The Fair Labor Standards Act (FLSA):
An Overview
Gerald Mayer
Analyst in Labor Policy
Benjamin Collins
Analyst in Labor Policy
David H. Bradley
Specialist in Labor Economics
May 3, 2013
Congressional Research Service
7-5700
www.crs.gov
R42713
CRS Report for Congress
Pr
epared for Members and Committees of Congress
The Fair Labor Standards Act (FLSA): An Overview
Summary
The Fair Labor Standards Act (FLSA) provides workers with minimum wage, overtime pay, and
child labor protections. The FLSA covers most, but not all, private and public sector employees.
In addition, certain employers and employees are exempt from coverage.
Provisions of the FLSA that are of current interest to Congress include the basic minimum wage,
subminimum wage rates, exemptions from overtime and the minimum wage for persons who
provide companionship services, the exemption for employees in computer-related occupations,
compensatory time (“comp time”) in lieu of overtime pay, and break time for nursing mothers.
Basic Minimum Wage
• The FLSA requires employers to pay covered, nonexempt employees at least the
minimum wage. In 2007, the basic minimum wage was raised, in steps, from
$5.15 to $7.25 an hour. The basic minimum wage was raised to $7.25 an hour
effective July 24, 2009. As of January 1, 2013, 19 states and the District of
Columbia have minimum wage rates that are higher than the federal minimum
wage rate.
• Basic minimum wage rates in American Samoa and the Commonwealth of the
Northern Mariana Islands (CNMI) are lower than in the continental United
States. In 2007, Congress passed the Fair Minimum Wage Act of 2007 (P.L. 110-
28), which mandated annual increases of $0.50 an hour in the minimum wages of
American Samoa and CNMI. In 2010, Congress temporarily suspended these
increases. The minimum wage in CNMI increased by $0.50 an hour to $5.55 on
September 30, 2012. In July 2012, Congress delayed the increases in American
Samoa. The next minimum wage increases in American Samoa are scheduled for
September 30, 2015.
Subminimum Wage Rates
• Tipped employees may be paid less than the basic minimum wage, but their cash
wage plus tips must equal at least the basic minimum wage of $7.25. Employers
may pay tipped workers $2.13 an hour in cash wages, provided the employees
receive at least $5.12 an hour in tips. The latter amount is called a “tip credit.”
• Employers may pay special minimum wages (SMWs) to workers with
disabilities. The purpose of the SMWs is to provide persons with disabilities the
opportunity to work.
Overtime
• The FLSA requires employers to pay at least time-and-a-half to covered,
nonexempt employees who work more than 40 hours in a week at a given job.
• The FLSA allows covered, nonexempt state and local government employees to
receive compensatory time off (comp time) for hours worked over 40 in a
workweek. Comp time is time off with pay in lieu of overtime pay.
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The Fair Labor Standards Act (FLSA): An Overview
Exemptions
• The FLSA exempts certain employers and employees from the minimum wage,
overtime pay, or child labor standards of the act.
• Certain employees in computer-related occupations are exempt from both the
minimum wage and overtime standards of the FLSA if they meet an hourly wage
or weekly salary test and a job duties test.
Domestic service workers who provide companionship services in private homes are exempt from
both the minimum wage and overtime requirements of the FLSA. Under regulations proposed by
the U.S. Department of Labor (DOL), minimum wage and overtime coverage would be extended
to companions employed by a third party. Overtime pay would be extended to live-in domestic
service workers employed by a third party.
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The Fair Labor Standards Act (FLSA): An Overview
Contents
Working Families Flexibility Act of 2013 ....................................................................................... 1
The Fair Labor Standards Act .......................................................................................................... 2
Who Is Covered by the FLSA? ........................................................................................................ 3
Relation of the FLSA to State Laws ................................................................................................ 4
Minimum Wage Rates ...................................................................................................................... 4
The Basic Minimum Wage ........................................................................................................ 5
Tipped Workers.......................................................................................................................... 5
Workers with Disabilities .......................................................................................................... 6
New Hires Under the Age of 20 ................................................................................................ 6
Full-Time Students .................................................................................................................... 7
Student Learners ........................................................................................................................ 7
Minimum Wage Rates in the Territories and Possessions of the United States ......................... 7
Overtime .......................................................................................................................................... 8
Comp Time in Lieu of Overtime Pay ........................................................................................ 8
Break Time for Nursing Mothers............................................................................................... 9
Exemptions from the Minimum Wage or Overtime Standards of the FLSA ................................... 9
Executive, Administrative, and Professional Employees .......................................................... 9
Outside Salespersons ............................................................................................................... 11
Employees in Computer-Related Occupations ........................................................................ 12
Domestic Service Employees .................................................................................................. 13
Child Labor .................................................................................................................................... 15
Tables
Table A-1. Federal Minimum Wage Laws ..................................................................................... 21
Table A-2. Minimum Wage Rates in the States and Other Jurisdictions, as of January 1,
2013 ............................................................................................................................................ 22
Table A-3. List of Acronyms .......................................................................................................... 23
Appendixes
Appendix. Major Amendments to the FLSA, Federal Minimum Wage Rates, and List of
Acronyms.................................................................................................................................... 18
Contacts
Author Contact Information........................................................................................................... 23
Key Policy Staff ............................................................................................................................. 23
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The Fair Labor Standards Act (FLSA): An Overview
n 1937, the United States was recovering from the Great Depression. As part of the recovery
effort, President Franklin D. Roosevelt endorsed a series of economic programs, known as the
INew Deal, to help stimulate and rebuild the U.S. economy. The National Industrial Recovery
Act (NIRA) was the major statute enacted to help achieve these goals. Although the NIRA was
eventually found unconstitutional, many of its provisions appeared in later New Deal statutes,
including in the Fair Labor Standards Act of 1938 (FLSA).1
Working Families Flexibility Act of 2013
On April 9, 2013, Representative Martha Roby introduced H.R. 1406, the Working Families
Flexibility Act of 2013. The Subcommittee on Workforce Protections of the House Committee on
Education and the Workforce held a hearing on the bill on April 11, 2013. The full committee
favorably reported the bill, as amended, to the House on April 30, 2013.
The FLSA requires employers to pay covered, nonexempt workers at least one-and-a-half times
their regular hourly wage for hours worked in excess of 40 hours in a week. H.R. 1406 would
amend the FLSA to allow private sector employers to offer employees compensatory time off
(i.e., “comp” time) in place of overtime pay. Employees would receive at least one and a half
hours of paid comp time for each hour of overtime worked.
The use of comp time would be optional for both employers and employees. Employers could
provide comp time to employees under the provisions of a collective bargaining agreement or
under an agreement between an employer and employee. An employee could choose to accept or
reject an offer of comp time. An employee may withdraw from a comp time agreement at any
time. An employer may withdraw from a comp time agreement with 30 days notice.
Employees would be eligible for comp time if they have worked at least 1,000 hours for their
employer in a period of continuous employment in the year before agreeing to or receiving comp
time. Employees could accumulate up to 160 hours of comp time. An employee who requests to
use comp time would be permitted to take time off within “a reasonable period” after making the
request if the use of comp time does not “unduly disrupt” the employer’s operations.
Under the act, several circumstances would trigger the conversion of accrued comp time into a
monetary payment:
• At the end of each calendar year (or at the conclusion of another specified 12-
month period), an employer must provide monetary compensation for any unused
comp time.
• An employee may request accrued comp time to be converted to monetary
payment at any time. The employer must comply with this request within 30
days.
• An employer, with 30 days notice, may convert any accrued comp time in excess
of 80 hours to a monetary payment.
1 Stephanie Fitzgerald, The New Deal: Rebuilding America (Minneapolis, MN: Compass Point Books, 2007), p. 77.
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• If employment is terminated, either voluntarily or involuntarily, accrued comp
time must be converted to a monetary payment.
When comp time is converted to a monetary payment, the rate of compensation shall be the
higher of (1) the regular rate received by the employee when the comp time was earned or (2) the
final regular rate received by the employee.
Under the act, an employer that provides comp time could not intimidate, threaten, or coerce any
employee to use comp time or interfere with an employee’s right to request or refuse comp time.
An employer who violates this provision would be required to pay the employee for the amount
of comp time earned plus an equal amount in damages.
The amendments made to the FLSA by H.R. 1406 would expire five years after the date of
enactment of the act.
The Fair Labor Standards Act2
The FLSA provides for a federal minimum wage, overtime pay, and child labor protections.
Congress endorsed the act because its provisions were meant to both protect workers and
stimulate the economy. The FLSA also created the Wage and Hour Division (WHD) within the
Department of Labor (DOL) to administer and enforce the act.3
At the time of the act’s passage, Congress found that a few employers who paid substandard
wages caused a decrease in wages within their respective industries, because other employers
sought to compete in the marketplace with lower priced goods.4 Congress also found that these
decreased wages caused one-third of the U.S. population to be “ill-nourished, ill-clad, and ill-
housed.”5 To counter these conditions, in 1938 Congress established a minimum wage of $0.25 an
hour, gradually increasing to $0.40 an hour in 1945.6 Congress has since legislated several
increases in the minimum wage. It now stands at $7.25 an hour.
The FLSA also mandates a pay rate of one-and-one-half times an employee’s hourly wage for
every hour the employee works beyond a standard work week. When enacted, the FLSA required
employers to pay overtime for hours worked in excess of 44 hours in a week.7 The 44-hour
threshold was lowered to 40 hours in 1940. The purpose of the overtime provision is to reduce
unemployment by encouraging employers to hire more workers, rather than requiring current
employees to work more than 40 hours per week and pay the premium overtime rate.
Finally, under the FLSA Congress set certain conditions under which children could work. Not
only was oppressive child labor considered immoral, as children often worked at the cost of their
2 This section of the report was written by Alexandra Hegji.
3 Table A-3 in the Appendix provides a list of acronyms used in the report.
4 U.S. Congress, House of Representatives Committee on Labor, Fair Labor Standards Act, Conference Report to
Accompany S. 2475, 75th Cong., 3rd sess., June 11, 1938, Report No. 2738, p. 28.
5 U.S. Congress, Senate Committee on Education and Labor, Fair Labor Standards Act, Report to Accompany S. 2475,
75th Cong., 1st sess., July 6, 1937, Report No. 884, p. 1.
6 Fair Labor Standards Act of 1938, ch. 676, §§6, 7, and 12, 52 Stat. 1060, at 1062-64, 1067.
7 Ibid.
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own health and education, but Congress also believed that the lower wages generally earned by
children drove down the wages of adult workers.8
The FLSA extends minimum wage, overtime pay, and child labor protections to individuals
“employed by an employer.”9 Congress has also “exempted” certain employers and employees
from all or parts of the FLSA. For example, exemptions were provided to executive,
administrative, or professional (EAP) employees; individuals employed at retail stores that did
not have interstate operations, and agricultural employees. Additionally, the child labor provisions
did not apply to children employed in the motion picture or theater industries.10
Who Is Covered by the FLSA?
The FLSA covers employees and enterprises engaged in interstate commerce. An enterprise is
covered if it has annual sales or business done of at least $500,000.11 Regardless of the dollar
volume of business, the act applies to hospitals; institutions primarily engaged in the care of the
sick, aged, mentally ill, or disabled who reside on the premises; schools for children who are
mentally or physically disabled or gifted; federal, state, and local governments; and preschools,
elementary and secondary schools, and institutions of higher education.12
Although enterprises that have less than $500,000 in annual sales or business done are not
covered by the FLSA, employees of these enterprises may be covered if they are individually
engaged in interstate commerce. These employees may travel to other states for work, make
phone calls or send emails to persons in other states, or handle records that are involved in
interstate transactions.13
The $500,000 enterprise threshold has not been raised since it was enacted in 1989. Employers
are required to administer dual enterprise and individual tests to determine if individual
employees are covered by the act. That is, although an enterprise may not be covered if it has less
than $500,000 in annual sales or business done, employees of the enterprise may be covered if
they are individually engaged in interstate commerce.
The FLSA covers most, but not all, private and public sector employees. Persons who are not
covered by the FLSA include individuals who are elected to state or local government offices and
members of their staffs, policymaking appointees of elected officeholders of state or local
governments, employees of legislative bodies of state or local governments, immediate family
8 Although Congress articulated both social and economic reasons for regulating child labor, some commentators noted
that President Roosevelt believed the addition of child labor provisions in the FLSA would make wage and hour
provisions more palatable to Congress, thereby making FLSA enactment easier. Ibid.
9 Fair Labor Standards Act of 1938, ch. 676, §§6, 7, 12, 52 Stat. 1060.
10 Ibid., at 1067-1068.
11 The size of an enterprise is measured by its “annual sales or business done.” Annual sales or business done includes
all business activities that can be measured in dollars. Thus, retailers are covered by the FLSA if their annual sales are
at least $500,000. Owners of rental properties are covered if they collect at least $500,000 annually in rent. 29 C.F.R.
§§779.258-779.259.
12 U.S. Department of Labor, Wages and Hours Worked: Minimum Wage and Overtime Pay, available at
http://www.dol.gov/compliance/guide/minwage.htm#who. 29 U.S.C. §203(s)(1).
13 U.S. Department of Labor, Coverage Under the Fair Labor Standards Act, available at http://www.dol.gov/whd/
regs/compliance/whdfs14.pdf. (Hereafter cited as DOL, Coverage Under the Fair Labor Standards Act.)
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members of an employer engaged in agriculture, persons who volunteer their services to a state or
local government (if the person is not employed by the government agency to perform the same
services), and persons who volunteer their services to a private, nonprofit food bank and who
receive groceries from the food bank.14
The FLSA exempts certain employers and employees from the minimum wage, overtime, or child
labor standards of the act. For example, bona fide executive, administrative, and professional
employees are exempt from both overtime and the minimum wage if they meet both a salary test
and a job duties test. Certain employees in computer-related occupations are also exempt from
both overtime and the minimum wage if they meet an hourly wage or weekly salary test and a job
duties test. Domestic service workers who provide companionship services in private homes are
exempt from both overtime and the minimum wage.
Relation of the FLSA to State Laws
Under Section 18 of the FLSA, if states enact minimum wage, overtime, or child labor laws that
are more protective of employees than what is provided by the FLSA, the state law applies. The
FLSA defines a state as “any State of the United States or the District of Columbia or any
Territory or possession of the United States.”15 Because states may enact laws that are more
protective of employees than what is provided by the FLSA, there are multiple minimum wage,
overtime, and child labor standards nationwide.
Minimum Wage Rates
Under Section 6 of the FLSA, employers must pay covered, nonexempt employees at least $7.25
an hour.16 However, the FLSA includes several subminimum wage rates. Employers may pay
lower minimum wage rates to tipped employees; workers with disabilities; new hires under the
age of 20; full-time students who work in retail or service establishments, agriculture, or
institutions of higher education; and high school students who are at least 16 years of age and
enrolled in a vocational education program.
14 29 U.S.C. §203(e).
15 29 U.S.C. §203(c).
16 Other federal laws or regulations establish minimum wage requirements for workers. These rates are generally
higher, but cannot be lower, than the applicable federal or state minimum wage. The Davis-Bacon Act requires
employers to pay employees at least the locally prevailing wage and fringe benefits on construction contracts of more
than $2,000 to which the federal government is a party. The Service Contract Act requires employers to pay workers at
least the locally prevailing wage and fringe benefits on service contracts of more than $2,500 with the federal
government. Unlike minimum wage rates under the FLSA, prevailing wages under the Davis-Bacon Act and Service
Contract Act are not legislated by Congress. Rather, prevailing wages under the two acts are based on wage surveys
conducted by or for the U.S. Department of Labor.
As required by the Immigration and Nationality Act (INA) or regulations, minimum wage requirements also apply to
foreign workers entering the United States under certain permanent employment-based visas and temporary
nonimmigrant visas (e.g., the H-1B visa for temporary professional workers, the H-2A visa for temporary agricultural
workers, and the H-2B visa for temporary nonagricultural workers). The minimum wage requirements for these
workers are generally based on wage surveys, collective bargaining agreements, or prevailing wages under the Davis-
Bacon Act or Service Contract Act.
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The Basic Minimum Wage
The basic minimum wage is raised periodically by Congress. The current basic minimum wage of
$7.25 went into effect on July 24, 2009.17 As of January 1, 2013, 19 states and the District of
Columbia have minimum wage rates that are higher than the federal minimum wage.18
Most employees are paid more than the basic minimum wage. According to the Bureau of Labor
Statistics (BLS), in 2011 94.8% of employees who were paid by the hour were paid an hourly
wage that was greater than the federal minimum wage of $7.25.19
Tipped Workers
Tipped employees may be paid less than the basic minimum wage, but their cash wage plus tips
must equal at least the basic minimum wage.
Under Section 3(m) of the FLSA, a “tipped employee” is a worker who “customarily and
regularly” receives more than $30 a month in tips. Employers must allow tipped employees to
keep all tips. However, the FLSA allows tips to be pooled and shared among tipped employees.
Under the FLSA, an employer may pay a tipped worker a minimum cash wage of $2.13 if the
employee receives at least $5.12 an hour in tips (for a total hourly wage of $7.25).20 Employers
may claim up to $5.12 in tips as a tip credit. However, if a tipped employee receives less than
$5.12 an hour in tips, the employer must make up the difference with a higher cash wage. For
example, if a tipped employee receives $3.00 an hour in tips, the employer must pay the
employee a cash wage of at least $4.25 an hour.
In states with a minimum wage that is higher than the federal minimum wage, the tip credit may
be more than $5.12. On the other hand, as of January 1, 2012, seven states and Guam do not
allow employers to claim a tip credit (i.e., employers must pay all tipped employees a cash wage
that is at least the higher of the federal or state minimum wage). In 24 states and the District of
Columbia, the minimum cash wage for tipped employees is greater than the federal minimum
cash wage of $2.13. In 13 states and the Virgin Islands, the minimum cash wage for tipped
employees is $2.13. In the remaining six states, five do not have state minimum wage laws and
one exempts tipped employees from state law.21
17 See Table A-1 in the Appendix for a history of federal laws that increased the basic minimum wage.
18 See Table A-2 in the Appendix for a list of state minimum wage rates.
19 U.S. Department of Labor, Bureau of Labor Statistics, Characteristics of Minimum Wage Workers: 2011, March 2,
2012, http://www.bls.gov/cps/minwage2011.pdf.
20 29 U.S.C. §203(m). In 1966, when the tip credit was added to the FLSA, an employer could claim up to 50% of the
minimum wage as a tip credit. In 1996, the minimum cash wage for tipped employees was set at $2.13 an hour, which
was 50% of the, then, minimum wage of $4.25 an hour.
21 The five states that do not have minimum wage laws are Alabama, Louisiana, Mississippi, South Carolina, and
Tennessee. In Georgia, tipped employees are exempt from the state minimum wage law. Puerto Rico allows a lower
minimum wage for tipped workers than for nontipped workers.
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Workers with Disabilities
Under Section 14(c) of the FLSA, employers may pay special minimum wages (SMWs) to
workers with disabilities. The purpose of the SMWs is to provide persons with disabilities the
opportunity to work. A disability may be physical or mental. It may be related to age or an injury.
Disabilities include blindness, mental illness or retardation, alcoholism, and drug addiction.22
Employers must receive certificates from the Wage and Hour Division (WHD) of DOL that
authorize the employers to pay SMWs.23 WHD issues certificates to four types of employers:
work centers, hospital or residential care facilities, businesses, and School Work Exploration
Programs (SWEP). Work centers (also called “community rehabilitation programs” and
“sheltered workshops”) provide employment, training, and rehabilitation services. Hospital or
residential care facilities employ “patient workers,” who are employed persons who also receive
treatment or care. A business establishment that employs workers with disabilities at SMWs must
receive a certificate from WHD. Under SWEP, schools place students with disabilities at work
sites in the community.
In order to pay a disabled worker less than the basic minimum wage, the employee’s disabilities
must impair his or her productive capacity in the job being performed. The wages paid must be
“commensurate” to the worker’s productivity. The worker’s wage must be based on the worker’s
productivity relative to the wages and productivity of experienced workers who are not disabled
and who perform the same type and quality of work in the same geographic area. For disabled
workers paid an hourly wage, employers must review the workers’ productivity, and adjust their
wages accordingly, at least every six months. The wages of all disabled workers must also be
adjusted at least once a year to take into account changes in wages paid to experienced,
nondisabled workers.24
An employee paid a SMW, or the employee’s parent or guardian, may ask WHD to review the
wage paid to the employee.
New Hires Under the Age of 20
Under what is known as the “youth opportunity wage,” employers may pay a minimum wage of
$4.25 an hour to employees under the age of 20 for their first 90 consecutive calendar days of
employment.25 Hiring youth at a subminimum wage cannot displace other workers. After 90
consecutive days of employment or when the worker reaches age 20, whichever comes first, the
employee must be paid at least the basic minimum wage.
The purpose of the youth subminimum wage is to provide employment opportunities to young
persons, especially disadvantaged youth. Some policymakers question whether it is appropriate to
pay subminimum wage rates to persons under 20, especially if they have held other jobs.
22 For a legislative history of Section 14(c), see out-of-print CRS Report RL30674, Treatment of Workers with
Disabilities Under Section 14(c) of the Fair Labor Standards Act, by William G. Whittaker (available to congressional
clients upon request).
23 The certificates also allow the payment of wages that are less than the prevailing wages on contracts subject to the
Service Contract Act (SCA).
24 29 C.F.R. §525.
25 29 U.S.C. §206(g).
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Full-Time Students
Under Section 14(b) of the FLSA, employers may pay certain full-time students 85% of the basic
minimum wage. The subminimum wage for full-time students applies to students employed by
retail or service stores, in agriculture, or by institutions of higher education. Again, the purpose of
the subminimum wage for full-time students is to provide these students with opportunities for
employment. The FLSA does not impose an age limit on the subminimum wage for full-time
students.
Student Learners
Under Section 14(a) of the FLSA, employers may pay “student learners” 75% of the basic
minimum wage. Student learners are high school students who are (1) at least 16 years old (or 18
if employed in an occupation that the Secretary of Labor has declared to be particularly hazardous
for the employment of youth), (2) are receiving instruction in an accredited school, college, or
university, and (3) are employed part-time by an employer as part of a vocational training
program. The employer may pay student learners a subminimum wage for as long as the students
are enrolled in the vocational education program. Employers must obtain certificates from DOL
authorizing them to pay less than the basic minimum wage.26
Minimum Wage Rates in the Territories and Possessions of the
United States
When the FLSA was enacted in 1938, the minimum wage in Guam, Puerto Rico, and the Virgin
Islands was set at the same rate as in the continental United States ($0.25 an hour).27 The
minimum wage that applies in the continental United States has applied to Guam since 1938.
However, in 1940 Congress enacted legislation that allowed Special Industry Committees (SICs)
to set minimum wage rates by industry in Puerto Rico and the Virgin Islands. In 1989, Congress
enacted legislation that eliminated the SIC structure in both territories. The minimum wage in the
Virgin Islands has been the same as in the continental United States since 1989. In Puerto Rico,
minimum wages by industry were raised, in steps, until they were the same as in the continental
United States by April 1, 1996.
American Samoa and the Commonwealth of the Northern Mariana Islands (CNMI) were not
covered by the FLSA of 1938. In 1956, Congress enacted legislation that required the Secretary
of Labor to establish minimum wages in American Samoa based on recommendations from SICs.
In 2007, Congress passed the Fair Minimum Wage Act of 2007 (P.L. 110-28).28 For American
Samoa, the act mandated annual increases of $0.50 an hour until the minimum wage in each
industry reached the federal minimum wage. However, in 2010 Congress passed legislation (P.L.
111-244) that postponed the planned increases for 2010 and 2011.29 In July 2012, Congress
26 29 C.F.R. §§520.201(c), 520.501(a), and 520.506(a).
27 For more information on minimum wages in the territories, see CRS Report RL30235, Minimum Wage in the
Territories and Possessions of the United States: Application of the Fair Labor Standards Act, by William G.
Whittaker.
28 The full name of P.L. 110-28 is the U.S. Troop Readiness, Veterans’ Care, Katrina Recovery, and Iraq
Accountability Appropriations Act, 2007.
29 The title of the 2010 legislation is To Clarify the Availability of Existing Funds for Political Status Education in the
(continued...)
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passed, and the President signed, the Insular Areas Act of 2011 (P.L. 112-149). The act delayed
the increases in the minimum wages in American Samoa for 2012, 2013, and 2014. The next
minimum wage increases in American Samoa are scheduled for September 30, 2015. Thereafter,
increases will be made every three years until they reach the federal minimum wage.
In the mid-1970s, the United States and CNMI entered into a Covenant of Association. CNMI
retained control over the minimum wage in the islands. However, as was the case with American
Samoa, P.L. 110-28 mandated that the minimum wage in CNMI be raised by $0.50 a year until it
reached the same level as in the continental United States. However, P.L. 111-244 postponed the
scheduled increase in the minimum wage for 2011. On September 30, 2012, the minimum wage
in CNMI increased by $0.50 an hour to $5.55.
Overtime
Under Section 7, employers must pay covered workers at least one-and-a-half times their regular
hourly wage for hours worked over 40 hours a week at a given job. Employers may choose to pay
more than time-and-a-half for overtime or to pay overtime to employees who are exempt from
overtime under the FLSA.
Under the FLSA, overtime pay applies to hours worked in excess of 40 in a workweek. Thus, the
law allows some flexibility in work hours. For example, an employer could schedule four 10-hour
workdays in a workweek without asking employees to work overtime. Similarly, an employee
who works a five-day workweek could work four hours one day and nine hours the other four
days and not work overtime.30
Comp Time in Lieu of Overtime Pay
The FLSA, under Section 7(o), allows covered, nonexempt state and local government employees
to receive compensatory time off (“comp time”) for hours worked over 40 in a workweek. Comp
time is time off with pay in lieu of overtime pay. An employer and employees must agree that the
employer will provide comp time. The agreement may be through a collective bargaining
agreement or, if there is no such agreement, between the employer and individual employees.
Comp time is calculated at a rate that is at least one-and-a-half times the number of overtime
hours worked. In general, state and local government employees may accrue up to 240 hours of
comp time. Law enforcement, fire protection, emergency response personnel, and employees
engaged in seasonal activities may accrue up to 480 hours of comp time. Instead of providing
comp time, an employer may pay an employee for any unused comp time. An employee must be
allowed to use comp time on the date requested, unless doing so would “unduly disrupt” the
(...continued)
Territory of Guam, and for Other Purposes (P.L. 111-244).
30 Some states have overtime laws that are more protective of employees than the FLSA; for example, overtime pay
may be required if an employee works more than 8 or 12 hours in a day. See U.S. Department of Labor, Wage and
Hour Division, Wage and Hour Division (WHD) Minimum Wage Laws in the States, January 1, 2012,
http://www.dol.gov/whd/minwage/america.htm.
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operations of the agency.31 Section 7(o) does not apply to state and local government employees
who are exempt from overtime.32
Break Time for Nursing Mothers
The Patient Protection and Affordable Care Act (PPACA, P.L. 111-148) added new Section 7(r) to
the FLSA.33 Section 7 of the FLSA requires employers to pay at least time-and-a-half to
employees who work overtime. Section 13 of the FLSA provides several exemptions to the
overtime requirements of Section 7. Thus, new Section 7(r) does not apply to employers or
employees who are exempt from overtime.
Section 7(r) requires covered employers to provide break time for nursing mothers. Break time
must be provided for one year after the child’s birth. Employers must provide space, other than a
bathroom, that is shielded from view and free from intrusion from coworkers and the public. Only
employees who are not exempt from the FLSA’s overtime pay requirements are entitled to break
times to express milk. Employers with fewer than 50 employees are not subject to the
requirement if compliance would impose an undue hardship on the employer. Employers are not
required to compensate nursing mothers for breaks taken for the purpose of expressing milk.
Exemptions from the Minimum Wage or Overtime
Standards of the FLSA
Most wage and salary workers are covered by the FLSA. However, under Section 13 of the act
certain employers and employees are exempt from coverage. They may be exempt from either the
minimum wage or overtime standards of the act, or both. This section considers some, but not all,
of the current exemptions in Section 13. The focus is on those exemptions that have been the
subject of recent legislation, hearings, or oversight.
Executive, Administrative, and Professional Employees
When the Fair Labor Standards Act (P.L. 75-718) was enacted in 1938, Section 13(a)(1) provided
an exemption, from both the minimum wage and overtime requirements of the act, for bona fide
executive, administrative, and professional employees (the EAP exemption).34 The act did not
define the terms executive, administrative, or professional employee. Instead, the law stated that
the terms would be defined in regulations issued by the Secretary of Labor.35
31 29 C.F.R. §§553.20-553.28.
32 Federal employees can receive comp time under the Federal Employees Flexible and Compressed Work Schedules
Act of 1982 (P.L. 97-221). Comp time may be used by both exempt and nonexempt employees. U.S. Office of
Personnel Management, Compensatory Time Off, http://www.opm.gov/OCA/pay/html/comp.htm.
33 Section 7(r) of the FLSA was added by Section 4207, “Reasonable Break Time for Nursing Mothers,” of PPACA.
34 For more information on the exemption for executive, administrative, and professional employees, see CRS Report
RL32088, The Fair Labor Standards Act: A Historical Sketch of the Overtime Pay Requirements of Section 13(a)(1),
by William G. Whittaker.
35 Originally, the FLSA stated that regulations implementing the EAP exemption would be issued by the administrator
of the newly created Wage and Hour Division (WHD) of DOL. The Fair Labor Standards Amendments of 1961 (P.L.
(continued...)
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Under current regulations, to qualify for the EAP exemption, employees must meet certain duties
tests and be paid a salary of at least $455 per week.36 Job titles do not determine whether an
employee is exempt.
To qualify for the exemption for executive employees, all of the following job duties tests must
be met:
• The employee’s primary duty “is management of the enterprise in which the
employee is employed or of a customarily recognized department or subdivision
thereof”;
• The employee “customarily and regularly directs the work of two or more other
employees”; and
• The employee “has the authority to hire or fire other employees or whose
suggestions and recommendations as to the hiring, firing, advancement,
promotion or any other change of status of other employees are given particular
weight.”37
To qualify for the exemption for administrative employees, both of the following job duties tests
must be met:
• The employee’s primary duty “is the performance of office or nonmanual work
directly related to the management or general business operations of the
employer or the employer’s customers;” and
• The employee’s primary duty “includes the exercise of discretion and
independent judgment with respect to matters of significance.”38
To qualify for the exemption for professional employees, the following job duties test must be
met:
• The employee’s primary duty is the performance of work: “Requiring knowledge
of an advanced type in a field of science or learning customarily acquired by a
prolonged course of specialized intellectual instruction;” or “Requiring invention,
imagination, originality or talent in a recognized field of artistic or creative
endeavor.”39
(...continued)
87-30) changed the authority to issue regulations from the administrator of the WHD to the Secretary of Labor.
36 An employee whose total annual compensation is at least $100,000 is exempt if he or she “customarily and
regularly” performs at least one of the job duties tests for executive, administrative, or professional employees. 29
C.F.R. §541.601.
Before 2004, under Section 13(a)(1), executive, administrative, or professional employees were exempt if they met
either a long or a short test. Under both tests, to be exempt, an employee had to meet both a salary test and a job duties
test. U.S. Department of Labor, Wage and Hour Division, “Defining and Delimiting the Terms ‘Any Employee
Employed in a Bona Fide Executive, Administrative, Professional, or Local Retailing Capacity, or in the Capacity of
Outside Salesman,’” Federal Register, vol. 5, October 15, 1940, pp. 4077-4078.
37 29 C.F.R. §541.100.
38 29 C.F.R. §541.200.
39 29 C.F.R. §541.300.
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Periodically, DOL has modified the regulations that implement the EAP exemption. The
regulations were last changed in 2004. The current minimum weekly salary of $455 is an issue in
implementing the exemption. Between changes in the threshold, weekly salaries may rise because
of inflation or increases in labor productivity. Thus, unless the threshold is raised (either
legislatively or administratively), over time more employees become exempt from overtime pay.
On the other hand, a higher threshold may make it more difficult for employers to administer
overtime (i.e., because employers would have to keep track of hours worked for more
employees).
The job duties tests are a second issue in implementing the EAP exemption. For an employee to
be exempt, the employee’s job duties must meet the requirements for exemption. The tests are
complex and can result in workers being misclassified (e.g., they may be classified as exempt
when they should be nonexempt). For employers, a higher salary threshold may make it easier to
administer the job duties tests for exemption—because fewer employees would meet the
minimum salary test.
Outside Salespersons
Outside salespersons are also exempt under Section 13(a)(1) of the FLSA. Unlike executive,
administrative, and professional employees, however, the $455 salary test does not apply to
outside salespersons.
To qualify for the exemption for outside sales employees, an employee must meet both of the
following job duties tests:
• The employee’s primary duty must be making sales (as defined in the FLSA), or
obtaining orders or contracts for services or for the use of facilities for which a
consideration will be paid by the client or customer;40 and
• The employee must be customarily and regularly engaged away from the
employer’s place or places of business.41
An outside salesperson is someone who makes sales at the customer’s home or place of business.
The person may work hours that are convenient for the customer. Also, the hours worked by
outside salespersons may be difficult for employers to monitor.
One issue with the exemption for outside salespersons is whether a sale involves the actual
transfer of ownership of a company’s goods or services. In a June 2012 decision by the U.S.
Supreme Court, the court ruled that pharmaceutical sales representatives (also called “detailers”)
who encourage doctors to prescribe the use of a company’s prescription drugs are outside
salespersons, even though the drugs can only be sold with a doctor’s prescription.42
40 Obtaining orders for “the use of facilities” includes selling advertising time on radio, television, or in newspapers,
and soliciting freight for railroads or other transportation companies. U.S. Department of Labor, Wage and Hour
Division, Exemption for Outside Sales Employees Under the Fair labor Standards Act (FLSA), http://www.dol.gov/
whd/regs/compliance/fairpay/fs17f_outsidesales.pdf.
41 29 C.F.R. §541.500.
42 Christopher v. SmithKline Beecham Corp., No. 11-204, pp. 4-5, 14-15 (U.S. Supreme Court 2012).
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Currently, regulations state that “Outside sales does not include sales made by mail, telephone or
the Internet unless such contact is used merely as an adjunct to personal calls.”43 Some
policymakers maintain that inside salespersons, whose primary duty is to make sales, should also
be exempt.
Employees in Computer-Related Occupations
In 1990, Congress directed the Secretary of Labor to issue regulations that would exempt from
overtime and the minimum wage certain employees in computer-related occupations.44 Before
1990, computer employees could be exempt from FLSA coverage if they met the requirements of
the EAP exemption. Regulations in effect in 1990 stated that the exemption for learned
professionals applied to employees who have acquired “knowledge of an advanced type in a field
of science or learning customarily acquired by a prolonged course of specialized intellectual
instruction and study.” The regulations said that knowledge of an “advanced type” was
knowledge that generally could not be attained with only a high school degree. Rather, learned
professionals typically held an “academic degree.” The 1990 regulations went on to say that
The question arises whether computer programmers and systems analysts in the data
processing field are included in the learned professions. At the present time there is too great
a variation in standards and academic requirements to conclude that employees employed in
such occupations are a part of a true profession recognized as such by the academic
community with universally accepted standards for employment in the field.45
In 1990, Congress enacted legislation that directed the Secretary of Labor to issue regulations that
would allow “computer systems analysts, computer programmers, software engineers, and other
similarly skilled professional workers” to qualify as exempt executive, administrative, or
professional employees under Section 13(a)(1) of the FLSA. The 1990 legislation also directed
the Secretary of Labor to apply the EAP exemption to employees in computer-related occupations
if they were paid on an hourly wage that was at least six-and-a-half times the basic federal
minimum wage.
In 1992, the U.S. Department of Labor (DOL) published final regulations that implemented the
1990 legislation. The regulations treated computer employees as professional employees under
the EAP exemption. The regulations stated that the exemption applied to “highly skilled”
computer employees. To be exempt as a professional employee, the 1992 regulations said that a
computer employee’s primary duty must consist of one or more of the following job duties:
(1) The application of systems analysis techniques and procedures, including consulting
with users, to determine hardware, software, or system functional specifications;
(2) The design, development, documentation, analysis, creation, testing, or modification
of computer systems or programs, including prototypes, based on and related to user or
system design specifications;
(3) The design, documentation, testing, creation or modification of computer programs
related to machine operating systems; or
43 29 C.F.R. §541.502.
44 For more on the exemption for employees in computer-related occupations, see CRS Report, CRS Report R42141,
Computer-Related Occupations Under the Fair Labor Standards Act (FLSA), by Gerald Mayer.
45 29 C.F.R. §§541.302 (July 1, 1990, edition).
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(4) a combination of the aforementioned duties, the performance of which requires the
same level of skills.
Finally, the 1992 regulations stated that “While such employees commonly have a bachelor’s or
higher degree, no particular academic degree is required for this exemption.”46
When the final regulations implementing the 1990 legislation went into effect, the basic federal
minimum wage was $4.25 an hour. Thus, computer employees who were paid by the hour were
exempt if they met the new job duties test and were paid at least $27.63 an hour (i.e., 6½ times
$4.25).
In 1996, Congress added Section 13(a)(17) to the FLSA. Section 13(a)(17) applies specifically to
employees in computer-related occupations. Under Section 13(a)(17), the minimum hourly wage
for computer professionals was fixed at $27.63 an hour. The exemption includes in statute much
of the language from the 1992 regulations that defined the primary duties of exempt computer
professionals.
In 2004, DOL issued new regulations that revised the salary and duties tests for the EAP
exemption. The regulations also simplified the duties tests for computer professionals to reflect
the 1996 amendments to the FLSA. Under the 2004 regulations, computer professionals are
exempt from the minimum wage and overtime standards of the FLSA if they meet the job duties
test provided in regulations and, if they are paid an hourly wage, are paid at least $27.63 an hour
or, if they are paid a salary, are paid at least $455 a week.47 The same duties tests apply to both
salaried and hourly computer employees.48
Skilled computer workers are not necessarily exempt from the minimum wage or overtime
requirements of the FLSA. Employees engaged in the manufacture or repair of computer
hardware are not exempt. Employees whose work is highly dependent on the use of computers
and computer software programs (e.g., engineers, drafters and others skilled in computer-aided
design software), but who are not primarily engaged in computer systems analysis and
programming, are not exempt computer professionals.49
Domestic Service Employees
When the FLSA was enacted in 1938, it did not cover domestic service employees. The Fair
Labor Standards Amendments of 1974 (P.L. 93-259) extended minimum wage and overtime
coverage to include domestic service workers who are employed in private households.50
Domestic service workers include housekeepers, cooks, full-time babysitters, and others.51
46 U.S. Department of Labor, Wage and Hour Division, “Fair Labor Standards Act: Computer-Related Occupations;
Exemption from Minimum Wage and Overtime Compensation Requirements; Final Rule,” Federal Register, vol. 57,
October 9, 1992, p. 46744.
47 The minimum weekly salary of $455 may be paid in periods longer than a week (e.g., $910 biweekly or $1,971.66 a
month). 29 C.F.R. §541.600(b).
48 29 C.F.R. §541.400(b).
49 29 C.F.R. §541.401.
50 The 1974 amendments added Sections 6(f) and 7(l) to the FLSA. Section 6(f) extended minimum wage coverage to
domestic service employees. Section 6(f) states that
Any employee (1) who in any workweek is employed in domestic service in a household shall be
(continued...)
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In addition to extending minimum wage and overtime coverage to domestic service employees,
the 1974 amendments added two exemptions that affect two types of domestic service workers:
domestic service workers who provide companionship services and live-in domestic service
workers. Under Section 13(a)(15) of the FLSA, domestic service workers who provide
companionship services in private homes are exempt from both the minimum wage and overtime
standards of the act. Section 13(b)(21) of the act exempts from overtime, but not the minimum
wage, domestic service workers who provide live-in domestic services.
On December 27, 2011, DOL issued a Notice of Proposed Rulemaking (NPRM) that would
change the definition of companionship services.52 Under current regulations:
• Companionship services are defined as “those services which provide fellowship,
care, and protection for a person who, because of advanced age or physical or
mental infirmity, cannot care for his or her own needs.”
• Companionship services may include household work related to the care of the
aged or infirmed individual, such as preparing meals, bed making, or washing
clothes. General household work (such as housecleaning) may also be included in
companionship services. However, general household work must be “incidental”
to providing companionship services. Current regulations define incidental as
20% or less of the total hours worked.
• Companionship services do not include services performed by trained personnel,
such as registered or practical nurses.53
(...continued)
paid wages at a rate not less than the wage rate in effect under subsection (b) of this section unless
such employee’s compensation for such service would not because of section 209(a)(6) of the
Social Security Act (42 U.S.C. 409(a)(6)) constitute wages for the purposes of title II of such Act
(42 U.S.C. 401 et seq.), [i.e., the employee’s pay must be wages for purposes of Social Security] or
(2) who in any workweek (A) is employed in domestic service in one or more households, and (B)
is so employed for more than 8 hours in the aggregate, shall be paid wages for such employment in
such workweek at a rate not less than the wage rate in effect under subsection (b) of this section.
[Note: Section 6(b) requires employers to pay employees at least the minimum wage rate required
in Section 6(a) of the FLSA.]
Section 7(l) extended overtime coverage to domestic service employees. Section 7(l) states that
No employer shall employ any employee in domestic service in one or more households for a
workweek longer than forty hours unless such employee receives compensation for such
employment in accordance with subsection (a) of this section. [Note: Section 7(a) requires
employers to pay covered employees at least one-and-a-half times their regular rate of pay for
overtime.]
51 DOL, Coverage Under the Fair Labor Standards Act.
52 U.S. Department of Labor, Wage and Hour Division, “Application of the Fair Labor Standards Act to Domestic
Service,” Federal Register, vol. 76, December 27, 2011, pp. 81190-81244. (Hereafter cited as DOL, Application of the
Fair Labor Standards Act to Domestic Service.) DOL twice extended the comment period on the proposed rule.
Comments were due on or before March 21, 2012. U.S. Department of Labor, Wage and Hour Division, “Application
of the Fair Labor Standards Act to Domestic Service,” Federal Register, vol. 77, March 13, 2012, pp. 14688-14689.
53 29 C.F.R. §552.6. DOL, Application of the Fair Labor Standards Act to Domestic Service, p. 81195. A registered
nurse may be exempt from the minimum wage and overtime standards of the FLSA as a professional employee under
section 13(a)(1) of the act.
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The NPRM would narrow the exemption for companionship services. Under the proposed rule:
• The definition of companionship services would be limited to fellowship and
protection (eliminating the reference to “care”). Fellowship and protection may
include activities such as conversation, reading, watching television, going for
walks, or visiting with friends of the person being cared for. A companion may
also help the person use a wheelchair or walker and help the person move from
one area of the home to another.
• Companions could spend up to 20% of total hours worked on incidental “intimate
personal care” services. These services must be performed in conjunction with
providing companionship services and may include occasional feeding, dressing,
bathing, or grooming. A companion may occasionally drive the person to run
errands or to appointments or social events. Incidental intimate personal care
services would not include household work that benefits other members of the
household, such as housekeeping, making meals, or doing laundry.
• Companionship services would not include medical care provided by persons
with specialized training.54
The proposed rule would also extend minimum wage and overtime coverage to companions
employed by a third party employer, and extend overtime coverage to live-in domestic workers
employed by a third party. The exemption for companions would continue to apply to
companions employed directly by an individual or family (provided the companions meet the
new definition of companionship services). Live-in domestic workers employed directly by
individuals or families would still be exempt from overtime.55
DOL’s target date for issuing a final rule is April 2013.56
Child Labor
The FLSA sets minimum age requirements for youth employed outside of school hours in
agricultural and nonagricultural occupations. In nonagricultural occupations, the act sets a general
minimum age for employment of 16. In agricultural occupations, the general minimum age to
work is 14.57
The FLSA includes a number of exceptions to the general minimum age requirements of the act.
Under a parental exemption, a child of any age may be employed by his or her parent (or person
standing in the place of a parent) in any occupation in a business, including a farm, owned or
operated by the parent. But, youth under 18 cannot be employed in mining or manufacturing,
including in a business owned or operated by a parent.58
54 DOL, Application of the Fair Labor Standards Act to Domestic Service, pp. 81193-81195, 81244.
55 Ibid., pp. 81195-81196.
56 Office of Information and Regulatory Affairs, Office of Management and Budget, Application of the Fair Labor
Standards Act to Domestic Service, RIN1235-AA05, http://www.reginfo.gov/.
57 For more information on child labor, see CRS Report RL31501, Child Labor in America: History, Policy, and
Legislative Issues, by Gerald Mayer.
58 Information on the age limits for youth employment are from U. S. Department of Labor, Wage and Hour Division,
(continued...)
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Youth under a certain age cannot work in occupations determined by the Secretary of Labor to be
hazardous to minors. The minimum age to work in hazardous occupations in nonagricultural
occupations is 18. In agricultural occupations, the minimum age is 16.
The FLSA also provides exemptions from the limits on employment in hazardous occupations. In
agriculture, youth between the ages of 14 and 15 may work in certain hazardous occupations if
they are student learners.59 Minors ages 14 and 15 can operate tractors or other machinery if they
hold a certificate of training from a 4-H or vocational agriculture training program. The
restrictions on employment in hazardous occupations in agriculture do not apply to youth
employed on farms owned or operated by a parent.
Youth ages 12 and 13 can work in agriculture with the written consent of their parents on a farm
where a parent (or person standing in the place of a parent) is also employed.
Youth who are covered by the FLSA and are not exempt must be paid at least the applicable
federal or state minimum wage. However, employees in agriculture are exempt from the overtime
requirements of the FLSA.60
On September 2, 2011, DOL issued a proposed rule to change the regulations that implement the
child labor provisions in agriculture. In the proposed rule, DOL said that “None of the revisions
proposed in this NPRM in any way change or diminish the statutory child labor parental
exemption in agricultural employment” in the FLSA.61 Nevertheless, in response to concerns
about the potential effects of the proposed rule on the parental exemption, DOL announced, on
February 1, 2012, that it was going to reconsider the part of the rule dealing with the
interpretation of the parental exemption. DOL said that instead of applying the parental
exemption to farms that are “wholly” owned by the parent (or person standing in place of a
parent), it would apply the parental exemption to farms that are “substantially” owned by the
parent. Thus, the parental exemption would apply to farms where the parent is a part owner of the
farm, a partner in a partnership, or an officer of a corporation that owns the farm if the parent
holds a substantial ownership interest in the partnership or corporation.62
On April 26, 2012, DOL announced that it was withdrawing the proposed rule. DOL stated that
“The decision to withdraw this rule—including provisions to define the ‘parental exemption’—
was made in response to thousands of comments expressing concerns about the effect of the
(...continued)
Child Labor Requirements in Agricultural Occupations Under the Fair Labor Standards Act, Child Labor Bulletin 102,
available at http://www.dol.gov/whd/regs/compliance/childlabor102.pdf; and U. S. Department of Labor, Wage and
Hour Division, Child Labor Provisions in Nonagricultural Occupations Under the Fair Labor Standards Act, Child
Labor Bulletin 101, available at http://www.dol.gov/whd/regs/compliance/childlabor101.pdf.
59 A student learner is someone who is enrolled in a vocational education program in agriculture under a written
agreement that, among other things, ensures that the work of the student is incidental to the training.
60 29 U.S.C. 213(b)(12). Employees on small farms are exempt from both the minimum wage and overtime
requirements of the FLSA. A farmer who did not employ more than 500 “man days” of labor in any calendar quarter in
the preceding calendar year is exempt from the minimum wage and overtime requirements of the act. A “man day” is
any day in which an employee performed agricultural work for at least one hour.
61 U.S. Department of Labor, Wage and Hour Division, “Child Labor Regulations, Orders and Statements of
Interpretation; Child Labor Violations—Civil Money Penalties,” Federal Register, vol. 76, September 2, 2011,
available at http://www.gpo.gov/fdsys/pkg/FR-2011-09-02/pdf/2011-21924.pdf, p. 54841.
62 U.S. Department of Labor, Wage and Hour Division, U.S. Labor Department to Re-Propose ‘Parental Exemption’ of
Child Labor in Agriculture Rule, February 1, 2012, http://www.dol.gov/opa/media/press/whd/WHD20120203.htm.
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proposed rules on small family-owned farms.” DOL also stated that the regulation will not be
pursued for the duration of the Obama Administration.63
63 U.S. Department of Labor, Wage and Hour Division, Labor Department Statement on Withdrawal of Proposed Rule
Dealing With Children Who Work in Agricultural Vocations, http://www.dol.gov/opa/media/press/whd/
WHD20120826.htm.
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Appendix. Major Amendments to the FLSA, Federal
Minimum Wage Rates, and List of Acronyms
This appendix briefly describes major amendments to the Fair Labor Standards Act (FLSA).
Table A-1 shows the history of legislated changes in the basic federal minimum wage. Table A-2
shows the minimum wage rates in the states and other jurisdictions as of January 1, 2012. Table
A-3 provides a list of acronyms used in the report.
Major Amendments to the FLSA
The FLSA has been amended several times since 1938.64 The amendments generally expanded
coverage of the act, created subminimum wage rates, and increased the basic minimum wage.
1947 Amendments
In 1947, Congress passed the Portal-to-Portal Act. The act addressed issues arising out of several
court cases. First, Congress addressed the practical definition of hours worked, for which an
employee must be paid. Congress excluded from hours worked time spent traveling to and from
work. Congress also stated that some “preliminary” and “postliminary” activities performed
before or after the workday are not hours worked.65 However, workers could be compensated for
such activities if the worker and employer agreed to such employment terms or if compensation
for the activities was customary in the place of employment.66
The 1947 amendments also allow parties to settle a worker’s minimum wage or overtime claim if
“there exists a bona fide dispute as to the amount payable.”67 However, parties cannot agree to a
settlement that would result in a wage less than the minimum wage or payment of less than time-
and-a-half for overtime.68
Additionally, in the 1947 amendments Congress prohibited class action suits under the statute,
unless the Secretary of Labor filed the suit as the representative of workers. It also limited the
availability of compensation recovered in a class action suit only to those employees who
affirmatively agreed to be a part of the suit.69 Finally, the amendments set a two-year statute of
limitation (time limit) in which a worker could file a claim.70
64 The review of major amendments to the FLSA was written by Alexandra Hegji.
65 For instance, absent an employer-worker agreement or workplace custom, employers may not be required to pay
workers minimum wage or overtime pay for the time workers spend changing clothes at the beginning and end of shifts
while on work premises. See, for example, Genuth v. National Biscuit Co., 81 F. Supp. 213 (S.D.N.Y. 1948).
66 29 U.S.C. §252.
67 29 U.S.C. §253(a).
68 Ibid.
69 29 U.S.C. §216.
70 29 U.S.C. §255.
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1961 and 1966 Amendments
In 1961, Congress amended FLSA exemptions such that employers of retail workers in
enterprises with annual sales in excess of $1 million were required to pay minimum wage and
overtime rates.71
In 1966, Congress expanded coverage of the FLSA to include workers employed in any enterprise
with annual sales of at least $250,000 and employees of all businesses engaged in construction,
repair, laundering, and cleaning services. Additionally, for the first time, FLSA coverage was
extended to employees of hospitals, elementary and secondary schools, and institutions of higher
education.72 The 1966 amendments also added a “tip credit,” which allowed employers to include
a portion of an employee’s tips as part of the minimum wage.73 Finally, the 1966 amendments
restricted the employment of youth under the age of 16 in agriculture in occupations found by the
Secretary of Labor to be particularly hazardous, except when the employee is employed by a
parent on a farm owned or operated by the parent.74
1974 Amendments
The 1974 FLSA amendments extended coverage to most federal, state, and local government
employees. However, fire protection and law enforcement employees (including security
personnel in correctional institutions) of public agencies were given special treatment, such as a
complete exemption from overtime for agencies that employ fewer than five employees in fire
protection or law enforcement and a partial exemption from overtime for fire protection and law
enforcement employees who work from 7 to 28 consecutive days.75
1985 Amendments
In 1985, to ease the financial burden on state and local governments of paying overtime to
significant numbers of employees, Congress amended the FLSA to allow public employers to
offer their workers compensatory time off from work in lieu of overtime pay.76
1989 Amendments
In 1989, FLSA coverage was extended to enterprises with annual sales of at least $500,000. The
amendments also repealed the retail exemption, under which employees of almost all small retail
enterprises were exempt from the minimum wage and overtime rates.
71 Fair Labor Standards Amendments of 1961, P.L. 87-30.
72 1966 U.S.C.C.A.N. §3003, 3008.
73 29 U.S.C. §203(m).
74 U.S. House of Representatives, Fair Labor Standards Amendments of 1966, Conference Report to Accompany H.R.
H.R. 13712, 89th Cong., 2nd sess., Report No. 2004, September 6, 1966, p. 18.
75 Fair Labor Standards Amendments, 1974, P.L. 93-259.
76 Fair Labor Standards Amendments of 1985, P.L. 99-150.
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The 1996 Small Business Job Protection Act
In 1996, Congress exempted certain computer professionals from minimum wage and overtime
regulations.77 The 1996 amendments also brought within the FLSA’s minimum wage coverage all
government employees employed as of April 1, 1996.
The 2007 Increases in the Basic Minimum Wage
On May 25, 2007, President George W. Bush signed into law a supplemental appropriations bill
titled the “U.S. Troop Readiness, Veterans’ Care, Katrina Recovery, and Iraq Accountability
Appropriations Act, 2007” (P.L. 110-28). Title VIII of the act, “Fair Minimum Wage and Tax
Relief,” increased the basic federal minimum wage from $5.15 to $5.85 an hour effective July
2007, from $5.85 to $6.55 an hour effective July 2008, and from $6.55 to $7.25 an hour effective
July 2009.
The Equal Pay Act
The Equal Pay Act (EPA), although commonly referred to on its own, was an amendment to the
FLSA. The EPA was enacted in 1963 and prohibits gender-based pay discrimination.78
Break Time for Nursing Mothers
The 2010 Patient Protection and Affordable Care Act (PPACA) amended the FLSA to require
covered employers to provide reasonable break time to nonexempt employees to express breast
milk for a nursing child.
77 29 U.S.C. §213(a)(17).
78 29 U.S.C. §§206-209.
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Table A-1. Federal Minimum Wage Laws
Public Law and Date Enacted
Wage Rate
Effective Date of Wage Rate
P.L. 75-718, enacted June 25, 1938
$0.25
October 1938
0.30
October 1939
0.40
October 1945
P.L. 81-393, enacted October 26, 1949
0.75
January 1950
P.L. 84-381, enacted August 12, 1955
1.00
March 1956
P.L. 87-30, enacted May 5, 1961
1.15
September 1961
1.25
September 1963
P.L. 89-601, enacted September 23, 1966
1.40
February 1967
1.60
February 1968
P.L. 93-259, enacted April 8, 1974
2.00
May 1974
2.10
January 1975
2.30
January 1976
P.L. 95-151, enacted November 1, 1977
2.65
January 1978
2.90
January 1979
3.10
January 1980
3.35
January 1981
P.L. 101-157, enacted November 17, 1989
3.80
April 1990
4.25
April 1991
P.L. 104-188, enacted August 20, 1996
4.75
October 1996
5.15
September 1997
P.L. 110-28, enacted May 25, 2007
5.85
July 2007
6.55
July 2008
7.25
July 2009
Source: CRS Report RL33791, Possible Indexation of the Federal Minimum Wage: Evolution of Legislative Activity, by
William G. Whittaker.
Congressional Research Service
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The Fair Labor Standards Act (FLSA): An Overview
Table A-2. Minimum Wage Rates in the States and Other Jurisdictions,
as of January 1, 2013
Jurisdictions (20) With Minimum Wage Rates Higher Than the Federal Minimum Wage
Alaska ($7.75)
Illinois ($8.25)
New Mexico ($7.50)
Arizona ($7.80)
Maine ($7.50)
Ohio ($7.85)
California ($8.00)
Massachusetts ($8.00)
Oregon ($8.95)
Colorado ($7.78)
Michigan ($7.40)
Rhode Island ($7.75)
Connecticut ($8.25)
Missouri ($7.35)
Vermont ($8.60)
District of Columbia ($8.25)
Montana ($7.80)
Washington ($9.19)
Florida ($7.79)
Nevada ($8.25)
Jurisdictions (24) With Minimum Wage Rates the Same as the Federal Minimum Wage ($7.25)
Delaware Maryland Pennsylvania
Guam Nebraska
South
Dakota
Hawaii New
Hampshire
Texas
Idaho New
Jersey
Utah
Indiana
New York
U.S. Virgin Islands
Iowa North
Carolina
Virginia
Kansas
North Dakota
West Virginia
Kentucky Oklahoma Wisconsin
Jurisdictions (7) With Minimum Wage Rates Less Than the Federal Minimum Wagea
American Samoa ($4.18-$5.59)b
Georgia ($5.15)
Puerto Rico ($4.10)
Arkansas ($6.25)
Minnesota ($6.15)
Wyoming ($5.15)
Commonwealth of the Northern
Mariana Islands (CNMI) ($5.55)b
Jurisdictions (5) With No State Minimum Wage Requirementa
Alabama
Mississippi
Tennessee
Louisiana South
Carolina
Source: U.S. Department of Labor, Wage and Hour Division, Changes in Basic Minimum Wages in Nonfarm
Employment Under State Law: Selected Years 1968 To 2013, http://www.dol.gov/whd/state/
stateMinWageHis.htm#.UORh87RHDAk. U.S. Department of Labor, Wage and Hour Division, Employee Rights
Under the Fair Labor Standards Act, http://www.dol.gov/whd/regs/compliance/posters/cnmi.pdf.
Notes: Coverage patterns vary from one jurisdiction to another. The table shows the highest wage applicable
under current law.
a. In states with a minimum wage that is lower than the federal minimum wage or with no minimum wage,
state law applies to workers who are not covered by the FLSA.
b. On September 30, 2012, the minimum wage in CNMI increased by $0.50 an hour to $5.55. In American
Samoa, the next wage increases are scheduled for September 30, 2015. The rates will then rise every three
years until they reach the federal minimum wage.
Congressional Research Service
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The Fair Labor Standards Act (FLSA): An Overview
Table A-3. List of Acronyms
Acronym
Description
BLS
Bureau of Labor Statistics of the U.S. Department of Labor
CNMI
Commonwealth of the Northern Mariana Islands
CPI-U
Consumer Price Index for Al Urban Consumers
DOL
U.S. Department of Labor
EAP
Executive, administrative, and professional employees
EPA
Equal Pay Act
FLSA
Fair Labor Standards Act
NIRA
National Industrial Recovery Act
NPRM
Notice of Proposed Rule Making
PPACA
Patient Protection and Affordable Care Act
SIC
Special Industrial Committees
SMW
Special minimum wage rates for persons with disabilities
SWEP
School Work Experience Program
WHD
Wage and Hour Division of the U.S. Department of Labor
Author Contact Information
Gerald Mayer
David H. Bradley
Analyst in Labor Policy
Specialist in Labor Economics
gmayer@crs.loc.gov, 7-7815
dbradley@crs.loc.gov, 7-7352
Benjamin Collins
Analyst in Labor Policy
bcollins@crs.loc.gov, 7-7382
Key Policy Staff
Area of Expertise
Name
Phone
E-mail
FLSA minimum wages
David Bradley
7-7352
dbradley@crs.loc.gov
Overtime pay
Benjamin Collins
7-7382
bcollins@crs.loc.gov
Information Research Specialist
Paul Janov
7-6615
mpjanov@crs.loc.gov
Overtime pay and child labor
Gerald Mayer
7-7815
gmayer@crs.loc.gov
Information Research Specialist
Abigail Rudman
7-9515
arudman@crs.loc.gov
Legal issues
Jon Shimabukuro
7-7990
jshimabukuro@crs.loc.gov
Congressional Research Service
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