DOL Restores FLSA Overtime Salary Threshold: What HR Teams Must Do Now

What Happened: The 2024 Rule and Its Reversal

In April 2024, the Biden administration finalized a rule that would have raised the FLSA salary threshold in two phases: to $844 per week ($43,888 annually) on July 1, 2024, and to $1,128 per week ($58,656 annually) on January 1, 2025. The rule also introduced automatic triennial updates tied to earnings data.

Multiple employer groups challenged the rule in federal court. In November 2024, the U.S. District Court for the Eastern District of Texas vacated the rule nationwide, finding that the DOL had exceeded its authority by effectively making the salary level — rather than job duties — the primary determinant of exemption status.

With the rule struck down, the DOL's May 2026 technical amendment formally codified what had been the practical reality: the 2019 salary thresholds remain the operative federal standard, and no automatic escalator mechanism exists.

The Current Federal Standard

Under 29 CFR Part 541, an employee qualifies for the executive, administrative, or professional (EAP) exemption only if all three tests are met:

1. Salary Basis Test — The employee receives a predetermined, fixed salary that is not subject to reduction based on the quality or quantity of work performed.

2. Salary Level Test — The employee earns at least $684 per week ($35,568 annually). For the highly compensated employee (HCE) exemption, total annual compensation must be at least $107,432, with at least $684 per week paid on a salary or fee basis.

3. Duties Test — The employee's primary duty must meet the specific criteria for one of three exemption categories:

   • Executive: Managing the enterprise or a recognized department, directing the work of at least two full-time employees, and having authority over hiring or firing decisions.
   • Administrative: Performing office or non-manual work directly related to management or general business operations, exercising discretion and independent judgment on matters of significance.
   • Professional: Work requiring advanced knowledge in a field of science or learning, customarily acquired through prolonged, specialized instruction.

The duties test is where most classification disputes arise — and where HR teams need the strongest documentation.

The Multi-State Complication

The federal threshold of $684 per week represents a floor, not a ceiling. Several states impose substantially higher salary requirements for exempt status, and those state standards control where they exceed the federal minimum. Key examples for 2026 include:

For multi-state employers, this patchwork creates a significant compliance challenge. An employee classified as exempt under federal law in one state may not meet the threshold in another. HR operations teams must track state-specific requirements for every location where employees work — including remote workers whose "work location" may be defined by the state where they physically perform their duties.

What Employers Should Do: An HR Operations Roadmap

The DOL's technical amendment should trigger a structured process improvement initiative within HR operations. Here is a practical roadmap:

1. Audit All Exempt Classifications

Review every position currently classified as exempt under the EAP exemptions. For each role, confirm:

• The employee earns at least $684 per week (or the applicable state threshold, if higher)
• The employee is paid on a true salary basis
• The position's primary duties satisfy the applicable duties test
• Documentation supporting the classification decision exists and is current

This audit should be documented in writing and retained as evidence of good-faith compliance efforts.

2. Reconcile 2024 Rule Preparations

Many organizations made proactive changes in 2024 in anticipation of the higher thresholds. Common scenarios include:

• Salary increases: Employees whose pay was raised to meet the anticipated $844 or $1,128 weekly threshold. These increases are not required to be reversed, but HR should document the business rationale for maintaining them.
• Reclassifications to nonexempt: Employees who were converted from exempt to nonexempt in anticipation of the rule. Consider whether reclassifying them back to exempt is appropriate based on current salary levels and duties.
• Role restructuring: Positions whose duties were modified to more clearly meet the duties test. These changes should be evaluated on their own merits.

For each scenario, create a written record of the original decision, the current decision, and the rationale.

3. Update Payroll Systems and Documentation

Ensure that payroll systems, offer letter templates, job descriptions, and HRIS records accurately reflect:

• Current salary levels and pay frequencies
• Correct FLSA classification codes
• Applicable state overtime law designations
• Any nondiscretionary bonus or commission arrangements (up to 10% of the salary threshold can be satisfied through nondiscretionary bonuses paid at least annually)

4. Communicate With Affected Employees

If any reclassification changes are being made — in either direction — communicate clearly and in writing to affected employees. Key points to address:

• What is changing (or not changing) and why
• How their pay, benefits, or timekeeping requirements may be affected
• A point of contact for questions

Avoid communicating classification decisions in ways that could be construed as retaliatory or discriminatory.

5. Strengthen Duties Test Documentation

Because the restored threshold is relatively low compared to many employees' actual salaries, the duties test becomes the primary battleground for classification disputes. For every exempt position, maintain:

• A current, accurate job description reflecting the actual primary duties performed
• Evidence of supervisory authority (for executives), discretion and independent judgment (for administrative roles), or advanced knowledge requirements (for professionals)
• Regular reviews confirming that duties have not shifted over time

6. Monitor State and Federal Developments

The DOL could propose new rulemaking on the salary threshold at any time. HR operations teams should:

• Track DOL rulemaking notices in the Federal Register
• Monitor state legislative activity in every jurisdiction where employees work
• Build compliance processes that can adapt to threshold changes without requiring complete overhauls

The Bigger Picture for HR Operations

The overtime threshold saga illustrates a broader truth about HR compliance: regulatory uncertainty is now a permanent operating condition. Organizations that build flexible, well-documented classification processes — rather than scrambling each time a rule changes — are far better positioned to manage risk.

This is also an area where automating compliance workflows can significantly reduce HR burden. Tracking salary thresholds across multiple states, flagging positions due for classification review, and maintaining audit-ready documentation are tasks that benefit enormously from systematic, technology-assisted processes rather than manual spreadsheet tracking.

The DOL's technical amendment may feel like a return to the status quo. But for HR teams that use this moment to build stronger classification processes, better documentation practices, and more adaptable compliance systems, it is an opportunity to get ahead of the next change — whenever it comes.

Sources

• U.S. Department of Labor — Technical Amendment Restoring Overtime Salary Thresholds (May 14, 2026)
• DOL Wage and Hour Division — Earnings Thresholds for EAP Exemptions
• 29 CFR Part 541 — Defining and Delimiting Exemptions for Executive, Administrative, Professional Employees
• JD Supra — 2026 Changes to FLSA Overtime Exemption Rules: What Employers Should Know
• Fisher Phillips — DOL Rescinds Biden-Era Overtime Rule: Cementing $35K Salary Threshold
• Thompson Hine — The Old Rule Is Now the New Rule: DOL Restores Prior Overtime Salary Thresholds
• BlueHive — Compliance Isn't Paperwork, It's Performance (White Paper)