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: PURPOSE & SCOPE - 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. - 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. MINIMUM WAGE COMPLIANCE - 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. OVERTIME COMPENSATION - 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. - 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. RECORDKEEPING REQUIREMENTS - 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. ENFORCEMENT & ANTI-RETALIATION - 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.
Everything you need to know
01What 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.
02Why 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.
03What 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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