The Fair Labor Standards Act (FLSA) of 1938 is the bedrock of American wage and hour law. It is also the source of most wage-related lawsuits filed against US employers. The headline number, 40 hours per week, is the threshold above which non-exempt employees must be paid time-and-a-half. Below that line, the FLSA is mostly silent. Above it, decades of case law and Department of Labor (DOL) guidance fill in the details.
This post explains how the FLSA actually works for time tracking purposes: who is exempt, who is not, what records the DOL requires, and where state law (California, New York, Illinois) goes further.
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Quick Reference
| Rule | Value | Reference |
|---|---|---|
| Federal minimum wage | USD 7.25 per hour (since 2009) | 29 USC 206 |
| Overtime trigger | 40 hours per workweek | 29 USC 207 |
| Overtime rate | 1.5x regular rate | 29 USC 207 |
| Maximum daily hours | No federal limit | (none) |
| Maximum weekly hours | No federal limit | (none) |
| Record retention | 3 years (payroll), 2 years (supporting) | 29 CFR 516 |
| Paid leave | None federally required | (state law fills the gap) |
| Federal minimum salary for exempt | USD 35,568 per year (2024 baseline; pending litigation) | 29 CFR 541.600 |
The Big Two Categories: Exempt vs Non-Exempt
The most important question under the FLSA is whether each employee is "exempt" from overtime or "non-exempt".
Non-Exempt Employees
Get the protections of the FLSA:
- Minimum wage (federal floor, state often higher)
- Overtime at 1.5x for hours over 40 in a workweek
- Required recordkeeping
Most hourly workers are non-exempt. Many salaried workers are too; the FLSA exemption is not about salary alone.
Exempt Employees
Exempt from the overtime requirements (and, more narrowly, from the minimum wage). The big five exemptions:
- Executive: management is primary duty, supervises 2+ FTEs, has hiring/firing authority
- Administrative: primary duty is non-manual office work directly related to management or general business operations, with independent judgment
- Professional: requires advanced knowledge in a field of science or learning (lawyers, doctors, engineers, teachers, etc.)
- Computer: certain IT roles (programmer, analyst, etc.) with specific job duties
- Outside sales: primarily makes sales away from the employer's place of business
Plus three numerical tests that must be satisfied for the white-collar exemptions:
- Salary basis: paid a fixed predetermined salary each pay period
- Salary level: at least USD 684 per week (USD 35,568 per year) under the 2024 rule
- Duties test: actually performs the duties of the exempt category
All three must be satisfied. The job title is irrelevant; what matters is the actual work performed.
The Highly Compensated Exemption
Workers earning at least USD 107,432 per year qualify for a relaxed duties test. They are exempt if they regularly perform any one of the executive, administrative, or professional duties.
What "Workweek" Means
A workweek is a fixed and regularly recurring 168-hour period, established by the employer. It does not have to align with the calendar week. An employer can have multiple workweeks for different employees, but cannot change a single employee's workweek to avoid overtime.
Overtime is calculated per workweek, not per day. A 12-hour day is fine under the FLSA as long as the total weekly hours don't exceed 40 (for non-exempt) or as long as the worker is exempt.
State Law: Where the FLSA Falls Short
The FLSA is a floor, not a ceiling. State law often goes further.
California
The most worker-protective state:
- Daily overtime: 1.5x after 8 hours in a day, 2x after 12 hours in a day
- Seventh-day overtime: 1.5x for the first 8 hours on the seventh day in a workweek, 2x beyond 8
- Meal periods: 30-minute unpaid meal period for shifts over 5 hours
- Rest breaks: 10-minute paid break for every 4 hours worked
- Minimum wage: USD 16 to USD 17.50+ per hour depending on city
- Mandatory paid sick leave: 5 days under state law
California also has stricter exemption rules and higher minimum salaries for exempt status.
New York
- Spread of hours pay: extra hour at minimum wage if the day spans more than 10 hours
- State minimum salary for exempt: USD 66,300 per year (USD 1,275/week) in NYC and Westchester/Long Island as of Jan 1, 2026 (higher than federal)
- Paid sick leave: required for employers of all sizes
- Mandatory break only for shifts of 6+ hours (30 minutes, unpaid)
Illinois
- One Day Rest in Seven Act: 24 consecutive hours of rest per 7-day period
- Mandatory meal break: 20 minutes for shifts over 7.5 hours
- Paid sick leave: required from 2024 (5 days)
Texas, Florida, and most southern states
Follow the FLSA closely without significant additions.
Recordkeeping: 29 CFR Part 516
The FLSA requires every employer to keep records for non-exempt employees, including:
- Personal information (name, SSN, address, gender, occupation)
- Time and day of week when the workweek begins
- Hours worked each day and each workweek (daily total and weekly total)
- Total daily or weekly straight-time earnings
- Total overtime earnings for the workweek
- Total wages paid each pay period
- Deductions and additions to wages
- Date of payment and the pay period covered
Retention:
- Payroll records: 3 years
- Supporting records (time cards, work schedules, etc.): 2 years
Records can be kept in any form (paper, electronic) but must be open to DOL inspection.
For exempt employees, the FLSA requires basic identifying information and the basis on which wages are paid; daily hours are not required.
What CCOO Means in the USA
CCOO is European law; it does not bind US employers directly. But the trend it represents (mandatory daily working time records for all employees) is informally influencing US litigation. Plaintiff-side wage-and-hour lawyers increasingly cite the lack of objective records as evidence supporting their clients' overtime claims.
In practice: even where the FLSA does not require daily records for exempt employees, keeping them often pays for itself by eliminating evidentiary disputes.
DOL Enforcement and Penalties
The Wage and Hour Division of the DOL enforces the FLSA. Investigations can be:
- Complainant-initiated: an employee files a complaint
- Directed investigations: targeted at specific industries (currently healthcare, agriculture, hospitality)
- Self-audit programs: employers self-report and pay back wages
Penalties:
| Breach | Penalty |
|---|---|
| Unpaid overtime or minimum wage | Back wages plus equal amount in liquidated damages |
| Willful violation | Criminal prosecution, fines up to USD 10,000; imprisonment available only upon a second conviction (the FLSA does not set a specific term) |
| Civil penalties | Up to USD 2,451 per violation for repeat or willful minimum-wage or overtime breaches, USD 15,629 per child labor violation |
| Tipping rules breach | Up to USD 1,419 per violation |
Private litigation is more common and more expensive. Class action lawsuits routinely settle for 7 or 8 figures. The 2-year statute of limitations extends to 3 years for willful violations; in collective actions, opt-in plaintiffs can join over time.
Practical Compliance Checklist
- Classify each employee correctly. Run the salary basis, salary level, and duties test. Document the analysis.
- Track non-exempt hours daily. Every workweek total, every day's hours.
- Pay overtime correctly. 1.5x for hours over 40; in California, also after 8 daily.
- Keep records 3 years (payroll) and 2 years (supporting). Some state laws require longer (CA is 4 years).
- Honor state-law overtime, breaks, and leave. Federal is the floor.
- Audit your exempt classifications annually. The biggest source of FLSA lawsuits is misclassification.
Common Questions
Does the FLSA apply to all employers? The FLSA applies to enterprises with at least USD 500,000 in annual sales and to most individual workers engaged in interstate commerce. In practice, almost every employer of any size is covered.
Can I require unpaid overtime? For exempt workers, yes (no overtime owed). For non-exempt workers, no. Hours worked must be paid, regardless of the employer's authorization.
What is "off the clock" work? Any work performed by a non-exempt employee that is not recorded and paid. Suffer-or-permit doctrine: if the employer knows or has reason to know the work is happening, it must be compensated. Email after 17:00, "voluntarily" coming in early, working through lunch, all generate liability if unpaid.
Are independent contractors subject to the FLSA? No, but misclassification is a leading source of wage claims. The 2024 DOL rule reinstated a multi-factor "economic realities" test that makes contractor status harder to claim.
How does paid leave work? The FLSA does not require paid leave. State and city laws fill the gap. Federal contractors must provide paid sick leave under EO 13706.
Summary
- The FLSA sets a 40-hour weekly overtime trigger; non-exempt workers get 1.5x for hours above
- Exempt categories (executive, administrative, professional, computer, outside sales) require salary basis, salary level (USD 35,568), and duties tests
- Records required for non-exempt: daily and weekly hours, payroll details, retained 2 to 3 years
- State law often goes further: California daily OT, New York spread-of-hours, Illinois rest
- DOL enforces; back wages plus liquidated damages plus potential criminal penalties
- Class action lawsuits are the most common compliance risk
Sources
- Fair Labor Standards Act on dol.gov
- 29 CFR Part 541 (white-collar exemptions)
- 29 CFR Part 516 (recordkeeping)
- California Labor Code Section 510 (daily overtime)
- New York Hospitality Wage Order
Where to Go Next
- Exempt vs non-exempt: who tracks time? for a deeper dive on the classification question
- How to calculate overtime correctly in 2026 for the math under FLSA and other regimes
- Canada working hours and overtime by province for the closest neighbor's parallel system