Minimum Wage & Overtime: Who's Covered

The Fair Labor Standards Act (FLSA) establishes        Employees of hospitals and residential care
standards for minimum wages, overtime pay, recordestablishments that have agreements with the
keeping, and child labor. These standards affect overemployees that they will work 14-day periods in lieu of
100 million workers, both full-time and part-time, in the7 day workweeks (if the employees are paid overtime
private and public sectors.premium pay within the requirements of the Act for all
        The Act applies to enterprises withhours worked over eight in a day or 80 in the 14-day
employees who engage in interstate commerce,work period, whichever is the greater number of
produce goods for interstate commerce, or handle, sell,overtime hours); and
or work on goods or materials that have been moved        Employees who lack a high school diploma,
in or produced for interstate commerce. For mostor who have not completed the eighth grade, who
firms, a test of not less than $500,000 in annual dollarspend part of their workweeks in remedial reading or
volume of business applies (i.e., the Act does not covertraining in other basic skills that are not job-specific.
enterprises with less than this amount of business).Employers may require such employees to engage in
        However, the Act does cover the followingthese activities up to 10 hours in a workweek.
regardless of their dollar volume of business: hospitals;Employers must pay normal wages for the hours
institutions primarily engaged in the care of the sick,spent in such training but need not pay overtime
aged, mentally ill, or disabled who reside on thepremium pay for training hours.
premises; schools for children who are mentally, or 
physically disabled or gifted; preschools, elementary,Basic Provisions/Requirements
and secondary schools and institutions of higher        The Act requires employers of covered
education; and federal, state, and local governmentemployees who are not otherwise exempt to pay
agencies.these employees a minimum wage of not less than
        Employees of firms that do not meet the$5.85 per hour effective July 24, 2007; $6.55 per hour
$500,000 annual dollar volume test may be covered ineffective July 24, 2008; and $7.25 per hour effective
any workweek when they are individually engaged inJuly 24, 2009. Youths under 20 years of age may be
interstate commerce, the production of goods forpaid a minimum wage of not less than $4.25 an hour
interstate commerce, or an activity that is closelyduring the first 90 consecutive calendar days of
related and directly essential to the production of suchemployment with an employer. Employers may not
goods.displace any employee to hire someone at the youth
        The Act covers domestic service workers,minimum wage.
such as day workers, housekeepers, chauffeurs,        Employers may pay employees on a
cooks, or full-time babysitters, if they receive at leastpiece-rate basis, as long as they receive at least the
$1,500  in cash wages from one employer in aequivalent of the required minimum hourly wage rate.
calendar year, or if they work a total of more thanEmployers of tipped employees (i.e., those who
eight hours a week for one or more employers.customarily and regularly receive more than $30 a
        The Act exempts some employees frommonth in tips) may consider such tips as part of their
its overtime pay and minimum wage provisions, and itwages, but employers must pay a direct wage of at
also exempts certain employees from the overtimeleast $2.13 per hour if they claim a tip credit. They must
pay provisions alone. Because the exemptions arealso meet certain other conditions.
narrowly defined, employers should check the exact        The Act also permits the employment of
terms and conditions for each by contacting their localcertain individuals at wage rates below the statutory
Wage and Hour Division office within the U.S.minimum wage under certificates issued by the
Department of Labor’s Employment StandardsDepartment of Labor:
Administration (ESA).        Student learners (vocational education
        The following are examples of employeesstudents);
exempt from both the minimum wage and overtime        Full-time students in retail or service
pay requirements:establishments, agriculture, or institutions of higher
        Executive, administrative, and professionaleducation; and
employees (including teachers and academicIndividuals whose earning or productive capacities for
administrative personnel in elementary and secondarythe work to be performed are impaired by physical or
schools), outside sales employees, and certain skilledmental disabilities, including those related to age or
computer professionals (as defined in the Departmentinjury.
of Labor's regulations);        The Act does not limit either the number of
        Employees of certain seasonal amusementhours in a day or the number of days in a week that
or recreational establishments;an employer may require an employee to work, as
Employees of certain small newspapers andlong as the employee is at least 16 years old. Similarly,
switchboard operators of small telephone companies;the Act does not limit the number of hours of overtime
Seamen employed on foreign vessels;that may be scheduled. However, the Act requires
        Employees engaged in fishing operations;employers to pay covered employees not less than
        Employees engaged in newspaper delivery;one and one-half times their regular rates of pay for all
        Farm workers employed on small farmshours worked in excess of 40 in a workweek, unless
(i.e., those that used less than 500 "man-days" of farmthe employees are otherwise exempt.
labor in any calendar quarter of the preceding calendar        Employers must keep records on wages,
year); andhours, and other information as set forth in the
        Casual babysitters and persons employedDepartment of Labor's regulations. Most of this data is
as companions to the elderly or infirm.the type that employers generally maintain in ordinary
        The following are examples of employeesbusiness practice.
exempt from the overtime pay requirements only:        The Act prohibits performance of certain
        Certain commissioned employees of retailtypes of work in an employee's home unless the
or service establishments;employer has obtained prior certification from the
        Auto, truck, trailer, farm implement, boat, orDepartment of Labor. Restrictions apply in the
aircraft salespersons employed by non-manufacturingmanufacture of knitted outerwear, gloves and mittens,
establishments primarily engaged in selling these itemsbuttons and buckles, handkerchiefs, embroideries, and
to ultimate purchasers;jewelry (where safety and health hazards are not
        Auto, truck, or farm implement parts-clerksinvolved). Employers wishing to employ homeworkers
and mechanics employed by non-manufacturingin these industries are required to provide written
establishments primarily engaged in selling these itemsassurances to the Department of Labor that they will
to ultimate purchasers;comply with the Act's wage and other requirements,
        Railroad and air carrier employees, taxiamong other things.
drivers, certain employees of motor carriers, seamen        The Act generally prohibits manufacture of
on American vessels, and local delivery employeeswomen's apparel (and jewelry under hazardous
paid on approved trip rate plans;conditions) in the home except under special
        Announcers, news editors, and chiefcertificates that may be issued when the employee
engineers of certain non-metropolitan broadcastingcannot adjust to factory work because of age or
stations;disability (physical or mental), or must care for a
        Domestic service workers who reside indisabled individual in the home.
their employers' residences;Special provisions apply to state and local government
        Employees of motion picture theaters; andemployment.
        Farmworkers.        It is a violation of the Act to fire or in any
        Certain employees may be partiallyother manner discriminate against an employee for
exempt from the overtime pay requirements. Thesefiling a complaint or for participating in a legal
include:proceeding under the Act. The Act also prohibits the
        Employees engaged in certain operationsshipment of goods in interstate commerce that were
on agricultural commodities and employees of certainproduced in violation of the minimum wage, overtime
bulk petroleum distributors;pay, child labor, or special minimum wage provisions.