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Fair Labor Standards Act of 1938 
The Fair Labor Standards Act of 1938 governs overtime pay, minimum wage and child labor protection, and prohibits pay discrimination on the basis of sex. 
For federal workers, the U. S. Office of Personnel Management guidlines state, ". In accordance with section 532.205 of title 5, Code of Federal Regulations, no wage schedule, including a special schedule, may include any rate of pay less than the higher of the minimum rate prescribed by section 6(a)(1) of the Fair Labor Standards Act of 1938, as amended, or the highest State or local minimum wage rate in the local wage area which is applicable to the private industry counterparts of the single largest Federal industry/ occupation in the wage area. In addition, further upward adjustments of scheduled rates may be required under section 532.205(c), which mandates a minimum intergrade differential above the minimum wage." 
Fair Labor Standards Act of 1938, as Amended (29 USC §201 et seq.; 29 CFR 510-794)
Who is Covered
The Fair Labor Standards Act (FLSA) establishes minimum wage, overtime pay, record-keeping and child labor standards that affect over 100 million full- and part-time workers in the private sector and in federal, state and local governments. 
The Act applies to enterprises that have employees who are engaged in interstate commerce, producing goods for interstate commerce, or handling, selling or working on goods or materials that have been moved in or produced for interstate commerce. For most firms, an annual dollar volume of business test of $500,000 applies (i.e., those enterprises under this dollar amount are not covered). The following are covered by the Act regardless of their dollar volume of business: 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; preschools, elementary and secondary schools and institutions of higher education; and federal, state and local government agencies. 
Employees of firms that do not meet the $500,000 annual dollar volume test may be individually covered in any workweek in which they are individually engaged in interstate commerce, the production of goods for interstate commerce, or an activity which is closely related and directly essential to the production of such goods. Domestic service workers, such as day workers, housekeepers, chauffeurs, cooks, or full-time babysitters, are also covered if they receive at least $1,000 (1995) in cash wages from one employer in a calendar year, or if they work a total of more than 8 hours a week for one or more employers. 
An enterprise that was covered by the Act on March 31, 1990, and that ceased to be covered because of the increase in the annual dollar volume test to $500,000, as required under the 1989 amendments to the Act, continues to be subject to the overtime pay, child labor and recordkeeping requirements of the Act. 
Some employees are exempt from the Act's overtime pay provisions or both the minimum wage and overtime pay provisions under specific exemptions provided in the law. Because these exemptions are generally narrowly defined, employers should carefully check the exact terms and conditions for each by contacting local offices of the Wage and Hour Division listed in most telephone directories under U.S. Government, Department of Labor, Wage and Hour Division. 
The following are examples of employees exempt from both the minimum wage and overtime pay requirements: 
Executive, administrative and professional employees (including teachers and academic administrative personnel in elementary and secondary schools), outside sales employees, and certain skilled computer professionals (as defined in Department of Labor regulations); 
Employees of certain seasonal amusement or recreational establishments; 
Employees of certain small newspapers and switchboard operators of small telephone companies; 
Seamen employed on foreign vessels; 
Employees engaged in fishing operations; 
Employees engaged in newspaper delivery; 
Farm workers employed on small farms (i.e., those that used less than 500 "man-days" of farm labor in any calendar quarter of the preceding calendar year); 
Casual babysitters and persons employed as companions to the elderly or infirm. 
The following are examples of employees exempt from the Act's overtime pay requirements only: 
Certain commissioned employees of retail or service establishments; 
Auto, truck, trailer, farm implement, boat or aircraft salesworkers, or parts-clerks and mechanics servicing autos, trucks or farm implements, who are employed by non-manufacturing establishments primarily engaged in selling these items to ultimate purchasers; 
Railroad and air carrier employees, taxi drivers, certain employees of motor carriers, seamen on American vessels, and local delivery employees paid on approved trip rate plans; 
Announcers, news editors and chief engineers of certain non-metropolitan broadcasting stations; 
Domestic service workers who reside in their employer's residence; 
Employees of motion picture theaters; 
Farmworkers. 
Certain employees may be partially exempt from the Act's overtime pay requirements. These include:

Employees engaged in certain operations on agricultural commodities and employees of certain bulk petroleum distributors; 
Employees of hospitals and residential care establishments which have agreements with the employees to work a 14-day work period in lieu of a 7-day workweek (if the employees are paid overtime premium pay within the requirements of the Act for all hours worked over 8 in a day or 80 in the 14-day work period, whichever is the greater number of overtime hours); 
Employees who lack a high school diploma or who have not completed the eighth grade may be required by their employer to spend up to 10 hours in a workweek in remedial reading or training in other basic skills that are not job-specific, as long as they are paid their normal wages for the hours spent in such training. Such employees need not be paid overtime premium pay for their remedial training hours. 
Basic Provisions/Requirements
The Act requires employers of covered employees who are not otherwise exempt to pay these employees a minimum wage of not less than $5.15 an hour beginning September 1, 1997. Youths under 20 years of age may be paid a minimum wage of not less than $4.25 an hour during the first 90 consecutive calendar days of employment with an employer. Employers may not displace any employee to hire someone at the youth minimum wage. Employers may pay employees on a piece-rate basis, as long as they receive at least the equivalent of the required minimum hourly wage rate. Employers of tipped employees, i.e., employees who customarily and regularly receive more than $30 a month in tips, may consider the tips of these employees as part of their wages, but must pay a direct wage of at least $2.13 per hour if they claim a tip credit. Certain other conditions must also be met. 
The Act also permits the employment of certain individuals at wage rates below the statutory minimum wage under certificates issued by the Department: 
Ul> Student learners (vocational education students); 
Full-time students in retail or service establishments, agriculture, or institutions of higher education; 
Individuals whose earning or productive capacity is impaired by a physical or mental disability, including those related to age or injury, for the work to be performed. 
The Act does not limit the number of hours in a day or days in a week an employee (at least 16 years old) may be required or scheduled to work, including overtime hours. The Act requires that covered employees, unless otherwise exempt, be paid not less than one and one-half times their regular rates of pay for all hours worked in excess of 40 in a workweek. 
Employers are required to keep records on wages, hours and other items as set out in the Department of Labor's regulations. Most of this information is of the type generally maintained by employers in ordinary business practice. 
Performance of certain types of work in an employee's home is prohibited under the Act unless the employer has obtained prior certification from the Department of Labor. Restrictions apply in the manufacture of knitted outerwear, gloves and mittens, buttons and buckles, handkerchiefs, embroideries, and jewelry (where safety and health hazards are not involved). Employers wishing to employ homeworkers in these industries are required to, among other things, provide written assurances to the Department that they will comply with the Act's wage and other requirements. The manufacture of women's apparel (and jewelry under hazardous conditions) is generally prohibited, except under special certificates that allow homework in these industries when the homeworker is unable to adjust to factory work because of age or physical or mental disability, or is caring for an invalid in the home. 
Special provisions apply to state and local government employment.
It is a violation of the Act to fire or in any other manner discriminate against an employee for filing a complaint or for participating in a legal proceeding under the Act. The Act also prohibits the shipment of goods in interstate commerce which were produced in violation of the minimum wage, overtime pay, child labor, or special minimum wage provisions. 
Assistance Available
More detailed information on the FLSA, including copies of explanatory brochures and regulatory and interpretative materials, may be obtained by contacting local Wage-Hour offices listed in most telephone directories under U.S. Government, Department of Labor, Wage and Hour Division. 
Penalties
Enforcement of the Act is carried out by Wage and Hour Division investigators stationed throughout the country. A variety of remedies is available to the Department to enforce compliance with the Act's requirements. When investigators encounter violations, they recommend changes in employment practices in order to bring the employer into compliance and request the payment of any back wages due employees. Willful violations may be prosecuted criminally and the violators fined up to $10,000. 
A second conviction may result in imprisonment. Employers who willfully or repeatedly violate the minimum wage or overtime pay requirements are subject to civil money penalties of up to $1,000 per violation. When a civil money penalty is assessed, employers have the right, within 15 days of receipt of the notice of such penalty, to file an exception to the determination. When an exception is filed, it is referred to an administrative law judge for a hearing and determination as to the appropriateness of the penalty. If an exception is not filed, the penalty becomes final. The Secretary of Labor may also bring suit for back pay and an equal amount in liquidated damages and obtain injunctions to restrain persons from violating the Act. Employees may also bring suit, where the Department has not done so, for back pay and liquidated damages, as well as attorney's fees and court costs. 
Relation to State, Local and Other Federal Laws
State laws also apply to employment subject to this Act. When both this Act and a state law apply, the law setting the higher standards must be observed. 
For the text of the FLSA, click here (pdf format). <http://www.dol.gov/dol/esa/public/regs/statutes/whd/0002.fair.pdf> 
Source: http://www.dol.gov/dol/esa/public/regs/statutes/whd/allfair.htm.