A lot of folks in the US started their careers earning minimum wage, and many still do. In 2019, about 1.6 million people, or 1.9% of all hourly workers, were paid at or below the federal minimum wage of $7.25. But this number doesn’t tell the whole story, because many states and cities have higher minimum wages.
Living on minimum wage is tough, especially if you have kids or other people depending on you. In fact, for most people, the minimum wage isn’t enough to live on, even if you’re working full-time. That’s why many economists think the federal minimum wage should be higher.
The reason we have a minimum wage at all is thanks to the Fair Labor Standards Act of 1938 (FLSA). This law, which was a big deal when it was passed, sets the minimum wage, overtime pay, recordkeeping, and youth employment laws for employees in the private sector and in federal, state, and local governments.
If you work or run a business in the US, you’re probably affected by the FLSA in some way. The law has changed over time, including a big (and controversial) change to overtime rules in 2016. It’s a good idea to know at least a little bit about the FLSA, because it probably affects your economic activities, whether you realize it or not.
The FLSA was first proposed in 1932, during the Great Depression, by Senator Hugo Black. His original proposal, which included a 30-hour workweek, didn’t go anywhere. But as the Depression continued, there was more political support for a law to protect workers. In 1938, Congress passed the FLSA, and President Franklin D. Roosevelt, who signed it into law, called it a cornerstone of his New Deal reforms.
At first, the FLSA only affected fewer than 1 million workers. It standardized the 40-hour workweek and eight-hour workday, set up time-and-a-half overtime for certain workers who work more than 40 hours per week, established a federal minimum wage, and put new restrictions on child labor.
The FLSA has been amended several times since it was first passed. These amendments have strengthened or clarified the law, raised the minimum wage, set new rules for young workers, and extended the law’s protections to new groups of employees.
In 1961, an amendment changed the way businesses were defined under the law, which greatly increased the number of organizations covered by the FLSA. The Equal Pay Act of 1963 made it illegal for employers to pay employees differently based on their gender, and the Age Discrimination in Employment Act of 1967 protected workers aged 40 and over.
The federal minimum wage was raised several times in the 1970s to keep up with inflation. In 1983, the Migrant and Seasonal Worker Protection Act extended some FLSA protections to agricultural workers. In 1985, an amendment allowed state and local government employers to give employees paid time off instead of overtime pay. In 1986, another amendment created a system that allowed employers to pay less than minimum wage to certain groups of employees, like teenagers and people with cognitive impairments.
The most recent major change to the FLSA came in 2019, when the Department of Labor announced big changes to overtime pay regulations. These changes, which took effect in 2020, raised the pay thresholds for employees to be considered exempt from overtime pay, which meant 1.3 million more workers were eligible for overtime pay.
The FLSA covers most businesses in the US, but not all. To be covered by the FLSA, a business must have annual gross sales or business volume of $500,000 or more, not including retail excise taxes, or be engaged in certain types of activities, like operating a hospital or a school, or be a public agency.
The FLSA is a long and complex law, but its main parts cover hours worked, minimum wage, overtime pay, child labor, and recordkeeping. The law also has some other important provisions, like requiring employers to accommodate nursing mothers who need to express milk during their shifts.
The FLSA doesn’t cover everything, though. It doesn’t regulate or require things like paid time off for vacations or holidays, paid sick leave, severance pay, premium pay for work performed outside the normal workday, employee benefits, or the total number of hours worked in a workweek.
The FLSA only protects workers who are considered "employees." Independent contractors, like freelancers and consultants, aren’t covered by the FLSA, but they have other legal protections.
The FLSA also divides employees into two categories: exempt and nonexempt. Exempt employees are any employees who are exempt from the FLSA’s minimum wage and overtime pay requirements for any reason. Nonexempt employees are covered by these requirements.
The FLSA has many other exemptions and carve-outs, too. For example, farm employers aren’t required to give overtime pay, and they can pay less than minimum wage if they used no more than "500 man-days of labor in any calendar quarter of the previous year." Tipped employees, like waiters and bartenders, can be paid as little as $2.13 per hour in "direct wages," as long as their tips bring their total earnings up to the federal minimum wage.
The FLSA is enforced by the Department of Labor’s Wage and Hour Division. If you think your employer is violating the FLSA, you can file a complaint with the Wage and Hour Division. Your employer can’t fire you for filing a complaint, and your identity won’t be revealed to your employer while the complaint is being investigated.
