Fair Labor Standards Act

Definition: A federal law enforcing minimum standards that employers must abide by when hiring employees

The Fair Labor Standards Act sets a minimum wage that most employees must be paid. At this writing, the federal minimum wage is $5.15 per hour, where it was set in 1997, but pending legislation would increase the wage to keep pace with inflation. In addition, some states have already set their minimum wages higher than the federal minimum wage. If your state's minimum wage is higher, you're subject to that law, which will be enforced by your state's Department of Labor. The U.S. Department of Labor's Wage and Hour Division enforces the federal minimum wage law.

The federal minimum wage law applies to employees of companies with $500,000 or more in annual sales, about 100 million employees in all. About one in 10 U.S. workers receives the federal minimum wage. The law may also cover smaller firms that are engaged in interstate commerce or produce goods for commerce. There are a number of specific exemptions, including a youth sub-minimum wage law that allows teenage employees to earn lower wages during their first 90 days on the job. Learn more about it at the Department of Labor's website.

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