Employers Have a Straighter Road to Overtime Compliance

Employers have faced ongoing uncertainty in determining overtime eligibility under the Fair Labor Standards Act (FLSA), but that landscape became clearer in May 2026 when the U.S. Department of Labor (DOL) formally rescinded the 2024 overtime rule and reinstated the prior regulatory framework. While this shift simplifies compliance, employers should not assume a “set it and forget it” approach to overtime classification.

The now-rescinded 2024 rule would have significantly increased the salary thresholds for exempt employees in two phases—first to $43,888 in July 2024 and then to $58,656 in January 2025, with automatic updates every three years. However, the rule was struck down in November 2024 by a federal district court, which held that the DOL exceeded its authority by placing too much emphasis on salary rather than job duties in determining exemption status. Following unsuccessful appeals, the DOL officially removed the rule in May 2026 and restored the 2019 framework.

As a result, the federal salary threshold for exempt “white collar” employees remains at $684 per week ($35,568 annually), and the highly compensated employee threshold remains $107,432. The previously proposed increases and automatic adjustments are no longer in effect.

Despite this rollback, employers should proceed carefully. Businesses that adjusted salaries, classifications, or workforce planning based on the 2024 rule may face practical and legal considerations if attempting to reverse those changes. In addition, state wage and hour laws may impose higher thresholds or different requirements.

Now is a great time for employers to reassess exempt classifications, confirm that duties tests are properly met, and document any compensation or classification decisions. If you would like assistance evaluating your organization’s overtime compliance or workforce strategy, please contact a member of our team.