U.S. Labor Law: Federal, State, FLSA & Leave Rules

Unlike Korea, the U.S. legal system has both federal and state laws. While this structure may seem complex at first, understanding how the two interact is essential. In this article, we will look at the relationship between federal and state laws, review key FLSA requirements, and summarize the main types of leave commonly provided in U.S. workplaces.

One reason HR management in the U.S. can feel more complex than in Korea is the structure of its legal system. Unlike Korea, where national laws generally apply across the country, the U.S. has both Federal Law and State Law.

• Federal law: Establishes minimum standards that apply across the U.S. regardless of the State.
• State law: Refers to laws independently enacted by each State to reflect local circumstances.

A key principle for HR teams to remember is that even if the federal minimum wage is $7.25, if the minimum wage in the State where the workplace is located is $15, the employer must follow the higher State minimum wage. When managing HR operations for a U.S. entity, it is therefore important to review both federal requirements and the specific regulations of the State where the workplace is located.

💡 Reference: State Labor Laws in the U.S.

The Fair Labor Standards Act (FLSA) is a federal law that establishes standards for minimum wage, overtime pay, time and attendance recordkeeping, and child labor. The FLSA applies to many private- and public-sector workplaces in the U.S. and sets fundamental employment standards covering areas such as minimum wage, overtime, and working time records.

The key FLSA requirements that HR teams should understand in practice can be broadly divided into three areas: pay, management, and protection.

• Federal minimum wage guidelines: The current federal minimum wage is set at $7.25 per hour. However, because each State may establish its own minimum wage, employers should review both the federal requirement and the minimum wage rules of the State where the workplace is located.

Source: U.S. Department of Labor > State Minimum Wage Laws, as of January 2026

• Overtime: Employees who work more than 40 hours in a workweek, defined as seven consecutive days totaling 168 hours, must be paid at least 1.5 times their regular hourly rate for overtime hours.

• Tip regulations: A Tip Credit may apply to employees in service and other occupations who regularly receive tips. Employers that meet certain requirements may count a portion of an employee's tips toward the applicable minimum wage. However, the employee's direct hourly wage from the employer plus tips must equal at least the applicable local minimum wage.

• Record keeping: Employers are required to accurately record and retain employees' working hours and wage payment records. They must also display an official poster containing key FLSA information in a location where employees can easily see it.

• Hours worked: Under U.S. labor law, working time may include not only time spent actively performing work but also certain waiting periods or time spent at a workplace under the employer's direction. This can include time employees are required to remain on the employer's premises, wait according to work instructions, or remain at a designated work location. In principle, time under the employer's direction and supervision is considered paid working time.

• Child labor restrictions: The FLSA places strict restrictions on child labor to protect minors' educational opportunities, health, and well-being. Permitted working hours and occupations vary by age, and minors are prohibited by law from working in environments considered harmful to their health or welfare.

One of the major differences between Korea and the U.S. is the legal requirement for paid leave. The FLSA does not require employers to provide paid vacation, paid sick leave, or holiday pay. Leave policies in the U.S. therefore vary significantly depending on State law and company policy, making it important to review the requirements that apply in each workplace location. The following are common types of leave offered in U.S. workplaces.

• Paid family and medical leave: Provides income replacement when employees take extended leave for reasons such as bonding with a child or dealing with a serious health condition affecting themselves or a family member. There is no federal mandate requiring a nationwide paid program, but many States now operate their own paid leave programs, so employers should review the requirements applicable to the workplace location.

• Paid sick leave: Provides paid short-term leave for reasons such as minor illnesses or medical care for employees or their family members. There is no federal requirement, but many States and local governments have enacted paid sick leave laws.

• Paid time off (PTO): A paid leave arrangement that combines vacation, sick leave, and personal time rather than managing each category separately. PTO is widely used in U.S. workplaces. While it is not federally mandated, it is often offered as an important employee benefit for attracting local talent.

• Unpaid family and medical leave (FMLA): Provides unpaid leave while protecting eligible employees' job reinstatement rights and continued health insurance coverage. Under the Family and Medical Leave Act (FMLA), employees who meet certain requirements are entitled to job-protected unpaid leave for qualifying reasons such as childbirth or a serious health condition.

Establishing HR standards that reflect the requirements of each location is more than a legal obligation. It is also an essential part of supporting stable global business operations and building trust with local employees. When operating a U.S. entity, companies should review how federal and state laws apply together and establish HR policies based on the requirements of each workplace location. We hope this guide provides a useful foundation for building consistent HR operations in the U.S.

Minimum wage, overtime, paid sick leave, PTO policies, and other requirements can vary by State, making it important for U.S. workplaces to manage attendance and leave policies systematically at the workplace level. Shiftee allows organizations to configure work policies and leave standards for different global workplaces and centrally manage attendance records and leave data, helping overseas entities manage their workforce policies more efficiently.