Fair Labor Standards Act
The federal wage-and-hour statute establishing minimum wage, overtime pay, recordkeeping, and child labor standards for covered employees. Operates alongside the Texas Payday Law, which governs when agreed wages must be paid, what may be deducted from them, and wage claims filed with the Texas Workforce Commission.
The Fair Labor Standards Act sets the federal minimum wage at $7.25 an hour and requires time and a half for every hour a non-exempt employee works past 40 in a workweek. Texas's minimum wage chapter adopts the federal rate and has no overtime provision, so 29 U.S.C. §§ 206-207 control.
The Fair Labor Standards Act (FLSA) is the federal wage-and-hour statute establishing minimum wage, overtime pay, recordkeeping, and child labor standards for covered employees. FLSA operates alongside the Texas Payday Law. The FLSA sets the wage floor and overtime. The Payday Law governs when agreed wages must be paid and what may be deducted from them, and it supplies the wage-claim process at the Texas Workforce Commission. Texas's own minimum wage chapter does not apply to an employee the FLSA covers. Tex. Lab. Code § 62.151.
- Overtime trigger
- Over 40 hours in a workweek, at 1.5 times the regular rate (29 U.S.C. § 207(a)(1))
- Exempt salary floor
- $684 per week, paid on a salary basis (29 C.F.R. § 541.600(a))
- Highly compensated
- $107,432 a year, including at least $684 weekly in salary (29 C.F.R. § 541.601)
- Texas paydays
- Exempt employees at least monthly; all others at least twice a month (Tex. Lab. Code § 61.011)
- Retaliation
- Barred for filing a complaint, starting a proceeding or testifying (29 U.S.C. § 215(a)(3))
Coverage
FLSA covers employees of "enterprises" with annual gross volume of $500,000 or more, plus employees individually engaged in interstate commerce or producing goods for commerce. § 203(s). Individual coverage turns on the employee's own work, so an employee of a business below the $500,000 threshold may still be covered.
Minimum wage
Federal minimum wage is $7.25 per hour. § 206. Texas adopts the federal minimum wage; there is no separate Texas minimum wage above federal. Tex. Lab. Code § 62.051.
Overtime
Non-exempt employees must receive overtime compensation at one-and-one-half times their regular rate of pay for hours worked over 40 in a workweek. § 207(a). The "regular rate" includes most non-discretionary compensation, not just base hourly rate.
Exemptions
Specified categories of employees are exempt from minimum wage, overtime, or both. § 213. See Exempt vs. Non-Exempt Employee for the principal exemptions.
Remedies
Backpay for unpaid wages; liquidated damages equal to the backpay (effectively doubling); attorney's fees and costs. § 216(b). If the employer shows it acted in good faith and had reasonable grounds to believe it was complying, the court may in its discretion reduce or deny the liquidated damages. § 260. Statute of limitations: 2 years for ordinary violations, 3 years for willful violations. § 255.
Enforcement
U.S. Department of Labor Wage and Hour Division investigates and litigates FLSA claims. Employees may also file private civil actions in federal or state court. § 216(b).
What a white-collar exemption requires
The executive, administrative and professional exemptions in 29 U.S.C. § 213(a)(1) turn on three tests, and an employee who fails any one of them is not exempt under that provision. Licensed lawyers and physicians practicing their profession, and teachers, are excused from the salary tests by 29 C.F.R. § 541.600(e).
- Salary basis. The employee receives a predetermined amount each pay period that is not reduced because of variations in the quality or quantity of the work. (29 C.F.R. § 541.602(a))
- Salary level. That amount is at least $684 a week, or $1,368 if paid biweekly. (29 C.F.R. § 541.600)
- Duties. The work itself fits the exemption. An exempt executive, for instance, must have management as a primary duty, regularly direct two or more employees, and either hold authority to hire and fire or make recommendations on those decisions that carry particular weight. (29 C.F.R. § 541.100(a))
What is the 7 minute rule in Texas?
It is a payroll rounding practice, and it comes from federal law. Under 29 C.F.R. § 785.48(b), an employer may record start and stop times to the nearest quarter hour, so a punch 1 to 7 minutes past the quarter rounds back and one 8 to 14 minutes past rounds forward. The Department of Labor accepts rounding only if, over time, employees are still paid for all the time they actually worked. Chapters 61 and 62 of the Texas Labor Code say nothing about rounding.
What is an FLSA violation?
A failure to meet one of the Act's duties, such as paying below $7.25 an hour or denying overtime to a non-exempt employee. Firing or punishing an employee for filing a pay complaint is a separate violation under 29 U.S.C. § 215(a)(3). For unpaid minimum wage or overtime, § 216(b) makes the employer liable for the shortfall, an equal amount as liquidated damages, and the employee's attorney's fees and costs. A court may reduce or deny the liquidated damages if the employer shows good faith and reasonable grounds ((29 U.S.C. § 260)).
Can an employer avoid overtime by paying a salary?
Not by salary alone. A salaried employee is exempt only if the pay meets the $684 weekly floor and the job meets the duties test for an exemption, and 29 C.F.R. § 541.2 provides that a job title alone is insufficient. Salaried employees who fail either test are non-exempt. Their hours over 40 in a workweek must be paid at 1.5 times the regular rate under 29 U.S.C. § 207(a)(1).
When was the Fair Labor Standards Act passed?
In 1938. The statute may still be cited as the Fair Labor Standards Act of 1938 ((29 U.S.C. § 201)), and the Texas Payday Law uses that name when it sets the monthly payday rule for exempt employees in Tex. Lab. Code § 61.011(a). Congress has amended the Act many times since. The current $7.25 federal minimum appears in 29 U.S.C. § 206(a)(1).
Treating a non-exempt employee as exempt exposes the employer to back overtime, an equal amount in liquidated damages, and the employee's attorney's fees. § 216(b). Texas businesses commonly run afoul of: (1) the salary basis test for executive, administrative, and professional exemptions; (2) overtime calculation including bonuses and commissions in the regular rate; (3) recordkeeping of hours worked by non-exempt employees. A single wage dispute can involve both the FLSA and the Texas Payday Law.