An Introduction to the Fair Labor Standards Act

The legislative history of the Fair Labor Standards Act of 1938 (FLSA) points to the fact that Congress enacted the Act as a remedial and humanitarian measure to stabilize the economy and protect the common labor force during the post-depression years. Since its enactment, a number of amendments had been made in response to the findings of Congress that the existence, in industries engaged in commerce or in the production of goods for commerce, of labor conditions detrimental to the maintenance of the minimum standard of living necessary for health, efficiency, and general well-being of workers (1) causes commerce and the channels and instrumentalities of commerce to be used to spread and perpetuate such labor conditions among the workers of the several States; (2) burdens commerce and the free flow of goods in commerce; (3) constitutes an unfair method of competition in commerce; (4) leads to labor disputes burdening and obstructing commerce and the free flow of goods in commerce; (5) interferes with the orderly and fair marketing of goods in commerce; and also that the employment of persons in domestic service in households affects commerce.

It is, therefore, declared to be the policy of the Fair Labor Standards Act, through the exercise by Congress of its power to regulate commerce among the several States and with foreign nations, to correct and as rapidly as practicable to eliminate the conditions referred to above, in such industries without substantially curtailing employment or earning power.

As provided under the United States Code, the administration and enforcement of the Fair Labor Standards Act are the responsibilities of the Wage and Hour Division within the U.S. Department of Labor, under the Direction of the Administrator of the Wage and Hour Division. The enforcement provisions of the FLSA are designed to secure to employees restitution of statutorily mandated wages; to ensure that violators are deprived of the use of unlawfully withheld compensation, thereby protecting complying employers from unfair wage competition by noncomplying employers; and to deter future violations of the FLSA. The Secretary of Labor is authorized to bring suits to recover unpaid minimum wages and overtime compensation, or to enjoin an act prohibited by the FLSA. Moreover, the Act creates private rights of action for violations of the FLSA and for retaliatory discharge or discrimination.

Under the Fair Labor Standards Act, the term employer refers to any person acting directly or indirectly in the interest of an employer in relation to an employee, and this includes a public agency, such as the government of the United States; the government of a state or political subdivision thereof; any agency of the United States (including the United States Postal Service and Postal Rate Commission); a state, or a political subdivision of a state; or any interstate governmental agency. Labor organizations and persons acting as officers or agents of those organizations are not employers within the meaning of the FLSA, except when they act as employers.

In determining whether a person is an employer, under the FLSA, the court applies the economic reality test, under which it considers the totality of the circumstances of the relationship, including whether the alleged employer has the power to hire and fire the employees, supervises and controls employee work schedules or conditions of employment, determines the rate and method of payment, and maintains employment records.

Section 218 of the United States Code, added as part of the Patient Protection and Affordable Care Act, enacted March 30, 2010, and effective March 1, 2013, amends The Fair Labor Standards Act to require an employer to which the Act applies that has more than 200 full-time employees and that offers employees enrollment in one or more health benefits plans to automatically enroll new full-time employees in one of the plans offered (subject to any waiting period authorized by law) and to continue the enrollment of current employees in a health benefits plan offered through the employer. Any automatic enrollment program must include adequate notice and the opportunity for an employee to opt out of any coverage the individual or employee was automatically enrolled in. It also amends The Fair Labor Standards Act to require an employer to inform employees of their health coverage options, including informing them of the existence of an Exchange, of their eligibility (under certain circumstances) for a premium assistance tax credit and cost sharing reduction, and of the consequences to the employee of purchasing a qualified health plan through the Exchange.

Subject to certain specified exceptions, the Fair Labor Standards Act defines the term “employee” as “any individual employed by an employer. In determining whether an individual is an employee, the key is whether the individual depends on the employer’s business for his or her livelihood. For purposes of the FLSA, the term “employee” includes: (1) any individual employed by the government of the United States as a civilian in the military departments; in any executive agency; in any unit of the judicial branch of the government which has positions in the competitive service; in a non-appropriated fund instrumentality under the jurisdiction of the Armed Forces; in the Library of Congress; or in the Government Printing Office, (2) any individual employed by the United States Postal Service or the Postal Rate Commission, and, (3) any individual employed by a state, political subdivision of a state, or an interstate governmental agency, other than such an individual who is not subject to the civil service laws of the entity which employs him or her.

All employees, regardless of their immigration status, are protected by the provisions of the Fair Labor Standards Act. In implementing the provisions of the FLSA, some courts have declared that it does not apply to employees of Indian tribes, in the absence of specific congressional intent, for the reason that its application would touch exclusive rights of self-governance and would modify and affect rights guaranteed by Indian treaties. Certain occupations such as executives, administrators, professionals, and outside salespersons are also specifically exempted from the provisions of the FLSA, as are employees of specific industries.

In enacting the FLSA, Congress deliberately left local business to the protection of the states, thus, the states are permitted to adopt higher minimum wage and overtime standards than those established under the FLSA, and state law is preempted in this area only to the extent that state law is less generous than the FLSA.

The FLSA does not require employers to continue to employ, or employees to continue to work, on terms that are not mutually agreeable to them; thus, employers and employees are free to contract for any terms they choose, as long as they comply with the FLSA. For example, an employer and employee may stipulate for the payment of wages in excess of the statutory minimum, and may also establish by contract the regular rate of pay on which overtime compensation will be based, as long as that rate is at least equal to the applicable minimum rate under the FLSA. The FLSA sets a national minimum wage to protect workers from substandard wages and excessive hours; thus, barring certain exceptions under pertinent regulations, the court has ruled that employers and employees may not make agreements to pay and receive less pay than the FLSA provides for, as such arrangements are against public policy and thus unenforceable.

The FLSA requires that most covered employees be paid overtime pay at the rate of not less than 1½ times their “regular rate” for hours worked in excess of 40 during any “workweek.

The FLSA is applicable throughout the various states of the United States, the District of Columbia, Puerto Rico, the Virgin Islands, Outer Continental Shelf Lands, American Samoa, Guam, Wake Island, Eniwetok Atoll, Kwajalein Atoll, and Johnston Island. It is not applicable to employees whose services during the workweek are performed within any other territory under the jurisdiction of the United States, or to any employee whose services during the workweek are performed in a workplace within a foreign country, even though the employee may be a citizen of the United States. Also excluded from FLSA coverage are foreign seamen aboard foreign vessels reflagged as American ships, where the vessels do not enter a United States port.

Under the FLSA, a number of willful acts or omissions are subject to criminal prosecution. These include: violating the federal minimum wage and overtime compensation requirements, including the provisions for the protection of learners, apprentices, students, and handicapped workers; discriminating against an employee who has brought or assisted in bringing proceedings against an employer; failing to keep records of wages, hours, and other conditions and particulars of employment, to make reports when required and to follow the regulations and orders applicable to industrial homework; and, shipping of “hot goods,” which are goods in the production of which any employee was employed in violation of the FLSA’s requirements.