THE LAW: The Fair Labor Standards Act () sets strict rules for how you pay employees, including setting a minimum wage and overtime. The basic concept is straightforward: You must pay employees for every hour they’re on duty, whether they’re actively working or not.
You must pay them at least the federal minimum wage (see box below) unless your state or local law provides for a higher minimum wage. And you must pay hourly workers overtime if they work more than 40 hours in a workweek.
The FLSA also allows employers to pay certain employees a set salary, instead of on an hourly basis. Salaried (exempt) employees don’t earn overtime pay no matter how many hours they work in a pay period.
So far, it all seems straightforward. But it isn’t. In fact, the FLSA is probably the most complicated of all the federal employment laws—and the most dangerous for employers. Adding to the problem is personal liability. If you make a ...(register to read more)