Overtime Salary Threshold Returns to $684 a Week

For two years, employers lived with uncertainty over who qualified for overtime. A 2024 federal rule would have sharply raised the salary employees must earn to be exempt. Courts struck it down, and in May 2026 the Labor Department made the reversal official. The result is a familiar number and a renewed focus on the part of the test employers most often get wrong.

Where the threshold stands

The federal salary threshold for the executive, administrative and professional exemptions under the Fair Labor Standards Act is $684 per week, or $35,568 a year. The threshold for highly compensated employees is $107,432 in total annual compensation. Both figures come from the rule the Labor Department adopted in 2019.

In mid-May 2026, the department formally rescinded the 2024 overtime rule and restored the earlier regulatory text. Law firms tracking the change describe it as a technical correction, since federal district courts in Texas had already vacated the 2024 rule in late 2024 and the Wage and Hour Division had been enforcing the 2019 levels since then.

The 2024 rule would have raised the standard threshold first to $43,888 a year and then to $58,656, with automatic updates every three years. One court held that the increase effectively replaced the duties test Congress intended, which is why the rule did not survive.

What could change again

The rescission does not prevent future rulemaking, but most observers do not expect the current administration to propose a new threshold. In Congress, a group of Senate Democrats introduced the Restoring Overtime Pay Act of 2026, which would raise the threshold to $45,000 a year with further increases in later years. That bill would need to pass both chambers and be signed, which is far from certain.

State law is the more likely source of change for multistate employers. Several states, including New York and California, set higher salary thresholds for exemption under their own laws, and those higher thresholds apply regardless of the federal rollback. Kentucky follows the federal salary level for most purposes, but employers with remote staff in other states should check each location.

Duties still decide most cases

With the salary line settled, the duties test carries most of the weight. To qualify as exempt, an employee must be paid on a salary basis, earn at least the threshold and perform work that meets the specific duties requirements for the exemption claimed.

Employment lawyers repeat the same warning. A job title does not create an exemption. An employee called a manager must actually manage, which generally means directing the work of at least two full-time employees and having real input into hiring and firing. An administrative employee must exercise discretion and independent judgment on significant matters. A professional employee must perform work requiring advanced knowledge in a field of science or learning.

Misclassification commonly shows up in a few roles. Assistant managers who spend most of their time doing the same work as hourly staff, coordinators who follow established procedures without real discretion, and inside sales or customer service employees paid a salary are frequent examples. Each can lead to back pay claims for unpaid overtime, plus liquidated damages.

What employers should do now

Employers that raised salaries or reclassified employees to prepare for the 2024 rule face a choice. Federal law no longer requires those changes, but reversing them can damage trust and invite claims if duties were the real issue. Most advisers recommend leaving pay increases in place and reviewing classifications on their merits.

A practical review starts with a list of every exempt employee, the exemption claimed, current salary and an honest description of daily work. Compare each against the duties test. Where the fit is weak, either change the role so it genuinely qualifies or reclassify the position as nonexempt and pay overtime going forward.

Keep good records either way. Accurate time records for nonexempt employees and written job descriptions for exempt ones are the best defense in a wage and hour dispute. Our guide to writing job descriptions that hold up covers how to document duties.

The overtime rules sit alongside several other federal changes this year. The Labor Department has also proposed replacing its 2024 independent contractor rule, which we explain in our contractor classification report. Kentucky employers should also review state requirements on breaks and seventh-day overtime, covered in our Kentucky wage and hour guide.