The federal law establishing minimum wage, overtime, recordkeeping, and child labor standards for most US employers.
The Fair Labor Standards Act (1938) is the cornerstone federal wage-and-hour law. It establishes: federal minimum wage ($7.25/hour as of 2026, though most states have higher), overtime pay at 1.5× regular rate for hours over 40 in a workweek (with specific tests for exempt vs. non-exempt status), recordkeeping requirements, and child labor restrictions.
The exempt/non-exempt classification is the most common FLSA pitfall: salaried workers can still be eligible for overtime if they don't meet specific exemption tests (salary level + duties tests for executive, administrative, professional, computer, or outside sales exemptions). Misclassification creates significant back-wage liability.
PEOs handle FLSA compliance for the co-employed workforce — applying correct exempt/non-exempt classifications, tracking hours, and calculating overtime correctly across multi-state and multi-rate scenarios.
The federal law establishing minimum wage, overtime, recordkeeping, and child labor standards for most US employers.
The Fair Labor Standards Act (1938) is the cornerstone federal wage-and-hour law.
Most PEO buying decisions touch several related concepts at once. Fair Labor Standards Act (FLSA) typically comes up alongside the other terms in this category. Closely related terms include Overtime pay, Minimum wage, Worker classification.
This is one entry from our PEO glossary covering payroll, benefits, workers comp, HR compliance, and PEO mechanics. Browse all terms.
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