hours worked. Your employer cannot take an average or pay you less than minimum wage for some hours worked and more for others.
  • Fixed rate or salary. Employees paid at a fixed rate can check their wages by dividing the amount they are paid in a pay period by the number of hours worked. The resulting average must be at least minimum wage.
  • Commissions and piece rates. Your total pay divided by the number of hours you worked must average at least the minimum hourly wage rate.

Form of Pay

Under the FLSA, the pay you receive must be in the form of cash or something that can be readily converted into cash or other legal forms of compensation, such as food and lodging. Your employer cannot, for example, pay you with a coupon or token that can be spent only at a store run by the employer. Employee discounts granted by employers do not count toward the minimum wage requirement.

Pay for Time Off

Neither the minimum wage section nor any other part of the FLSA requires employers to pay employees for time off, such as vacation, holidays, or sick days. Although most employers provide full-time workers some paid time off each year, the FLSA covers payment only for time spent at work.

However, some state laws mandate that employees get paid time off for jury duty or family medical leave. A few states and local governments require employees to be paid for sick days or certain types of family leave, either by the employer or from a state fund. And many state laws, including North Carolina, provide that if employers offer paid vacation days off, employees are entitled to be paid for the portion they have already earned when they quit or are fired.


When employees routinely receive a minimum amount in tips as part of their jobs—commonly, $20 to $30 per month as set out in state law—their employers are allowed to pay less than the minimum wage and credit the tips received against the minimum wage requirement. However, the employee’s hourly wage plus the tips the employee actually earns must add up to at least the minimum wage—or the employer has to make up the difference. However, in order for an employer to utilize the tip credit provision, it must comply with very strict requirements of the law. Otherwise, the employer will be required to pay the full minimum wage.

Pay for Overtime

The FLSA does not limit the number of hours an employee may work in a week, unless the employee is a minor. But it does require that any covered worker who works more than 40 hours in one week must be paid at least one and one-half times his or her regular rate of pay for every hour worked in excess of 40.

In addition to the FLSA overtime provisions, a number of state laws also define how and when overtime must be paid. Some states measure overtime on a daily, rather than weekly, basis. In these states, workers who put in more than eight hours a day are generally entitled to overtime, even if they work a total of 40 or fewer hours in a week.

Compensatory Time

Most workers are familiar with compensatory or comp time—the practice of employers offering employees time off from work in place of cash payments for overtime. What comes as a shock to many is that the practice is illegal in most situations. Under the FLSA, only state or government agencies may legally allow their employees time off in place of wages. (29 U.S.C. § 207(o).)

Even then, comp time may be awarded only:

  • according to the terms of a collective bargaining unit agreement, or
  • if the employer and employee agree to the arrangement before work begins.

For more information relating to any of the above issues, feel free to contact our office to schedule an appointment.