DOL Officially Restores Pre-2024 Overtime Salary Thresholds, Capping White-Collar Exemption at $684 a Week

The federal salary threshold for white-collar overtime exemptions is officially locked at $35,568 a year. In a technical amendment that formally unwinds two years of regulatory whiplash, the Department of Labor (DOL) has scrubbed its 2024 overtime expansion from the Code of Federal Regulations. The move restores the 2019 baseline of $684 per week, abandoning a Biden-era rule that would have raised the minimum to $58,656 and extended overtime eligibility to an estimated four million additional workers. The technical amendment serves as the final procedural step in a long legal battle, confirming that the agency will not attempt to enforce or revive the higher thresholds that were struck down by federal courts late last year.

For employers, the rollback eliminates a looming compliance cliff that threatened to force sweeping reclassifications of lower-tier salaried managers. For workers earning between $35,568 and $58,656, it removes a federal guarantee of time-and-a-half pay for hours worked beyond 40 in a week. The DOL's rescission, which took effect in May 2026, follows a November 2024 ruling by a federal judge in Texas that struck down the higher thresholds nationwide. By officially removing the vacated rule from the books, the DOL has provided businesses with the certainty they need to finalize their payroll structures and compensation strategies for the foreseeable future without the threat of retroactive federal enforcement.[1]

The mechanism governing who gets overtime pay under the Fair Labor Standards Act (FLSA) rests on a three-legged stool. To be classified as an exempt executive, administrative, or professional employee, a worker must be paid on a fixed salary basis, perform specific high-level duties, and earn above a hard federal salary floor. All three conditions must be met simultaneously; a failure on any single prong automatically entitles the employee to overtime pay, regardless of how prestigious their job title might sound or whether they agreed to a salaried arrangement when they were hired.

When the salary floor is low, the 'duties test' becomes the primary battleground for compliance and litigation. At $35,568, millions of full-time workers easily clear the salary hurdle, meaning their right to overtime depends entirely on whether their day-to-day work genuinely involves independent judgment, managing others, or advanced professional knowledge. If a salaried 'assistant manager' spends 90 percent of their shift stocking shelves or operating a cash register, they fail the duties test and are legally owed overtime, even if their salary exceeds the $684 weekly minimum.

The vacated 2024 rule attempted to flip that dynamic entirely. By raising the floor to $58,656, the DOL sought to bypass the subjective duties test for millions of lower-paid managers. The agency argued that anyone earning below that mark was functionally a frontline worker, and that a higher salary threshold was necessary to restore the historical value of the overtime exemption, which had been eroded by decades of inflation. The rule was designed to create a bright-line test that would be simple for employers to administer and easy for federal regulators to enforce.[1]

That approach proved legally fatal. In his November 2024 decision, U.S. District Judge Sean Jordan ruled that the DOL had exceeded its statutory authority by making the salary level—rather than the actual job duties—the dominant factor in determining exemption status. The court concluded that the aggressive salary hike effectively displaced the duties test, violating the original intent of the FLSA. By setting the threshold so high that it excluded millions of employees who genuinely performed executive or administrative duties, the court found that the agency had rewritten the law rather than simply updating its parameters.[1]

Following the court's nationwide injunction, the threshold immediately reverted to the 2019 level. However, the 2024 rule technically remained on the books while the DOL, under the previous administration, appealed the decision to the Fifth Circuit Court of Appeals. This created a prolonged period of limbo for human resources departments, many of which had already budgeted for the higher thresholds or preemptively reclassified employees to hourly roles in anticipation of the rule taking effect. Companies were forced to decide whether to roll back those pay increases and risk damaging employee morale, or maintain the higher salaries despite the court's ruling.

The change in federal administration brought a swift end to the litigation. The DOL formally withdrew its appeals and issued a technical amendment to align the federal regulations with the court's ruling. The agency described the action as a necessary correction to reflect the law as it currently stands, signaling it has no intention of reviving the $58,656 threshold. The amendment officially scrubs the Biden-era rule from the Code of Federal Regulations, cementing the $35,568 threshold as the undisputed law of the land and closing the door on any lingering legal ambiguity that might have complicated corporate payroll audits.

The rollback also eliminates the highly contested automatic update mechanism. The 2024 rule would have tied the salary threshold to current earnings data, triggering automatic increases every three years starting in 2027. Business groups had fiercely opposed this provision, arguing it would create a perpetual cycle of forced wage inflation and administrative burden. Under the restored 2019 framework, any future increases will require the DOL to initiate a full, multi-year notice-and-comment rulemaking process, ensuring that employers have ample opportunity to weigh in on proposed changes before they are finalized.[1]

The highly compensated employee (HCE) exemption has similarly reverted to its previous level. The HCE provision allows workers who earn a high total annual compensation to qualify for exemption under a much looser duties test, acknowledging that top earners are rarely the victims of wage exploitation. The 2024 rule would have pushed that threshold to $151,164; it is now restored to $107,432. This parallel rollback provides significant relief to industries that rely heavily on commissioned sales professionals and specialized consultants who clear the six-figure mark but might not meet the strict requirements of the standard duties test.

While the federal baseline is settled, the compliance landscape remains fractured across the country. The FLSA sets a floor, not a ceiling, and several states enforce their own, significantly higher salary thresholds for white-collar exemptions. Employers cannot simply rely on the federal $35,568 figure if they operate in jurisdictions that have enacted stricter local labor laws designed to capture a larger segment of the workforce. This state-by-state patchwork requires multi-state operators to maintain highly localized payroll systems to avoid inadvertently violating state wage orders.

Employers operating in states like California, New York, and Washington must continue to classify workers based on state-level minimums, which frequently exceed $60,000 annually. In jurisdictions where state and federal laws conflict, employers are legally required to follow the standard that provides the greatest protection to the worker. Consequently, a manager earning $50,000 in Texas is perfectly exempt under the restored federal rule, while a manager holding the exact same title and salary in California is legally entitled to overtime pay for every hour worked beyond eight in a day.[2]

With the federal salary threshold frozen at $35,568, legal experts anticipate a surge in litigation focused squarely on misclassification. Because the salary hurdle is easily cleared by most full-time workers, plaintiff attorneys are increasingly targeting the duties test, arguing that employees given 'manager' titles are actually spending the vast majority of their time performing non-exempt, hourly tasks. These lawsuits often result in massive back-pay settlements, as employers are forced to compensate workers for years of unpaid overtime, along with liquidated damages and attorney fees. The financial exposure in a class-action misclassification suit can easily dwarf the cost of simply paying the overtime premiums in the first place.[2]

Corporate counsel are advising employers to use the regulatory reprieve to conduct aggressive internal audits. Rather than relying on job descriptions, companies are being urged to evaluate what their salaried employees actually do on a daily basis to ensure they are not vulnerable to class-action claims. If an employee's primary value to the company is their physical labor or routine administrative output, rather than their independent decision-making, they should be reclassified as hourly, regardless of their salary level. Proactive audits are the only reliable defense against a DOL investigation or a private lawsuit.[2]

The political fight over overtime pay is unlikely to end with the DOL's technical amendment. Congressional Democrats have introduced legislation, such as the Restoring Overtime Pay Act, which seeks to codify higher salary thresholds directly into federal law, bypassing the agency rulemaking process entirely. These legislative efforts aim to permanently link the threshold to inflation, ensuring that the value of the white-collar exemption does not erode over time. While these bills serve as a clear statement of policy priorities, they face an uphill battle in a divided legislature.[2]

However, with the current composition of Congress, such legislative efforts face steep odds. For the foreseeable future, the $684 weekly threshold stands as the definitive federal standard, leaving the balance of power in overtime disputes resting on the granular details of daily workplace duties. Employers that master the nuances of the duties test will find themselves well-protected, while those that assume a salary alone buys an exemption will remain exposed to significant legal risk. The era of sweeping federal salary hikes may be paused, but the fundamental obligation to pay workers fairly for their time remains as strictly enforced as ever.[2]