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FLSA Overtime & Wage Policy US

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FLSA Overtime & Wage Policy US

FLSA Overtime & Wage Policy US

Company Name
Effective Date
Policy Owner
Approved By
Federal EIN

1. Purpose & Scope

(a)This policy ensures the Organization's compliance with the Fair Labor Standards Act (FLSA) of 1938, as amended, governing minimum wage, overtime pay, recordkeeping, and child labor standards for covered employees in the United States.

(b)The HR department shall classify all positions as either exempt or non-exempt under the FLSA based on the duties test and salary threshold prescribed by the Department of Labor. Classifications shall be reviewed annually and upon any material change in job duties or compensation.

2. Minimum Wage Compliance

(a)The Organization shall pay all covered employees at least the federal minimum wage of $7.25 per hour, or the applicable state or local minimum wage, whichever is higher. Tipped employees shall receive the required cash wage plus tips equalling at least the applicable minimum wage.

3. Overtime Compensation

(a)Non-exempt employees shall receive overtime compensation at one and one-half times their regular rate of pay for all hours worked in excess of 40 in a workweek, as required by Section 7(a) of the FLSA. The regular rate includes base pay, non-discretionary bonuses, shift differentials, and commissions.

(b)The Organization's designated workweek begins at 12:00 a.m. Sunday and ends at 11:59 p.m. Saturday. Hours worked in two different workweeks shall not be averaged or combined for overtime calculation purposes.

4. Recordkeeping Requirements

(a)The Organization shall maintain payroll records for each employee as required by Section 11(c) of the FLSA and 29 C.F.R. Part 516, including employee identification, hours worked each day and week, regular rate of pay, overtime earnings, and total wages paid. Records shall be retained for a minimum of 3 years.

5. Enforcement & Anti-retaliation

(a)The Organization prohibits retaliation against any employee who files a complaint, participates in an investigation, or exercises any right under the FLSA. Violations of wage and hour requirements may result in back pay, liquidated damages, and civil monetary penalties under Sections 16 and 17 of the FLSA.

The guide

Everything you need to know about the FLSA overtime & wage policy US

What Is an FLSA Overtime & Wage Policy?

An FLSA overtime and wage policy documents how a US employer complies with the Fair Labor Standards Act, the federal law governing minimum wage, overtime pay, and employee classification. It explains how the company classifies workers as exempt or non-exempt, pays at least the applicable minimum wage, and pays overtime at one and a half times the regular rate for hours over 40 in a workweek. The policy anchors your pay practices to a clear legal standard.

Why Companies Need an FLSA Overtime & Wage Policy

FLSA violations, especially misclassifying employees as exempt, are among the most expensive wage claims US employers face, often triggering back pay and liquidated damages. A written policy forces disciplined classification, accurate timekeeping, and correct overtime math. It also clarifies that state law may set higher minimums or stricter overtime rules that override the federal floor. Documented practices give you a defensible record if the Department of Labor or an employee ever challenges your pay decisions.

What an FLSA Overtime & Wage Policy Should Include

Define the workweek, the exempt and non-exempt classifications with the duties and salary tests used, and the applicable minimum wage. Explain the overtime rate of 1.5 times the regular rate for hours over 40 per week and how the regular rate is calculated including bonuses. Cover timekeeping and recordkeeping duties, the ban on off-the-clock work, meal and rest break rules, and a note that stricter state or local laws take precedence.

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FAQ

Questions about the FLSA overtime & wage policy US

The FLSA requires overtime pay of at least 1.5 times the regular rate for all hours a non-exempt employee works beyond 40 in a single workweek. The federal law does not require daily overtime, but some states like California do, and those stricter rules apply.

Non-exempt employees are entitled to minimum wage and overtime, while exempt employees are not. To be exempt, a worker generally must be paid on a salary basis above a set threshold and perform qualifying executive, administrative, or professional duties, not just hold a title.

No, the FLSA does not mandate meal or rest breaks, though short breaks that are offered must usually be paid. Many states impose their own break requirements, so employers should follow whichever standard is more protective of the employee.

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