Stay Compliant: Important Wage and Hour Laws for Growing Businesses

Accurately tracking employee hours and wages is essential to HR compliance. From minimum wage requirements to overtime rules and mandatory breaks, navigating these regulations helps your business avoid costly fines and lawsuits. This guide covers federal and state wage and hour laws, distinctions between exempt and non-exempt employees, and best practices for payroll management.

At the core of wage and hour compliance is the Fair Labor Standards Act (FLSA), which establishes national standards for minimum wage, overtime pay, and child labor protections.

The FLSA applies to businesses that meet one or more of the following criteria:

• Annual Sales or Business Revenue: At least $500,000 in gross annual revenue.
• Interstate Commerce: Businesses involved in activities across state lines, such as shipping products or providing services to out-of-state customers.
• Public Agencies: Government entities, including schools and hospitals, are covered regardless of revenue.
• Employee Count: Individual employees engaged in interstate commerce or producing goods for interstate commerce are also covered.

Understanding these baseline requirements ensures businesses comply with federal regulations while navigating state-specific laws.

The FLSA establishes a federal minimum wage of $7.25 per hour (as of 2023). However, many states and cities set higher minimum wages to reflect the cost of living. Businesses must pay the highest applicable rate.

Minimum Wage Laws by State #

The minimum wage varies significantly across states and localities, often exceeding the federal minimum to account for cost of living differences. Below is a chart summarizing the minimum wage in each state as of January 1, 2025. Please note that some states have scheduled increases, so it’s essential to verify the current rate through the provided sources. Refer to your state’s Department of Labor to ensure compliance with the appropriate minimum wage laws.

Note: Some states like New York and California have different minimum wages based on regions or city ordinances. While we strive to maintain an accurate list, you should always refer to the state’s labor department or local city regulations for the most accurate and up-to-date information.

Overtime regulations determine when employees are eligible for additional pay beyond their standard wages. Under the federal FLSA, non-exempt employees are entitled to overtime pay at 1.5 times their regular hourly rate for hours worked over 40 in a week.

While the FLSA sets the federal baseline, many states have additional or more stringent overtime requirements. The following chart outlines the overtime laws across states, highlighting deviations from federal rules. You may also access a chart at the U.S. Department of Labor.

• 1.5x: Time and a half
• Double Time: Twice the regular rate of pay
• No State Overtime Law: State follows federal FLSA rules without additional provisions

• Check city or county labor department websites for specific local wage and hour regulations, as some cities impose higher minimum wages or additional overtime requirements.
• While we strive to maintain an accurate list, you should always refer to the state’s labor department or local city regulations for the most accurate and up-to-date information.

One of the most critical distinctions in wage and hour law is between exempt and non-exempt employees. This classification affects an employee’s eligibility for overtime pay under the FLSA.

Non-exempt employees are typically hourly workers who are entitled to overtime pay. They must be compensated for any hours worked beyond 40 in a week (or daily overtime in certain states).

Exempt employees, on the other hand, are salaried workers who are not entitled to overtime pay. However, for an employee to be classified as exempt, they must meet specific criteria under the FLSA, including salary thresholds and job duty requirements.

The U.S. Department of Labor (DOL) uses duties tests to determine whether an employee qualifies as exempt. The table below provides detailed information on the key requirements for each FLSA exemption category. Additionally, it highlights deviations from the general salary threshold, such as for computer employees, and explains the specific duties tests applicable to each exemption.

The table below provides detailed information on the key requirements for each FLSA exemption category. Additionally, it highlights deviations from the general salary threshold, such as for computer employees, and explains the specific duties tests applicable to each exemption.

1. Deviations in Salary Thresholds:
   • Computer employees can qualify for exemption if paid hourly at $27.63 per hour, instead of meeting the standard salary threshold.
   • No salary threshold applies to outside sales employees, given the unique nature of their work.
   • Highly Compensated Employees (HCE) are subject to a significantly higher total compensation threshold.
2. Duties Tests Override Salary in Specific Cases:
   In certain roles, meeting the duties tests can exempt employees regardless of salary thresholds, depending on state-specific laws or regulations (e.g., public school teachers and doctors).
3. State Variations:
   Some states have stricter requirements, including higher salary thresholds for exemption. For example:
   • California requires a minimum salary equivalent to two times the state minimum wage for a full-time employee to qualify for exemption.
   • New York imposes region-specific thresholds, with higher requirements in New York City.

Meals and Rest Periods by State #

Meal and rest break requirements vary significantly across federal and state laws. While the Fair Labor Standards Act (FLSA) provides minimal guidance, many states have enacted their own regulations to protect employees’ rights to breaks during the workday. Understanding these differences is essential for small businesses to ensure compliance and avoid potential legal issues.

Federal Meal and Rest Period Laws #

Under federal law, the Fair Labor Standards Act (FLSA) sets the baseline for meal and rest breaks:

• Meal Breaks:
  • No Requirement: The FLSA does not mandate employers to provide meal breaks.
  • If Provided: Meal breaks (typically 30 minutes) do not need to be paid as long as the employee is fully relieved from duties during the break.
• Rest Breaks:
  • No Requirement: The FLSA does not require employers to provide rest breaks.
  • If Provided: Short breaks (usually 5 to 20 minutes) must be paid as work time.

Note: While federal law sets the minimum standards, many states have more stringent requirements that employers must follow.

Meal and Rest Period Laws #

Federal Meal and Rest Period Standards #

The FLSA does not mandate breaks. However:

• Meal Breaks: Typically unpaid if employees are fully relieved from duties.
• Rest Breaks: Paid breaks (5–20 minutes) must be counted as work hours if provided.

There is no federal law requiring employers to provide meal breaks; however, under the FLSA, the employee must be relieved of their duties in order for the break to be unpaid.

Many states require meal and/or rest breaks. The following chart outlines the meal and rest break requirements for each state as of 2025. This includes both meal breaks (unpaid breaks typically lasting 30 minutes or more) and rest breaks (paid breaks typically lasting 5 to 20 minutes). Where applicable, local ordinances that impose additional requirements are also noted.

Meals and Rest Periods Chart #

• No State Requirement: Employers are not mandated by state law to provide meal or rest breaks. However, if breaks are offered, they must comply with federal regulations.
• Mandatory: Employers must provide the specified breaks according to state law.
• Unpaid/Paid: Indicates whether the break must be unpaid or paid.

Best Practices for Compliance #

To effectively comply with meal and rest period laws, consider adopting the following best practices:

1. Understand Applicable Laws
   • Federal vs. State vs. Local: Determine which laws apply based on your business location and where your employees work.
   • Industry-Specific Rules: Some industries may have unique requirements.
   • Legal Advice: Seek guidance from labor law attorneys to navigate complex regulations and avoid potential legal pitfalls.
   • Stay Updated: Laws can change; ensure your policies are up-to-date with the latest legal requirements.
2. Implement Clear Policies
   • Written Guidelines: Develop and distribute clear policies regarding meal and rest breaks to all employees.
   • Consistent Application: Ensure policies are applied consistently across all departments and shifts.
   • Employee Classification: Ensure that employees are correctly classified as exempt or non-exempt based on both federal and state criteria to determine overtime eligibility.
3. Train Management and Staff
   • Educate Supervisors: Train managers on the importance of adhering to break policies and the legal implications of non-compliance.
   • Employee Awareness: Inform employees of their rights regarding breaks and how to request them.
4. Use Payroll and Timekeeping Systems:
   • Accurate Tracking: Implement reliable timekeeping systems to monitor when employees take breaks.
   • Prevent Missed Breaks: Use systems that alert supervisors when breaks should be taken.
   • Precise Payroll Management: Implement payroll systems that are updated regularly to reflect current wage and overtime laws.
5. Regular Audits and Reviews:
   • Compliance Checks: Periodically audit your break policies and practices to ensure they meet legal requirements.
   • Check Payroll: Periodically review your payroll practices and employee classifications to ensure adherence to all applicable laws.
   • Address Issues Promptly: Correct any discrepancies or non-compliance issues immediately.
6. Provide Flexibility:
   • Accommodate Needs: Where possible, accommodate employees’ needs for breaks, especially in high-stress or physically demanding roles.
   • Flexible Scheduling: Allow flexibility in scheduling breaks to enhance employee satisfaction and productivity.

Conclusion: Mastering Wage and Hour Compliance #

Adhering to wage and hour laws protects businesses from legal risks and fosters a fair workplace. By staying informed of federal, state, and local regulations, using appropriate tools, and implementing clear policies, you can ensure compliance while supporting employee well-being.

• U.S. Department of Labor: https://www.dol.gov
• State Labor Departments: Refer to your local labor agency.