Overtime for Salaried Employees: What the Law Actually Requires in 2026

In 2024, the Department of Labor finalized a rule raising the salary threshold for overtime exemption, first to $43,888 a year, then to $58,656 in 2025, with automatic increases scheduled every three years after that. A federal court in Texas struck the rule down nationwide in November 2024, ruling the DOL had exceeded its authority. The appeals were dismissed in May 2026, and the DOL has since formally restored the original 2019 thresholds.

So if you’ve been operating under the assumption that a higher federal salary threshold applies to your salaried employees, it doesn’t, at least not from the federal government. Here’s where things actually stand.

What Happened to the 2024 Overtime Rule?

The short version: it never took lasting effect. The rule was vacated by the courts within months of its first phase-in, and after the appeals process played out, the DOL published a final rule on May 15, 2026 restoring the pre-2024 numbers. As of now, the federal salary threshold for the standard executive, administrative, or professional (EAP) exemption is $684 per week, or $35,568 per year. The threshold for highly compensated employees is $107,432 per year.

If you raised any salaries in 2024 to get ahead of the higher threshold, you’re not required to walk that back, though cutting pay now would likely create more morale and retention risk than it’s worth. You’re also not required to maintain those higher salaries going forward on the federal government’s account.

Salary Alone Doesn’t Make an Employee Exempt

The threshold only tells half the story. To be exempt from overtime, an employee has to clear the salary threshold and pass a duties test showing their actual job responsibilities are executive, administrative, or professional in nature. Paying someone a salary above $35,568 doesn’t automatically make them exempt if their day-to-day work doesn’t meet that duties test.

Misclassifying a non-exempt employee as exempt is one of the more common and expensive wage-and-hour mistakes small businesses make, and it doesn’t require a change in federal law to become a problem. It’s worth reviewing borderline roles periodically regardless of what’s happening in Washington.

Check Your State’s Threshold Too

The federal number is a floor, not a ceiling. A number of states, including California, New York, Washington, Colorado, Connecticut, and Alaska, set their own exempt salary thresholds well above the federal minimum, and several tie those thresholds to annual minimum wage increases, so they change every January. Employers have to follow whichever threshold is higher, federal or state, based on where the employee actually works.

Because these figures update annually and vary by state (and in some cases by region within a state), check your state labor department’s current numbers directly rather than relying on a figure that might already be a year old by the time you read it.

Why Track Hours for Salaried Employees Anyway?

Even with the threshold back at 2019 levels, accurate time tracking for salaried employees still matters for a few reasons. For any salaried employee who is non-exempt, either because they’re under the salary threshold or because their role doesn’t pass the duties test, the FLSA’s hourly recordkeeping requirements apply just as they would for an hourly employee.

For exempt employees, tracking hours, PTO, and schedules still supports workload visibility and staffing decisions, even though it’s not a wage-and-hour requirement. And if a classification is ever challenged, whether by an employee complaint or a DOL audit, having accurate records for a borderline role is a lot better than reconstructing hours after the fact.

How TimeTrakGO Helps

TimeTrakGO can track hours, schedules, and time off for both exempt and non-exempt employees, so you’re not maintaining separate systems depending on classification. If a role’s exemption status is ever in question, you’ll have the records to back up your position either way.

This isn’t legal advice, and overtime classification rules are genuinely easy to get wrong. If you have salaried employees near the threshold or in ambiguous roles, it’s worth a conversation with an employment attorney. Try TimeTrakGO free for 14 days to see how it handles time tracking across exempt and non-exempt staff.