In 1938 Congress enacted the Fair Labor Standards Act to protect employees engaged in interstate commerce from substandard wages and excessive working hours. The Act achieves its purpose by prescribing a maximum workweek of 40 hours for an employee engaged in commerce, unless the employee is paid at the rate of one and one half times the regular rate of compensation for all hours worked over 40, and by prescribing a minimum wage for all employees engaged in interstate commerce. The Act also requires equal pay for equal work regardless of gender, and restricts the employment of underage children.
The Act initially covered only those employees “engaged in commerce or in the production of goods for commerce.” Congress greatly expanded the Act’s coverage in 1961 by amending the Act to cover “enterprises” as well as individual employees. The Act now provides that employers must pay the minimum wage and overtime compensation not only to employees actually engaged in commerce or in the production of goods for commerce, but also to any employee “employed in an enterprise engaged in commerce or in the production of goods for commerce.”
In summary, for the minimum wage and overtime compensation requirements to apply to a particular worker, the following two requirements must be satisfied: (1) the worker must either be (a) engaged directly in commerce or in the production of goods for commerce, or (b) employed by an enterprise engaged in commerce or in the production of goods for commerce, and (2) the worker must be an employee.
The more important of these terms are discussed in the following paragraphs, along with pertinent exemptions.