Wages and Overtime Regulations
Under the Fair Labor Standards Act (FLSA), the federal minimum wage is $7.25 per hour at the time of writing (Jan. 2026). In cases where the state in which the employee works also has a minimum wage, the employee is entitled to the higher of the two wages. Most states in the United States have a minimum wage higher than $7.25.
Non-exempt employees that are covered by the FLSA are also entitled to an overtime rate at least 1.5 times that of their standard rate for hours worked over 40 hours per workweek (defined as any fixed and regularly recurring period of 168 hours).
Exempt vs. Non-Exempt Employees
Most workers are classified as either exempt or non-exempt employees, and are protected by a number of requirements placed by the FLSA. In addition, many states also have wage and hour laws. As such, it is important both as an employer and as an employee to understand one's position.
Non-Exempt Employees
Non-exempt employees are entitled to minimum wage as well as overtime pay under the FLSA. Employers are required to pay these workers an overtime rate of 1.5 times their standard rate when they work more than 40 hours per workweek. A non-exempt employee that is not paid overtime wages can file an FLSA overtime claim through the U.S. Department of Labor. Most workers that are paid an hourly wage fall under this category.
Exempt Employees
Exempt employees are not protected by the FLSA and are not entitled to overtime pay. Certain job types are exempt by definition, including commissioned sales employees, computer professionals, farm workers, drivers, salesmen, seasonal workers, and those performing executive, administrative, or professional roles.
For most professions, if an employee meets the following three rules, they are considered exempt:
- The employee is paid at least $35,568 per year ($684 per week).
- The employee is paid on a salary rather than an hourly basis.
- The employee performs exempt job duties (Executive, Administrative, or Professional).
Professions That Are NOT Exempt
Generally, the exemptions discussed above only apply to "white-collar" employees. "Blue-collar" workers, such as those who perform manual labor or other repetitive operations with their hands that require physical skill and energy, are not included within the exemptions regardless of whether they meet the salary and duties requirements.
No matter how highly paid non-management employees in production, maintenance, or construction are, they are entitled to a minimum wage and overtime pay. This includes carpenters, electricians, mechanics, plumbers, and construction workers. The exemptions also do not apply to police, firefighters, paramedics, and other first responders.
Brief History of Time Cards and Clocks
Time cards have been used since the late 19th century in the form of clock cards, which were rectangular cards on which the working hours of the day and days of the week were printed. The need for clock cards arose partly due to industrialization, the increasing use of factory labor, and the need for a more effective way to track workers' hours to improve efficiency.
The first clock card time recording machine, the Rochester Time Recorder, was invented by Daniel M. Cooper in 1894. This clock was able to print accurate clock-in and clock-out times on individual clock cards that employees would insert into the clock. In 1888, William Bundy invented the Bundy Key Recorder, and Dr. Alexander Dey invented Dey's Dial Recorder.
The need for these technologies increased in the early 20th century, leading large companies like International Business Machines Corporation (IBM) to develop new time recording solutions under the direction of Thomas J. Watson. While time recorders and clock cards are still in use today, there are many new electronic time tracking solutions, including radio-frequency identification (RFID), magnetic cards, and biometric time recorders.