Legal Requirements for Pay

Pay policies and practices in the United States are subject to government laws and regulations. Under the laws governing equal employment opportunity, employers may not base differences in pay on an employee’s age, sex, race, or other protected status. The goal is for employers to provide equal pay for equal work. Job descriptions, job structures, and pay structures can help organizations demonstrate that they are upholding these laws.
In the United States, employers must pay at least the minimum wage established by law. (A wage is the rate of pay per hour.) Some states have laws specifying minimum wages; in these states, employers must pay whichever rate is higher. Another requirement of the FLSA is that employers must pay higher wages for overtime, defined as hours worked beyond 40 hours per week. The overtime rate under the FLSA is one and a half times the employee’s usual hourly rate. Under the FLSA, executive, professional, administrative, and highly compensated employees are considered exempt employees, meaning employers need not pay them overtime for working more than 40 hours per week.
Exempt status depends on the employee’s job responsibilities, salary level, and “salary basis,” meaning that the employee is paid a given amount regardless of the number of hours worked or quality of the work. The FLSA also sharply restricts the use of child labor, with the aim of protecting children’s health, safety, and educational opportunities. The limits apply to children younger than 18, with various restrictions for children ages 14 to 17.