FPC

Enterprise coverage applies to businesses with at least two employees engaged in interstate commerce and annual gross sales or business of at least $500,000; hospitals, residential care facilities, schools, and public agencies are covered regardless of sales. Individual coverage protects employees of noncovered businesses whose own work regularly involves interstate commerce (handling goods that cross state lines, interstate calls or email, interstate travel). Domestic service workers are also covered.

Minimum Wage

Minimum wage compliance is measured for the workweek: total straight-time pay for the week divided by total hours worked must be at least the minimum wage. Other subminimum wages (full-time students, workers with disabilities) require DOL certificates. Deductions for items primarily for the employer's benefit (uniforms, tools, cash shortages) may not reduce pay below the minimum wage or cut into overtime due.

The Workweek

A workweek is a fixed and regularly recurring period of 168 hours: seven consecutive 24-hour periods. It may begin on any day and at any hour, and it need not match the calendar week or the pay period. Once set, it may be changed only if the change is intended to be permanent and not to evade overtime. Each workweek stands alone: hours may not be averaged over two or more weeks, even when the pay period is biweekly or semimonthly.

Compensable Time

Hours worked include all time the employee is required to be on duty or at a prescribed workplace, and all time the employer suffers or permits the employee to work, even if not requested. Under the Portal-to-Portal Act, ordinary commuting and preliminary or postliminary activities are not compensable unless they are integral and indispensable to the principal activities.

Activity	Compensable	NotCompensable
Waitingtime	Engagedtowait:waitingispartofthejob(a	Waitingtobeengaged:completelyrelievedof
	firefighterbetweenalarms adriverwaitingfora ,	dutylongenoughtousethetimefreely
	load)
On-call time	Requiredtoremainonthepremises orsorestricted ,	Reachablebyphoneandfreetopursuepersonal
	thatthetimecannotbeusedforpersonalpurposes	activities;onlytimeactuallyspentrespondingis
		paid
Travel	Between job sites during the workday; a one-day	Normal home-to-work commute; overnight travel
	assignmenttoanothercity(lessnormalcommute);	asapassengeroutsidenormalhours
	overnighttravelduringnormalworkinghours even ,
	onnonworkingdays
Training meetings , ,	Anytrainingthatfailsoneofthefourtestsatright	Onlyifallfouraremet:outsidenormalhours ,
lectures		voluntary notdirectlyrelatedtothejob andno , ,
		productiveworkperformed
Restbreaks	Shortbreaksofabout5to20minutes(federallaw	Unauthorizedextensionsofbreakstheemployer
	doesnotrequirebreaks butmustpaythemifgiven) ,	hasclearlycommunicated
Mealperiods	Employeenotcompletelyrelieved(eatingatthedesk	Bonafidemealperiod ordinarily30minutesor ,
	whileansweringphones)	more completelyrelievedofduty ,
Sleeptime	Dutyunder24hours:alltime evenifsleepis ,	Dutyof24hoursormore:upto8hoursmaybe
	permitted	excludedbyagreementiffacilitiesareadequate
		andsleepisusuallyuninterrupted

Overtime Basics

Nonexempt employees must receive at least 1.5 times the regular rate for all hours worked over 40 in a workweek. Federal law has no daily overtime, no overtime for weekends or holidays as such, and no requirement to pay for time not worked (holidays, vacation, sick time). Paid leave hours are not hours worked and do not count toward the 40. Some states require daily overtime (for example, over 8 hours in a day) and must be followed where they apply.

Regular rate: total remuneration for the week (hourly pay, nondiscretionary bonuses, commissions, shift differentials) divided by total hours worked; excludes discretionary bonuses, gifts, expense reimbursements, paid leave, and premium pay already counted as overtime.

Hospitals and residential care may use the 8-and-80 system (over 8 hours a day or 80 hours in 14 days) by prior agreement.

Compensatory time off in place of overtime pay is allowed only for public-sector employees; private employers must pay overtime in cash.

Rounding Time Records

Employers may round recorded start and stop times to the nearest 5 minutes, one-tenth of an hour (6 minutes), or quarter hour (15 minutes), provided the practice is neutral and, over time, does not fail to pay employees for all time worked. Under quarter-hour rounding (the "7-minute rule"), 1 to 7 minutes round down and 8 to 14 minutes round up.

Examples: 8:07 a.m. rounds to 8:00; 8:08 rounds to 8:15; 4:52 p.m. rounds to 4:45; 4:53 rounds to 5:00.

A policy that always rounds in the employer's favor (clock-in rounded up, clock-out rounded down) is not neutral and violates the FLSA. Rounding applies to recorded times; it may not be used to avoid paying for work the employer knows was performed.

Tipped Employees and the Tip Credit

A tipped employee customarily and regularly receives more than $30 a month in tips. The employer may pay a cash wage of at least $2.13 per hour and take a tip credit of up to $5.12 per hour, provided the employee's tips plus cash wage reach at least $7.25 for every hour worked in the workweek. If they do not, the employer must make up the shortfall. Many states prohibit or limit the tip credit.

$183.90  |  Makeup = $217.50 − $183.90 = $33.60

A server works 30 hours and reports $120 in tips ($4.00 per hour). Cash wage plus tips equals $6.13 per hour, $1.12 below the minimum. The employer owes an additional $1.12 × 30 = $33.60 for the week.

Rule	Requirement
Notice	Beforetakingatipcredit theemployermusttelltheemployeethecashwage thetipcredit , ,
	amount thatthecreditcannotexceedtipsreceived andthatalltipsbelongtotheemployeeexcept , ,
	inavalidpool .
Tipsbelongtotheemployee	Employers managers andsupervisorsmayneverkeepanypartofemployees'tips whetherornot , , ,
	atipcreditistaken .
Tippoolswithatipcredit	Amandatorypoolmayincludeonlyemployeeswhocustomarilyandregularlyreceivetips(servers ,
	bartenders bussers servicebartenders) , , .
Tippoolswithoutatipcredit	If the employer pays the full minimum wage a mandatory pool may also include non-tipped ,
	employeessuchascooksanddishwashers butnevermanagers supervisors orowners , , , .
Servicecharges	Amandatoryservicechargeisnotatip;itistheemployer'srevenueand whendistributed is , ,
	wagesthatcannotbecountedtowardthetipcredit .
Dualjobs	Time spent in a separate non-tipped occupation (a server who also works shifts as a janitor) must ,
	bepaidatthefullminimumwage .
Tipreporting	Employeesreporttipsof$20ormoreinamonthtotheemployerbythe10thofthefollowing
	month(Form4070oranequivalentstatement) ReportedtipsarewagesforFITandFICA . .

Exempt and Nonexempt Employees

The white-collar exemptions (executive, administrative, professional, computer, outside sales) remove employees from both minimum wage and overtime. Job titles do not matter: an exemption requires passing a salary level test, a salary basis test, and a duties test. The employer bears the burden of proving the exemption.

Exemption	PrimaryDutyTest	PayRequirement
Executive	Managing the enterprise or a department; directs two or more full -time	Salarybasis atleast$684per ,
	employees(orequivalents);hiresandfires orrecommendationscarry ,	week
	particularweight
Administrative	Office or non-manual work directly related to management or general	Salaryorfeebasis atleast$684 ,
	businessoperations exercisingdiscretionandindependentjudgment ,	perweek
	onmattersofsignificance
Professional	Learned:advancedknowledgeinafieldofscienceorlearningacquired	Salaryorfeebasis atleast$684 ,
	byprolongedspecializedinstruction Creative:invention originality or . , ,	perweek(notrequiredfordoctors ,
	talentinarecognizedartisticfield	lawyers andteachers) ,
Computeremployee	Systemsanalysis programming softwareengineering orsimilarly , , ,	Atleast$684perweeksalaryor
	skilledcomputerwork	fee oratleast$2763perhour , .
Outsidesales	Makingsalesorobtainingordersorcontracts customarilyand ,	Nosalaryrequirement
	regularlyawayfromtheemployer'splaceofbusiness
Highlycompensated	Customarilyandregularlyperformsatleastoneexemptexecutive ,	Totalannualpayatleast$107432 , ,
	administrative orprofessionalduty ,	includingatleast$684perweek
		onasalaryorfeebasis

Nondiscretionary bonuses, incentives, and commissions paid at least annually may satisfy up to 10% of the standard salary level; if the employee falls short at year-end, the employer may make one catch-up payment within one pay period after the year ends. Blue-collar workers and first responders are generally not exempt, however much they earn.

The Salary Basis Test and Permissible Deductions

Paid on a salary basis means receiving a predetermined amount each pay period (weekly or less often) that is not reduced because of variations in the quality or quantity of work. An exempt employee who performs any work in a workweek must receive the full salary for that week, subject to the deductions below.

PermissibleDeductionsfromExemptSalary	ImproperDeductions
Absenceofoneormorefulldaysforpersonalreasonsother	Partial -day absences (except unpaid intermittent FMLA leave)
thansicknessordisability
Full -day absences for sickness or disability under a bona fide	Absencescausedbytheemployeroritsoperatingneeds suchas ,
planorpolicy(beforeeligibilityorafterleaveisexhausted)	aplantclosureorlackofwork whentheemployeeisreadyand ,
	abletowork
Offsetsforjuryfees witnessfees ormilitarypayreceived , ,	Absencesforjuryduty attendanceasawitness ortemporary , ,
	militaryleave
Penaltiesforviolatingsafetyrulesofmajorsignificance	Deductionsforqualityorquantityofwork orforpoor ,
	performance
Unpaiddisciplinarysuspensionsofoneormorefulldaysfor	Disciplinarysuspensionsofpartialdays orforperformance ,
workplaceconductruleviolationsunderawrittenpolicy	ratherthanconduct
Proportionatepayfortheinitialandterminalweeksof employment UnpaidleavetakenundertheFamilyandMedicalLeaveAct	1 Deductionsforcashshortages breakage ordamagethatreduce , , salary Deductionsforholidayswhenthebusinessclosesforlessthana fullweek

$1,000 weekly salary ÷ 5 workdays = $200 per day

An exempt employee takes one full day off for personal reasons with no paid leave available: the employer may deduct $200. A two-hour absence could be charged to a leave bank but not deducted from salary.

An actual practice of improper deductions can cost the exemption for all employees in the same job classification working for the same managers during the period of the deductions. Under the safe harbor, an employer with a clearly communicated policy prohibiting improper deductions and a complaint mechanism that reimburses affected employees and commits to comply keeps the exemption.

Child Labor

The FLSA's nonagricultural child labor rules set age-based limits on hours and occupations. The Secretary of Labor designates hazardous occupations (such as operating power-driven hoisting equipment, meat slicers, or motor vehicles) that are off-limits to minors under 18. State law is often stricter, and many states require work permits.

Age	NonagriculturalRules
Under14	Generallymaynotbeemployed exceptinexemptworksuchasnewspaperdelivery performing oraparent's , , ,
	nonhazardousbusiness
14and15	Outsideschoolhoursonly;nomorethan3hoursonaschoolday 18hoursinaschoolweek 8hoursona , ,
	nonschool day and 40 hours in a nonschool week; only between 7 a .m and 7 p .m (until 9 p .m from June 1 , . . .
	throughLaborDay);limitedtopermittedoccupationssuchasretailandfoodservice
16and17	Anynumberofhoursandanytimeofday butnotinhazardousoccupations ,
18andolder	Nofederalchildlaborrestrictions

Child labor questions usually test the 14- and 15-year-old limits. Memorize the pattern 3 / 18 / 8 / 40 and the 7 a.m. to 7 p.m. window, extended to 9 p.m. in summer (June 1 through Labor Day).

Enterprise coverage: $500,000 annual sales; hospitals,

Tip credit up to $5.12; cash wage at least $2.13; employer

schools, and government always covered.

makes up any shortfall.

Workweek = fixed 168 hours; no averaging; overtime after 40

Exempt: salary level $684 per week, salary basis, and duties;

hours, not daily.

outside sales has no salary test.

Engaged to wait is paid; waiting to be engaged is not.

Deduct from exempt salary only in full-day increments for the permitted reasons.