The Fair Labor Standards Act (FLSA) is one of the most powerful and far-reaching labor laws in American history. Whether you are an employee wondering about your overtime rights, an HR professional navigating new compliance requirements, or a business owner trying to stay on the right side of federal law, understanding the FLSA is not optional — it is essential. And in the current regulatory climate, this law is changing faster than at almost any point in recent memory.
This guide breaks down everything: what the FLSA is, who it covers, what it guarantees, and precisely what has happened in the courts and Congress through today.
Key Points Summary
╔════════════════════════════════════════════════════════════════════╗
║ – The FLSA establishes federal minimum wage, overtime pay, ║
║ recordkeeping, and child labor standards nationwide. ║
║ – The federal minimum wage remains $7.25/hour as of May 2025, ║
║ unchanged since 2009. ║
║ – A federal court in Texas vacated the Biden-era overtime rule ║
║ in November 2024; the salary exemption threshold reverted ║
║ to $684/week ($35,568/year). ║
║ – The Trump DOL shelved the 2024 independent contractor rule ║
║ in May 2025, reverting to an older economic realities test. ║
║ – In February 2026, the DOL proposed a new rule to rescind the ║
║ 2024 IC classification rule and replace it with a streamlined ║
║ analysis aligned to federal court precedent. ║
║ – A new proposed joint employer rule was published in April 2026 ║
║ to restore FLSA regulatory guidance absent since 2021. ║
╚════════════════════════════════════════════════════════════════════╝What Is the Fair Labor Standards Act?
The Fair Labor Standards Act was enacted in 1938 under President Franklin D. Roosevelt as a cornerstone of New Deal labor reform. At its core, the FLSA created a federal floor of workplace protections applicable to employees across the private sector as well as federal, state, and local governments.
The law governs four primary areas:
Minimum Wage — The FLSA sets a federal baseline below which no covered employee can legally be paid. The current federal minimum wage is $7.25 per hour, a rate that has not changed since July 24, 2009 — making it one of the longest periods without an increase in the law’s history. Many states, however, set their own higher minimums, and in cases where both state and federal law apply, the employee is entitled to whichever rate is more favorable.
Overtime Pay — Covered, non-exempt employees who work more than 40 hours in a single workweek must be paid at least one and one-half times their regular rate of pay for every hour beyond that threshold.
Recordkeeping — Employers covered by the FLSA are required to maintain accurate records of employees’ wages, hours worked, and related payroll data.
Youth Employment — The FLSA imposes restrictions on the types of work, hours, and conditions under which minors may be employed, with rules that vary depending on age and whether the work is classified as hazardous.
Who Does the FLSA Cover?
FLSA coverage is broad, but not universal. It operates through two pathways: enterprise coverage and individual coverage.
Enterprise coverage applies when a business has at least $500,000 in annual gross volume of sales or business done, or when the business is engaged in certain protected activities regardless of revenue — such as operating a hospital, school, or residential care facility.
Individual coverage applies to workers who are themselves engaged in interstate commerce or the production of goods for interstate commerce, regardless of whether their employer meets the enterprise threshold.
Despite this broad reach, certain categories of workers are exempt from some or all FLSA protections. The most prominent examples are the so-called “white collar” exemptions — executive, administrative, professional, outside sales, and certain computer employees — who are exempt from overtime requirements if they meet both a duties test and a salary threshold. The exact parameters of these exemptions have been the most legally contested aspect of FLSA enforcement in recent years.
The Overtime Rule: A Legal Saga That Reshaped the Landscape
No aspect of the FLSA has generated more legal activity in the past two years than the overtime exemption salary threshold. Here is the full story.
The Biden Administration’s 2024 Rule
On April 26, 2024, the U.S. Department of Labor under the Biden administration published a sweeping final rule designed to dramatically expand overtime eligibility for lower-paid workers. The rule introduced a two-phase increase to the salary threshold required for employees to qualify as exempt from overtime:
- Effective July 1, 2024: The threshold rose from $684 per week ($35,568/year) to $844 per week ($43,888/year) for executive, administrative, and professional (EAP) employees. The highly compensated employee (HCE) threshold simultaneously rose from $107,432 to $132,964 annually.
- Effective January 1, 2025: The threshold was set to rise again, to $1,128 per week ($58,656/year) for EAP employees and $151,164 annually for highly compensated employees.
- The rule also introduced an automatic indexing mechanism that would update these thresholds every three years beginning in 2027, without requiring a new rulemaking process.
The DOL estimated that this rule would extend overtime protections to millions of additional workers who had previously been classified as exempt.
The Texas Court Ruling — November 2024
The Biden rule never fully took effect. On November 15, 2024, U.S. District Judge Sean D. Jordan of the Eastern District of Texas vacated the final rule in its entirety — a decision applied nationwide.
Judge Jordan found two fundamental problems with the rule. First, he concluded that the DOL had placed so much emphasis on salary level that it effectively displaced the duties-based test that is the true statutory cornerstone of the EAP exemption under the FLSA. He characterized the elevated minimum salary as a “proxy characteristic” that overrode the duties analysis Congress intended. Second, he found that the automatic indexing mechanism was an improper attempt to set rulemaking “on autopilot,” circumventing the Administrative Procedure Act’s notice-and-comment requirements.
The practical result was significant: not only was the January 2025 increase blocked, but the July 2024 increase — which had already taken effect — was also retroactively nullified. The salary threshold for EAP exemptions reverted to $684 per week ($35,568 annually), and the HCE threshold returned to $107,432. These are the thresholds from the 2019 rule issued during President Trump’s first term.
The Current Enforcement Position
With the Trump administration returning to power in January 2025 and the DOL indicating it would not appeal the Texas ruling, the pre-2024 thresholds are now the operative standard for federal FLSA enforcement. Employers who raised salaries to meet the July 2024 threshold must decide independently whether to maintain those elevated compensation levels, a business decision that may also be influenced by state laws in jurisdictions that impose higher salary minimums than the federal floor.
Employers must remember: even under the reverted thresholds, the duties test remains fully intact. An employee cannot be classified as exempt from overtime solely because their salary exceeds $35,568. They must also satisfy the executive, administrative, or professional duties criteria.
Independent Contractor Classification: A Major Shift in Policy
The question of who qualifies as an employee — and who may be classified as an independent contractor — has been equally turbulent.
The 2024 Biden Rule on Worker Classification
On March 11, 2024, a Biden-era final rule on independent contractor classification took effect. It adopted a multi-factor “economic reality” test with six non-exhaustive factors designed to make it more difficult for businesses to classify workers as independent contractors. The rule was broadly viewed as expanding worker protections and placing a meaningful hurdle on independent contractor arrangements.
The Trump DOL’s Reversal — May 2025
On May 1, 2025, the Trump DOL’s Wage and Hour Division issued Field Assistance Bulletin (FAB) No. 2025-1, announcing that the agency would no longer apply the 2024 rule’s analysis in its enforcement investigations. In its place, the DOL reverted to the older Fact Sheet #13 framework from 2008, informed by Opinion Letter FLSA2025-2.
This older framework applies a seven-factor economic realities test and is widely regarded as more favorable to independent contractor classification, offering greater flexibility for gig economy businesses, staffing firms, and other industries that rely heavily on contracted workers.
Importantly, the FAB clarified that the 2024 rule technically remains in effect for purposes of private litigation — meaning employees and plaintiffs’ attorneys in civil cases may still invoke its more protective standard, even though the DOL itself will not enforce it.
The February 2026 Proposed Rule
Going a step further, on February 26, 2026, the DOL announced a formal Notice of Proposed Rulemaking (NPRM) to officially rescind the 2024 rule and replace it with a streamlined analysis grounded in federal judicial precedent. The proposed rule would also apply this analysis to the Family and Medical Leave Act (FMLA) and the Migrant and Seasonal Agricultural Worker Protection Act (MSPA), creating a unified classification standard across multiple federal labor laws.
The 60-day public comment period for this proposed rule closed on April 28, 2026. A final rule is expected later in the year.
Joint Employer Status: The Newest Regulatory Frontier
In April 2026, the DOL issued yet another significant proposed rule — this time addressing joint employer status under the FLSA, FMLA, and MSPA. Joint employer liability arises when two or more entities share control over a worker’s employment conditions, making them jointly and severally liable for FLSA compliance.
The regulatory landscape on joint employment had been effectively lawless since 2021, when the Biden administration rescinded the Trump-era 2020 joint employer rule without replacing it. The new proposed rule would restore Part 791 regulations to provide clarity on both “vertical” joint employment (where a worker serves an entity through a staffing or contracting arrangement) and “horizontal” joint employment (where associated businesses share a workforce).
The proposal takes a more flexible approach than the 2020 rule, and notably does not require that a potential joint employer actually exercise control — only that the potential for meaningful control exist. The public comment period for this rule closes June 22, 2026.
Subminimum Wages and Workers With Disabilities: A Policy Reversal
Section 14(c) of the FLSA historically permitted employers to obtain certificates allowing them to pay workers with disabilities less than the federal minimum wage, based on the workers’ productivity. The Biden administration had proposed phasing out these certificates entirely in a December 2024 NPRM. However, on July 7, 2025, the Trump DOL formally withdrew that proposed rule, formally discontinuing the rulemaking and preserving the existing subminimum wage certificate framework.
This decision has renewed debate about the appropriate balance between protecting vulnerable workers’ employment access and ensuring equal wage protections regardless of disability status.
State-Level Minimum Wage and Overtime Thresholds
While federal FLSA standards form a national floor, many states have enacted wage and hour protections that significantly exceed federal requirements. This creates a layered compliance landscape that employers operating across state lines must navigate carefully.
For instance, California sets its exemption salary threshold as a multiple of the state minimum wage — for the current year, this equates to a weekly minimum of $1,320 for exempt employees, far exceeding the federal $684 floor. Washington and New York similarly maintain thresholds well above federal requirements.
For employees covered by both federal and state law, the more protective standard always applies. This means that in high-cost states, the federal overtime rule saga described above has had minimal practical impact on actual employer obligations — since market-driven wages and state law already set a much higher bar.
FLSA Enforcement: What Happens When Employers Violate the Law
The Department of Labor’s Wage and Hour Division is the primary federal enforcement agency for the FLSA. When violations are found, the consequences can be substantial:
Employers found to have violated minimum wage or overtime provisions may be liable for back pay — the full amount of unpaid wages — and an equal amount in liquidated damages, effectively doubling the employer’s liability. In cases of willful violations, the statute of limitations extends from two years to three years.
Employees can also bring private lawsuits directly under the FLSA, and in many cases these are filed as collective actions, aggregating claims from large groups of similarly situated workers. Attorney’s fees and court costs are recoverable if the employee prevails.
The DOL’s PAID (Payroll Audit Independent Determination) program also offers employers a pathway to self-report potential violations and resolve wage and hour issues without litigation, though participation is voluntary.
What Employers Must Do Right Now
Given the current state of FLSA law, employers should take the following practical steps:
Review overtime classifications under the 2019 thresholds. With the salary exemption floor at $684/week, ensure that every exempt employee meets both the salary test and the applicable duties test. Classification errors remain one of the most common and costly FLSA violations.
Revisit independent contractor arrangements. With the enforcement shift away from the 2024 IC rule, some classification decisions made under Biden-era standards may warrant re-examination. However, state law — which may impose stricter tests — must be independently evaluated.
Monitor the proposed rules. Both the independent contractor classification NPRM and the joint employer NPRM are active rulemakings that will likely be finalized in the coming months, reshaping compliance obligations across multiple industries.
Maintain meticulous records. Regardless of any regulatory change, the FLSA’s recordkeeping requirements remain fully in force. Accurate timekeeping is both a legal obligation and the employer’s primary defense in any wage claim.
Do not rely solely on federal standards. In states like California, New York, Colorado, and Washington, local law can impose significantly higher obligations than the FLSA. Multi-state employers should conduct a jurisdiction-by-jurisdiction compliance audit.
Looking Ahead: The FLSA in a Changing Economy
The FLSA was written for an industrial economy of hourly factory workers. The modern economy — with its gig platforms, remote workforces, fractional employment arrangements, and AI-assisted work — is stretching that original framework in ways Congress never anticipated.
The twin rulemakings on independent contractor status and joint employer liability reflect a fundamental policy question: as work becomes more fragmented and distributed, where does employee protection end and entrepreneurial freedom begin? Courts, regulators, and Congress will continue wrestling with this question throughout this decade and beyond.
For now, the direction of travel under the current administration is clear: a lighter regulatory touch on classification and joint employment, a restored emphasis on the duties test over salary thresholds, and a posture that prioritizes employer flexibility alongside worker protection.
But FLSA litigation is perennial. Whatever regulatory framework exists today will face court challenges tomorrow. Staying current is not a one-time exercise — it is an ongoing obligation for anyone who employs workers in the United States.
Have questions about how the latest FLSA changes affect your workplace? Drop your thoughts in the comments below, or subscribe to stay updated as these rules continue to evolve — the landscape is shifting fast and you don’t want to be caught off guard.