Federal Wage and Hour Law: The FLSA

The Fair Labor Standards Act: The Federal Baseline

The Fair Labor Standards Act (FLSA), first passed in 1938, is the foundational federal law governing minimum wage, overtime pay, and recordkeeping. For how this interacts with DC and Maryland’s own wage and hour laws, see our Wage and Hour Law overview. This page covers the federal baseline itself.

Exempt vs. Non-Exempt: The Most Consequential Question

Whether you’re entitled to overtime pay under the FLSA comes down to whether you’re classified as “exempt” or “non-exempt.” Non-exempt employees must receive overtime pay — one and a half times their regular rate — for hours worked beyond 40 in a workweek. Exempt employees are not entitled to overtime at all, regardless of how many hours they actually work. Getting this classification wrong, in either direction, can mean years of unpaid overtime owed once the mistake is caught.

To qualify for one of the FLSA’s main exemptions (often called the “white collar” exemptions), an employee generally must satisfy three separate tests — all three, not just one:

The Salary Basis Test

An exempt employee must be paid a predetermined, fixed salary that doesn’t fluctuate based on the quality or quantity of the work performed in a given week. If your employer docks your pay for partial-day absences, or otherwise treats your pay as if it were hourly despite calling you “salaried,” that practice can itself undermine your exempt status — regardless of what your job title or duties are.

The Salary Level Test

Beyond being paid on a salary basis, you must be paid at least a minimum threshold amount to qualify as exempt. This figure has been the subject of real back-and-forth in recent years: in 2024, the Department of Labor issued a rule significantly raising this threshold, but a federal court in Texas vacated that rule in November 2024, and the DOL formally restored the prior, lower thresholds through a technical amendment in May 2026. As of today, the current federal salary level is $684 per week ($35,568 per year) for the standard executive, administrative, and professional exemptions, and $107,432 in total annual compensation (including at least $684 per week paid on a salary basis) for the separate “highly compensated employee” exemption.

Worth knowing: some states set a higher salary level requirement than the federal floor. Where that’s the case, the higher state threshold controls for employees in that state, even though the federal number described above remains the baseline everywhere else.

The Duties Test

Meeting the salary basis and salary level tests isn’t enough on its own — what you actually do in your job matters most. The FLSA’s main exemptions require that your primary duties fall into one of several specific categories:

Executive: your primary duty is managing the business or a recognized department, you regularly direct the work of at least two other full-time employees, and you have genuine authority (or meaningful input) over hiring and firing decisions.
Administrative: your primary duty involves office or non-manual work directly related to management or general business operations, and you exercise discretion and independent judgment on matters of significance.
Professional: your primary duty requires advanced knowledge in a field of science or learning, typically acquired through prolonged specialized instruction, or involves recognized artistic or creative work.
Computer employees: a separate exemption for certain computer systems analysts, programmers, and software engineers meeting specific duties requirements.
Outside sales: your primary duty is making sales or obtaining orders away from your employer’s place of business.

A common and costly mistake: job titles don’t determine exempt status — an impressive-sounding title like “manager” or “coordinator” means nothing under the FLSA if your actual day-to-day duties don’t genuinely satisfy one of these categories. Employers sometimes over-rely on titles rather than actual job functions, and that’s a frequent source of misclassification claims.

Minimum Wage

The federal minimum wage has remained $7.25 per hour since July 24, 2009 — unchanged for well over a decade. Where state or local law sets a higher minimum wage, as both DC and Maryland do, employers must pay the higher applicable rate, not the lower federal floor.

The Tip Credit

The FLSA allows employers to pay tipped employees (generally, those who customarily and regularly receive more than $30 per month in tips) a lower direct cash wage, currently as low as $2.13 per hour, and count up to $5.12 per hour in tips toward the remaining balance of the $7.25 federal minimum wage. If an employee’s direct wage plus tips doesn’t add up to at least $7.25 per hour in a given workweek, the employer must make up the difference.

A few protections apply regardless of whether an employer takes a tip credit: employers, including managers and supervisors, can never keep any portion of an employee’s tips, and employers must inform tipped employees in advance of specific information about how the tip credit is being applied before they can claim it at all.

Recordkeeping Requirements

Employers must maintain accurate records for each covered employee, including identifying information, hours worked each day and week, wages paid, and the applicable pay period dates. There’s no single required format, but payroll records generally must be retained for at least three years, and supporting records (like time cards and wage rate tables) for at least two years. Employers that take a tip credit face additional, more specific recordkeeping obligations related to reported tips.

Why this matters to you as an employee: if your employer’s records are incomplete or missing, that generally doesn’t work in the employer’s favor in a wage dispute — courts have long held that an employer’s failure to keep accurate records can shift the burden to the employer to disprove an employee’s reasonable estimate of hours worked, rather than requiring the employee to prove the exact number with precision.

Talk to a Wage and Hour Attorney

Whether you believe you’ve been misclassified as exempt, denied proper overtime, or shorted through improper tip credit practices, Wilkenfeld Law Office can help you understand what the FLSA actually entitles you to.

Or call 301.245.3035 · Intake@WilkenfeldLO.com

This article provides general information and is not legal advice. Contacting us does not create an attorney-client relationship.

Reviewed by Ari Wilkenfeld, Esq. (DC Bar No. 461063; MD Bar No. 9806240300). Ari has over 27 years of experience litigating in federal and state courts, and before the U.S. Equal Employment Opportunity Commission (EEOC), the U.S. Merit Systems Protection Board (MSPB), and various arbitration panels. Ari has been recognized by Esquire Magazine as “a famously determined Civil Rights lawyer” and by the New York Post as “a high powered DC Lawyer.” Last updated: August 28, 2026.