On May 14, 2026, the Department of Labor issued a technical amendment formally reinstating the 2019 regulation establishing the salary threshold for exempt executive, administrative, and professional employees under the Fair Labor Standards Act (“FLSA”). These overtime exemptions are commonly referred to as the “white collar” exemptions.
The Department of Labor has long maintained a three-part test for an employee to be exempt from overtime compensation under the white collar exemptions. First, the employee’s primary duty must involve executive, administrative, or professional work as defined by the regulations (the “duties test”). Next, the employee must be paid a predetermined, fixed salary that cannot be reduced based on the amount or quality of the work performed (the “salary basis test”). Finally, the employee’s salary must generally satisfy a minimum amount established by the DOL (the “salary level test”).
In 2004, the DOL set the salary threshold for the white collar exemptions at $455 per week. That same year, the agency created an alternative test for highly compensated employees (“HCE exemption”) that paired a less stringent duties test with a substantially higher annual compensation threshold. Employees earning at least $100,000 annually qualified for the HCE exemption.
In 2019, the DOL increased the salary threshold for the white-collar exemption to $684 per week. The agency also increased the annual compensation requirement for the HCE exemption to $107,432 per year, provided the employee also received at least $684 per week on a salary basis. This rule took effect on January 1, 2020.
In 2024, the DOL again raised the governing salary thresholds. The standard salary level increased to $844 per week on July 1, 2024, with a further increase to $1,128 per week scheduled to take effect on January 1, 2025. The annual compensation requirement for the HCE exemption similarly increased to $132,964 on July 1, 2024, and was scheduled to increase to $151,164 on January 1, 2025. The 2024 rule also implemented automatic triennial updates to the governing salary thresholds.
Litigation challenging the revised compensation thresholds quickly followed. See, e.g., Texas v. U.S. Dep’t of Labor, 738 F. Supp. 3d 807 (E.D. Tex. 2024); Flint Ave., LLC v. U.S. Dep’t of Labor, No. 24-cv-00130-H (N.D. Tex. June 3, 2024). Ultimately, the courts vacated the DOL’s 2024 rule. Consistent with those decisions, on May 14, 2026, the DOL amended Part 541 and reinstated the salary thresholds that took effect on January 1, 2020. The agency characterized the amendment as “a technical correction accounting for changes in the law that have already occurred.” The DOL also concluded that typical notice-and-comment procedures were unnecessary and made the rule effective upon publication. The rule was published the following day on May 15, 2026.
The recent amendment does not create a new law. Rather, it reinstates the salary thresholds implemented in 2020. Accordingly, employees must receive at least $684 per week to qualify for the white collar exemptions, andmust earn at least $107,432 annually and receive at least $684 per week on a salary basis to qualify for the HCE exemption. Employers who adjusted compensation structures or employee classifications in anticipation of the DOL’s 2024 salary threshold increases should reevaluate those decisions considering the DOL’s recent amendment, taking into account potential potential impacts on employee morale and retention. Additionally, employers should remember that satisfaction of the salary threshold alone does not establish exempt status. Employees classified as exempt must continue to satisfy the duties and salary tests under Part 541.
Given the continued scrutiny surrounding employee classification issues, employers should regularly review exempt classifications, compensation practices, and job descriptions to ensure ongoing compliance with the FLSA and any applicable state law requirements.
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