August 04, 2026 | Posted By: Hoyer Law Group, PLLC
On May 14, 2026, the U.S. Department of Labor published a technical amendment to the Fair Labor Standards Act regulations governing overtime exemptions for white-collar employees. The practical effect: the salary thresholds that determine whether an employee can be classified as exempt from overtime pay are substantially lower than the rule would have required, and employers need to make sure their classifications are still sound. A Sarasota, FL employment lawyer can help businesses review employee classifications and ensure compliance with changing federal overtime regulations.
Here is what changed, what it means for your business, and what you should do next.
How We Got Here
In 2024, the DOL issued a rule that would have raised the minimum salary for exempt employees in two steps: first to $844 per week (as of July 1, 2024), then to $1,128 per week (as of January 1, 2025). The rule would also have included automatic increases every three years.
Employers and business groups challenged those increases in federal court. In November and December of 2024, two federal district courts in Texas vacated the 2024 rule in its entirety. After the government appealed, the Fifth Circuit dismissed those appeals in early May 2026, and the vacatur became final. The DOL’s May 14 technical amendment cleans up the Code of Federal Regulations to reflect what the courts had already decided.
What the Restored Rules Actually Require
The regulations now in effect are the ones that have been in place since January 1, 2020, under the DOL’s 2019 Final Rule. For an employee to be exempt from the FLSA’s minimum wage and overtime requirements under the executive, administrative, or professional exemptions (commonly called the white-collar exemptions), all three tests must be satisfied.
The duties test. The employee’s primary responsibilities must involve genuine executive, administrative, or professional work as defined by the regulations. Job title alone does not determine exempt status; the actual day-to-day duties matter.
The salary basis test. The employee must be paid a predetermined, fixed salary that does not vary based on the quality or quantity of work performed. Docking pay in ways that undermine the fixed-salary requirement can destroy the exemption.
The salary level test. The employee must earn at least $684 per week, which equals $35,568 per year for a full-time worker. This is the threshold restored by the technical amendment, down from the $1,128 per week that the vacated 2024 rule would have required.
For highly compensated employees, the threshold is $107,432 in total annual compensation, provided that at least $684 per week is paid on a salary or fee basis. Such an employee qualifies for a streamlined exemption if they customarily and regularly perform any one or more of the exempt duties.
The restored rules include a few additional features. Up to 10% of the standard salary can be met through nondiscretionary bonuses, incentive pay, or commissions, provided those payments are made at least annually. For computer employees, the alternative is an hourly rate of at least $27.63. The salary tests do not apply at all to doctors, lawyers, teachers, or outside sales employees.
Different thresholds apply outside the fifty states. Special lower thresholds apply to employers in U.S. territories: $455 per week for employers in the Northern Mariana Islands, Guam, Puerto Rico, and the U.S. Virgin Islands, and $380 per week for employers in American Samoa.
Why This Matters for Your Business
Any employer that currently classifies employees as exempt from overtime should take this as an opportunity to carefully review those classifications. A lower threshold does not make overtime law any simpler. Courts and the DOL continue to scrutinize whether employees genuinely satisfy the duties tests, and misclassification claims remain among the most common and costly wage-and-hour problems employers face.
If your business reclassified employees or adjusted salaries in response to the 2024 rule, you may want to revisit those decisions now that the lower threshold is restored. Conversely, if you have employees earning between $684 and $1,128 per week whom you have been treating as non-exempt in anticipation of the higher threshold, this is a good time to evaluate whether they actually qualify for an exemption under the duties and salary basis tests.
Next Steps for Employers
Before relying on the restored federal thresholds, keep two points in mind. First, the federal threshold is a floor, not a ceiling. Several states have enacted their own overtime exemption rules with higher salary thresholds, and in those jurisdictions, the state rule controls because it is more protective of employees. Employers operating in multiple states need to check the requirements in each state where they have workers, not just the federal standard.
Second, if a review turns up potential underpayments, the DOL’s Payroll Audit Independent Determination (PAID) program offers a structured process for self-reporting and resolving minimum wage and overtime violations before they escalate into litigation. Proactive compliance is almost always less expensive than defending a lawsuit or DOL investigation after the fact.
The Bottom Line
Wage and hour law is one area where small misclassifications can compound into significant liability over time, particularly when multiple employees are affected. The restoration of the 2019 thresholds is a good moment to confirm that every exempt classification in your organization still meets both the duties and salary tests, and that your practices align with the law in every state where you operate. Employers that take a careful look now will be in a far stronger position than those that wait for a complaint, an audit, or a class action to force the issue.
Contact Hoyer Law Group, PLLC today to speak with an experienced employment lawyer.
This blog is for general informational purposes only and does not constitute legal advice. For advice specific to your situation, please consult a qualified attorney.