The FLSA has been on the books since 1938, yet it still generates more wage and hour litigation than any other federal employment statute. The Wage and Hour Division collected over $270 million in back wages and damages in the most recent fiscal year on record, and the underlying disputes almost always come down to two things: how employees are classified, and how hours are tracked. For HR teams, the law's basics look straightforward, but the edges get messy fast once you add multi-state operations, tipped employees, or hybrid work. Knowing where the common traps sit saves significant liability.
What the FLSA Actually Covers Four rules sit at the core. Minimum wage: the federal floor is $7.25 per hour, though most states set a higher rate. Overtime: non-exempt employees earn 1.5 times their regular rate for hours worked over 40 in a workweek. Child labor: restrictions on hours and types of work for minors under 18. Recordkeeping: employers must track time, wages, and related data for non-exempt workers.
Not every worker is covered. Bona fide independent contractors sit outside the FLSA. So do certain categories of exempt employees who meet specific salary and duties tests.
The Classification Problem That Drives Most Claims Misclassifying a non-exempt worker as exempt is the single most common FLSA violation. When a lawsuit lands, the employer owes unpaid overtime going back two to three years, plus an equal amount in liquidated damages, plus attorney's fees. One misclassified role across a team of 20 becomes a seven-figure problem fast.
What's the Current FLSA Salary Threshold for Exemption? Federal courts blocked the 2024 rule that would have raised the threshold to $58,656, so the effective threshold reverts to $35,568 annually. California, New York, Washington, and Colorado set higher state-law thresholds. Check the DOL's current FLSA guidance for updates.
How the FLSA Gets Enforced The Wage and Hour Division investigates complaints, runs directed audits in high-risk industries, and can subpoena payroll records. Employees can also sue directly in federal court, often as collective actions covering similarly situated workers. The statute of limitations is two years, or three years for willful violations.
Remedies include back wages, liquidated damages equal to the back wages, civil penalties, and in severe cases criminal prosecution. Willful violations also carry reputational exposure the company can't settle away.
Staying Ahead of Fair Labor Standards Act Compliance Risk Audit every exempt employee role annually against the salary and duties tests. Run the same audit on every independent contractor using the economic reality test. Track overtime and minimum wage compliance across every state where you have workers, because state floors often exceed the federal minimum. Keep payroll records for at least three years, and time records for at least two. Review changes in DOL enforcement priorities at the Wage and Hour Division site each year, and update your employee handbook whenever the federal or state standards shift.
.svg)
.svg)
