Minimum Working Conditions
The federal Fair Labor Standards Act (FLSA) regulates wages, working hours and overtime pay. Employees who are engaged in “interstate commerce” or who work for FLSA-covered employers are protected under the statute. Certain employees employed in “executive, administrative or professional” positions are deemed “exempt” from the FLSA’s minimum wage and overtime pay requirements. Other categories of employees are also “exempt”. These include, among others, outside sales employees, certain skilled computer professionals, employees of certain seasonal amusement and recreational businesses, casual babysitters and persons employed as companions to the elderly or people with disabilities. Other categories of employees are exempt from the FLSA’s overtime pay requirements only.
In addition to federal wage and hour law, U.S. employers must comply with state and local requirements, which may impose further obligations regarding pay, rest breaks, and wage payment and reporting. When federal and state law differ, the more employee-protective statute controls. Compliance with these varying laws is particularly challenging for employers with operations in multiple states. Adding to the difficulty is that federal regulations can change sharply with each turnover in presidential administration, as well as the constantly evolving requirements of state wage and hour laws.
Penalties for wage and hour violations can be significant, including liquidated damages (double damages) for violations. Wage and hour laws are the source of much of the class action litigation U.S. employers face. In addition to private litigation, employers are subject to a rigorous enforcement regime by federal and state government enforcement agencies.
Salary
The FLSA sets forth a (national) minimum wage of $7.25 per hour for covered employees, a rate that has been in effect since 2009. A higher minimum wage applies to private-sector workers who perform work related to certain federal government contracts. States are free to legislate a higher minimum wage. The majority of U.S. states have minimum wage rates above the federal standard. For example, California’s minimum wage for non-exempt employees is $16.90 per hour as of January 1, 2026. Some cities impose higher minimum wage rates for employees who work for employers in the municipal areas of those cities.
Under the FLSA, there is a reduced minimum wage rate for employees in occupations that customarily earn tips, such as restaurant servers and hospitality industry employees. Employers may compensate tipped workers at a reduced “tip credit” hourly rate, provided that certain criteria are met, including that the workers earn enough from tips to satisfy the standard minimum wage and overtime rate requirements. Employers must make up the difference if their tipped employees do not earn enough in tips to meet minimum wage requirements. Some states prohibit employers from taking a tip credit or using “tip pools,” which are allowed under the FLSA.
Maximum Working Week
American workplace law does not impose maximum working hours. (However, non-exempt employees must be compensated at a premium rate for any hours worked beyond 40 hours in a workweek.) Many state statutes mandate daily rest periods, generally requiring that employees who work more than four hours per day receive a break of at least 10 minutes for every hour worked. Also, many states require an unpaid meal break of at least 30 minutes after employees worked a set number of hours per day (threshold working hours generally ranging from five to eight). Furthermore, several states mandate that employees receive at least one day off in each seven-day period.
Overtime
Under the FLSA, non-exempt employees must receive one-and-one-half times (1.5x) their “regular rate” of pay for all hours worked in excess of 40 hours per week. Generally, non-working time, including leaves of absence, rest periods, holidays and vacation time, is not counted toward the 40-hour-a-week overtime threshold. In a few states, the overtime premium must be paid for all hours beyond eight in a workday.
Employees classified as exempt, especially employees deemed exempt under the executive, professional, or administrative exemptions, are not entitled to overtime pay. They are compensated on a salary basis rather than an hourly rate. Lawsuits by employees alleging they were erroneously classified as exempt are a regular source of wage and hour lawsuits.
An employee’s “regular rate” of pay may be higher than their standard hourly pay rate, as it may include other forms of compensation, such as non-discretionary bonuses. Litigation challenging whether the employer has properly calculated the “regular rate” also has increased notably in recent years.
Employer’s Obligation to Provide a Healthy and Safe Workplace
The Occupational Safety and Health Act (OSH Act) requires employers to provide employees with a safe and healthy place of employment, which is free from recognised hazards that cause or are likely to cause death or serious physical harm. The Occupational Safety and Health Administration (OSHA) regulations govern a wide variety of workplace conditions. For example, OSHA standards require employers to prevent and abate recognised hazards, limit the amount of hazardous chemicals workers can be exposed to, ensure employees are provided with appropriate protective equipment, provide training on safe work practices, monitor hazards, and keep records of workplace injuries and illnesses.
OSHA standards govern the majority of states. However, workplace safety in over 20 states is governed by the state’s OSHA-approved workplace safety and health program. These state plans must be at least as effective as OSHA in promoting workplace safety and health.
Complaint Procedures
There are several ways that OSHA, the government agency that sets and enforces workplace safety and health standards, may initiate an inspection of an employer’s facility or worksite:
- Imminent Danger: these inspections are initiated upon OSHA learning of a hazard that poses an immediate risk of death or serious physical harm at a worksite.
- Injuries or Incidents: these types of inspections will be initiated following an employer report of a work-related fatality, in-patient hospitalisation of one or more employees, or an employee’s amputation or loss of an eye.
- Informal or Formal Complaints: complaint inspections are initiated as a result of an individual (usually employees or their representatives) contacting the agency to raise safety and health concerns. These reports may be made anonymously. Employees can file complaints online in addition to other submission methods. Depending on the severity of the alleged hazard, the agency may choose to investigate the complaint through an on-site inspection or alternatively through written communications with the employer (a letter inspection).
- Referrals: referral inspections are similar to complaint inspections, except the safety and health concerns may come from other agencies or individuals outside of the company.
- Programmed Inspections: these inspections are aimed at targeted high-hazard industries or operations.
Protection from Retaliation
Any employee who believes that he or she has been retaliated against as a result of engaging in protected activity, such as reporting potentially unsafe working conditions, may file a whistleblower complaint with OSHA. Thus, in addition to ensuring overall compliance with OSHA safety and health standards, employers should ensure that they have strong internal programs to encourage employees to voice safety and health complaints and that there are procedures in place to prevent retaliation.
