Link to Takeaways Takeaways
- The current federal salary threshold for most white-collar overtime exemptions remains $684 per week ($35,568 annually) under the reinstated 2019 rule.
- Employers should immediately review exempt employee classifications and compensation practices to ensure compliance with the restored Part 541 framework and applicable state laws.
- Because state salary thresholds and exemption requirements may exceed federal standards, multi-state employers should confirm compliance under both federal and state wage-and-hour laws.
On April 26, 2024, the Department of Labor issued a final rule raising the earnings thresholds for entitlement to overtime under the FLSA in the Code of Federal Regulations, 29 C.F.R. Part 541. In November 2024, however, a federal court vacated and set aside the that Final Rule on a nationwide basis. As a result: (1) the increase in overtime threshold scheduled to become effective January 1, 2025 did not go into effect; (2) the July 1, 2024 increase that previously went into effect was nullified; and (3) the final rule’s automatic “escalator” provision, which would have increased the threshold every three years going forward, was also found to be unlawful.
On May 14, 2026, the U.S. Department of Labor’s Wage and Hour Division (“USDOL”) issued a “technical amendment” to “reinstate the regulatory text promulgated in the 2019 final rule, as it appeared in the [Federal Register] immediately prior to the effective date of the 2024 rule.” This action immediately effectuates two primary modifications to the existing regulatory framework:
First, the Department has removed the regulatory provisions that were previously incorporated by the now-vacated 2024 final rule.
Second, the Department republished Part 541 regulatory text as it existed immediately prior to the effective date of the 2024 rule, thereby restoring the regulatory framework established under the Department’s 2019 final rule. Therefore, the 2019 FLSA “white-collar” exemption salary threshold remained the current law:
- (1) The salary threshold for Executive, administrative, and professional exemptions in 2019 was $684 per week ($35,568 annually); and
- (2) Highly compensated employee exemption: $107,432 in total annual compensation, including at least $684 per week paid on a salary or fee basis.
The Department has characterized this amendment as a ministerial correction designed to ensure that the published Code of Federal Regulations accurately reflects the operative legal standards following judicial vacatur of the 2024 rule. As such, the Department found good cause to set aside the ordinary notice-and-comment period and to make the amendment effective immediately upon its publication.
Notably, the Department’s regulatory action does not constitute a comprehensive reexamination of the fundamental “white collar” exemption structure. The established analytical framework remains intact, consisting of:
- Salary basis component: the employee’s compensation must be a predetermined amount, regardless of the quality of work or the quantity of work;
- Salary level component: The salary amount must meet the established threshold, i.e., $684 per week ($35,568 annually), subject to established categorical exceptions (including certain licensed professionals and outside sales personnel); and
- Duties component: Analyzing the employee’s primary job responsibilities.
It’s also important to understand that this change is on a federal level, which may be different than the employer’s state law requirements. For example, in California, the minimum salary level is $70,304, which is much higher than the federal level test. And because employee classification is often litigated, the penalties for misclassification can be enormous; understanding the distinction between exempt employees under federal and state law is critical.
Link to Conclusion Conclusion
The Department of Labor’s technical amendment of removing the vacated 2024 Part 541 and restoring the pre-2024 regulatory framework represents an immediate compliance event requiring employers’ attention. Businesses should confirm their policies, systems, and classification are within the currently published Part 541 regulations while maintaining comprehensive documentation supporting all exemption determinations. The best practice would be for employers to treat this “technical amendment” as requiring immediate review of all FLSA exemptions, given the direct impact on exemption qualification thresholds and the potential for significant wage and hour liability exposure. Employers should contact the authors or any member of Dykema’s Labor and Employment Practice Group with questions about the amendment or how it affects employers’ operations.