FLSA Violations in Specific Industries

Common FLSA Violations in Specific Industries

Employers in certain industries frequently violate the FLSA. Employees working in the industries listed on this page should pay careful attention to their employer’s pay practices. Some illegal pay practices are so common in these industries that workers assume they must be legal.

• Home Health Care Industry
• Manufacturing Establishments
• Nursing Care/Residential Care Facilities
• Professional Offices
• Real Estate and Rental Agencies
• Security Guard/Janitor/Maintenance
• State and Local Governments
• Wholesale or Warehouse Industry

Home Health Care Industry

Employers who provide home health care services for individuals who (because of age or infirmity) are unable to care for themselves are generally required to pay minimum wage and overtime premium pay under the Fair Labor Standards Act (FLSA). However, whether these protections apply may depend on the type of services provided and the nature of the employment relationship. As of January 1, 2015, third-party employers (such as home care staffing agencies) may not claim the FLSA’s companionship services or live-in domestic worker exemptions. Trained personnel such as nurses, whether registered or practical, are not exempt from minimum wage or overtime under the companionship exemption. Registered nurses may be exempt under the learned professional exemption if they meet all applicable criteria, including being paid on a salary basis at no less than $684 per week.

Requirements

Persons employed in domestic service in households are covered by the FLSA. Certified nurse aides, home health care aides, and other individuals providing home health care services fall within the term “domestic service employment.”

An employee who performs companionship services in or about the private home of the person by whom they are employed may be exempt from the FLSA’s minimum wage and overtime requirements if all criteria of the exemption are met and the employer is not a third-party employer. “Companionship services” means services that provide fellowship and protection for persons who, because of advanced age or physical or mental infirmity, are unable to care for themselves. These services may include household work directly related to the care of the individual such as meal preparation, bed making, and laundry. However, if the employee performs general household work that exceeds 20 percent of the total hours worked in a week, the exemption no longer applies.

The term “companionship services” does not include services performed by trained personnel such as registered or practical nurses. Registered nurses may qualify for the professional exemption if they meet the applicable tests. Individuals who provide care for children who are not physically or mentally infirm do not qualify for the companionship exemption.

Covered domestic service employees who reside in the household where they are employed are entitled to the minimum wage but may be exempt from the Act’s overtime requirements under limited conditions.

Typical Problems

An employee hired as a companion to an aged individual with a physical infirmity spends more than 20% of their time doing general household work. That person must be paid at least the minimum wage and one and one-half the regular rate of pay for hours worked in excess of forty in a workweek.

An employee who provides care and protection for minor children, where the children are not physically or mentally infirm, must be paid the minimum wage and proper overtime compensation. This activity would not constitute exempt companionship services.

Manufacturing Establishments

Employees who work in manufacturing, processing, and distributing establishments (including wholesale and retail establishments) that produce, handle, or work on goods for interstate or foreign commerce are included in the category of employees engaged in the production of goods for commerce. The minimum wage and overtime pay provisions of the Act apply to employees so engaged.

Typical Problems

1. Hours Worked: Failure to count and pay for all the hours worked, such as time spent oiling, greasing, cleaning, or installing machines at the start or end of the workday; time spent traveling from job site to job site; or time spent at a designated place to receive instructions or to pick up and carry tools to a designated place.
2. Exemptions: Employees treated as exempt solely based on job titles or because they are paid on a salary basis, without meeting the duties test.
3. Industrial Homework: Employees performing work in their private homes in restricted industries without the required prior certification from the Wage and Hour Division.

Coverage

The FLSA applies to employees of a manufacturing business covered either on an “enterprise” basis or by “individual” employee coverage. If the manufacturing business has at least some employees who are “engaged in commerce” and meets the $500,000 annual dollar volume test, then the business is required to pay all employees in the enterprise in compliance with the FLSA.

Even if a business does not meet the enterprise coverage threshold, it may still be required to comply with the FLSA under individual coverage if an employee’s job duties involve engagement in interstate commerce or the production of goods for interstate commerce. This includes employees who handle goods or materials that have moved in or will move in interstate commerce, such as receiving shipments, making interstate phone calls, or handling credit card transactions.

The Wage and Hour Division has found that virtually all employees of manufacturing establishments are covered by the FLSA.

Requirements

Covered, nonexempt employees must be paid at least the current Federal minimum wage. This minimum rate applies regardless of whether employees are paid by the hour, piece, job, incentive, or other basis. The cost of tools, uniforms, or other similar requirements may not be borne by the employee if it would reduce the wages below the minimum wage or cut into overtime compensation due under the FLSA.

Unless specifically exempt, covered employees must receive overtime pay for hours worked over 40 in a workweek, at a rate of not less than one and one-half times their regular rate of pay. The regular rate includes all forms of compensation, including nondiscretionary bonuses and shift differentials, and is calculated by dividing total compensation by total hours worked in the workweek.

Nursing Care/Residential Care Facilities

This section provides general information concerning the application of the minimum wage and overtime pay requirements of the Fair Labor Standards Act (FLSA) to skilled nursing care facilities, intermediate care facilities, and nursing and personal care facilities. It is designed to provide general information on the requirements of the FLSA and to alert employees to certain employment practices that result in FLSA violations.

Coverage:

The FLSA covers all nursing care enterprises, public and private, whether operated for profit or not for profit.

Requirements:

Minimum Wage: Covered employers must pay all non-exempt employees at least the current federal minimum wage on their regularly scheduled payday.

Overtime: Employers must pay non-exempt employees time-and-one-half their regular rate of pay for each hour of overtime worked. Nursing care facilities may comply with overtime requirements in one of two ways:

• The standard method: pay overtime after 40 hours in a 7-day workweek.
• The “8 and 80” system: with a prior agreement, pay overtime for hours worked over 8 in a day or over 80 in a 14-day period.

Recordkeeping: Employers are required to maintain accurate payroll and time records. Time records must be preserved for two years, and payroll records must be kept for three years.

Meal Periods: Automatic deductions for meal periods must be used cautiously. Employers must ensure that employees receive bona fide meal periods free of work duties. If employees are interrupted during their meal period to perform job duties or are not fully relieved of duty, that time must be compensated.

Common Industry Problems:

Non-exempt employees must be compensated for any time during which they perform activities that benefit the employer.

The most common violation in the nursing care industry is failure to pay for all hours worked. Unpaid work time often occurs when employers fail to compensate for work performed:

• Before and after a scheduled shift
• During scheduled meal periods
• While attending staff meetings or compensable training sessions

Minimum wage and overtime violations also occur when employers make deductions or demand reimbursement for the cost of required uniforms or equipment.

Volunteers: Individuals not otherwise employed by the facility who volunteer — without expectation of compensation — to assist residents in ways not otherwise provided by the facility are not considered employees under the FLSA. However, individuals (including residents) who perform work of any economic benefit to the facility must be treated as employees and are entitled to minimum wage and overtime.

Overtime pay violations frequently occur when employers:

• Fail to pay daily overtime under the “8 and 80” system
• Pay overtime only after 80 hours in a 14-day period without a valid “8 and 80” agreement
• Fail to combine hours worked in different departments or locations
• Fail to include hours spent on-call in total hours worked
• Fail to include all forms of compensation (e.g., shift differentials, bonuses, on-call fees) when calculating the regular rate of pay
• Fail to pay overtime to non-exempt salaried employees (e.g., clerical staff, cooks, activity directors)

Professional Offices

This section contains information to assist in determining how the Fair Labor Standards Act (FLSA) applies to professional offices, e.g., doctors, lawyers, accountants, etc.

Characteristics

Professional offices provide services to their customers, clients, or patients, which may or may not involve the sale of goods or products. Many such offices are small, with few employees, and are local in nature. Others may be part of a larger enterprise with more than one office or establishment.

Requirements

Employees who are covered by the FLSA are entitled to be paid at least the federal minimum wage as well as time and one-half the regular rate of pay for all hours worked over 40 in a workweek. Certain employees may be exempt from minimum wage and overtime under the bona fide executive, administrative, professional, outside sales, or computer employee exemptions. However, these exemptions apply only if specific criteria regarding job duties and compensation are met.

Examples of Common Non-Exempt Roles

Paralegals: Paralegals are generally non-exempt under the FLSA and are entitled to overtime pay, even if they are paid on a salary basis. Although their work may involve legal knowledge, they do not qualify for the learned professional exemption because their duties do not require a prolonged course of specialized academic instruction.

Medical Assistants: Medical assistants, including those in doctors’ offices or clinics, are typically non-exempt. Their duties may involve both clinical and clerical work, but they do not meet the criteria for exemption as learned professionals due to the absence of a prolonged academic degree requirement.

Billing Staff: Employees performing billing tasks — such as medical billers, legal billing clerks, and office billing personnel — are generally non-exempt. These roles are typically clerical and do not involve the exercise of discretion and independent judgment on matters of significance required for the administrative exemption.

Typical Problems

• Paying non-exempt employees a salary but failing to pay time and one-half for hours worked over 40 in a workweek.
• Not paying employees for all hours worked, such as time spent arriving early, working through unpaid meal breaks, or staying late.
• Failing to compensate employees for work performed at home or not including such hours in overtime calculations.
• Misclassifying paralegals, billing clerks, or medical assistants as exempt when they do not meet the required exemption criteria.
• Automatically deducting time for meal periods without confirming whether the employee received an uninterrupted break. Interruptions to meal periods must be compensated.  Employers must ensure that breaks are duty-free in order to avoid violations.

All hours worked must be accurately recorded, and employees must be compensated for any time spent performing work that benefits the employer, regardless of where or when the work occurs.

Real Estate and Rental Agencies

A real estate or rental agency is one which represents both in-state and out-of-state clients in negotiating the purchase or sale of property within the State in which the broker is located, or negotiates for the purchase or sale of property in other states, or collects or remits rents or other monies for property owners.

Coverage

Real estate and rental agencies may be subject to the FLSA through either enterprise coverage or individual coverage. Even if the agency does not meet the $500,000 annual gross revenue threshold for enterprise coverage, employees who regularly handle interstate communications (such as phone calls, emails, or online listings), process credit cards, or otherwise engage in commerce may still be individually covered under the Act.

Requirements

The FLSA requires the payment of the federal minimum wage to covered non-exempt employees and overtime pay at a rate of not less than one and one-half times the regular rate of pay after 40 hours of work in a workweek. As of 2025, the federal minimum wage is $7.25 per hour. However, some states and localities have higher minimum wage rates, and employers must comply with the rate most favorable to the employee.

Wages required by FLSA are due on the regular payday for each pay period. Employers are required to keep records containing information specified in the regulations (29 C.F.R. Part 516).

Exemptions from various provisions of the FLSA are provided for employees who meet certain requirements. Among the employees who may be exempt from minimum wage and overtime pay are executive, administrative, professional, and outside sales employees. Each of these categories of employee must meet specified requirements before the exemption may be applied.

Outside Sales Exemption

Many real estate agents and brokers may qualify for the outside sales exemption under the FLSA if they:
– Customarily and regularly work away from the employer’s place of business;
– Are primarily engaged in making sales or obtaining orders or contracts for services;
– Are paid on a commission basis (although a salary is not required).

However, office-based workers, assistants, and those who do not regularly work outside the office typically do not qualify for this exemption and must be paid minimum wage and overtime.

Typical Problems

Some common compliance issues found during investigations in this industry include:

• Misclassifying inside sales or office employees as exempt without meeting the salary or duties test.
• Failing to pay for all hours worked, including after-hours phone calls, showings, or administrative tasks performed remotely.
• Improper deductions from commissions, such as deductions for marketing, desk fees, or transaction errors that reduce pay below minimum wage or cut into overtime.
•  Not compensating assistants or clerical staff properly when they handle listings, showings, or transactions.
•  Charging employees for meals, lodging, and other facilities that are actually for the benefit of the employer.
• Charging employees the full retail cost for facilities furnished for their benefit, instead of limiting charges to the actual cost.

Security Guard/Janitor/Maintenance Service Industry

This section provides an overview of how the Fair Labor Standards Act (FLSA) applies to the security guard and maintenance service industries.

Characteristics

The security guard service industry includes firms that provide protection to other businesses or individuals. Guards typically obtain a state license, which is portable across employers, and are assigned to posts on a daily basis. They are usually paid hourly.

The maintenance service industry includes firms that provide janitorial or custodial services. These employees typically work at one or more locations during a shift, and the employer generally supplies cleaning materials and tools.

Requirements

The FLSA requires payment of the federal minimum wage and time-and-one-half the regular rate of pay for hours worked beyond 40 in a workweek. Covered employers must also maintain accurate records of hours worked each day and week by non-exempt employees.

Typical Problems

Security Guard Firms:

• Guards cannot be required to pay for uniforms, firearms, belts, or other tools if those costs reduce their wages below the minimum wage or cut into overtime pay. This rule applies whether the guard buys items independently or from the employer.
• The cost of maintaining or cleaning uniforms, such as dry cleaning, cannot reduce wages below the minimum or overtime thresholds.
• Overtime must be calculated based on a single workweek. Employers may not average hours over multiple weeks to avoid overtime.
• Hours worked at multiple job sites or posts in a single workweek must be combined for determining overtime.
• Time spent traveling between assignments during the workday is compensable.
• All hours worked must be recorded accurately. Employers cannot disguise overtime hours as “expense” reimbursements.

Industrial/Maintenance Service Firms:

• Every individual who performs work must be paid, regardless of whether they are part of a family team (e.g., spouses or children).
• Minors must be compensated according to wage and hour laws applicable to their age and duties.
• Overtime is due for all hours worked over 40 in a workweek, regardless of pay method (hourly, salary, piece rate, or task basis).
• Hours worked across multiple sites or facilities by a single employee must be totaled when calculating overtime pay.

State and Local Governments

State and local government employers consist of those entities that are defined as public agencies by the FLSA. A “Public Agency” is defined to mean the Government of the United States; the government of a State or political subdivision thereof; any agency of the United States, a State, or a political subdivision of a State; or any interstate governmental agency. The public agency definition does not extend to private companies engaged in work normally performed by public employees.

Coverage

Section 3(s)(1)(C) of the FLSA covers all public agency employees of a State, political subdivision of a State, or an interstate government agency. All employees of public agencies are covered under the FLSA regardless of the agency’s revenue.

Requirements

The FLSA requires employers to:

• Pay at least the Federal minimum wage ($7.25 an hour) to all covered non-exempt employees for all hours worked
• Pay at least one and one-half times the employees’ regular rates of pay for all hours worked over 40 in a workweek
• Comply with applicable child labor standards (note: these standards typically do not apply to state and local government employees, except in limited cases)
• Comply with the recordkeeping requirements of 29 C.F.R. Part 516

Under certain conditions, state or local government employees may receive compensatory time off in lieu of overtime pay. Such comp time must be earned at a rate of not less than one and one-half hours for each overtime hour worked. Public safety employees, emergency response personnel, and employees engaged in seasonal activities may accrue up to 480 hours; all others, up to 240 hours.

Wholesale or Warehouse Industry

The wholesale industry is characterized by the sale of goods for resale, rather than sales to the ultimate consumer. The warehouse industry includes central warehouses for a business enterprise, public warehouses, and storage establishments.

Requirements

The FLSA sets basic minimum wage and overtime pay standards and regulates the employment of minors. Covered, nonexempt employees must be paid at least the Federal minimum wage of $7.25 per hour. Non-exempt employees must also be paid time and one-half their regular rates of pay for all hours worked over 40 per workweek, regardless of whether paid hourly, by salary, piece rate, commission, or other basis. Each workweek stands alone and there can be no averaging of hours over multiple workweeks.

Typical Problems

Common issues in the wholesale and warehouse industries include:

• Misapplying exemptions to non-exempt employees such as clerical staff or dispatchers
• Assuming salaried employees are automatically exempt from overtime
• Failing to pay for all hours worked, including time spent completing paperwork, taking inventory, or attending mandatory meetings
• Inadequate or missing time records for salaried or piece rate employees
• Providing compensatory time off in lieu of overtime pay, which is not permitted in the private sector
• Misclassifying employees as independent contractors without meeting the economic realities test
• Making deductions unrelated to board, lodging, or other permitted categories during overtime weeks