Status Quo: DOL Final Rule Keeps Overtime Salary Levels at 2019 Thresholds

Takeaways

• The DOL’s final rule leaves in place the federal minimum salary thresholds for white-collar exemptions set in 2019.
• Employees classified as exempt under the white-collar exemptions and who are subject to a salary basis requirement must earn a minimum salary of $684 per week or $107,432 annually for the highly compensated employee exemption.
• The rule rescission comes after the DOL dismissed its appeal of the federal court decision invalidating the 2024 rule.

Related links

• 91 Fed. Reg. 27833: Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees; Implementation of Federal Court Judgments
• DOL Releases Final White-Collar Exemption Rule, Sets Minimum Salary to Increase in Phases Beginning July 1, 2024
• A Reprieve for Employers: Texas Court Vacates DOL Rule Increasing Salary Level for Exempt Employees
• Fifth Circuit Holds DOL Can Set Salary Floor for White-Collar Exemptions

Article

The U.S. Department of Labor (DOL) on May 15, 2026, formally rescinded its 2024 final rule, issued during the Biden Administration, which sought to increase the minimum salary thresholds for the Fair Labor Standards Act’s (FLSA) executive, administrative, and professional (EAP) exemptions. This means the federal salary threshold will stay at $684 per week for the standard exemptions and $107,432 annually for the highly compensated employee exemption. These are the salary levels adopted under a final rule issued in 2019 and are currently in effect.

The rule follows federal court decisions in Texas vacating the 2024 rule and the DOL’s recent decision to withdraw its appeals.

How We Got Here

The 2024 final rule sought to raise the standard salary threshold of $684 per week ($35,568 annually) in two phases:

• To $844 per week ($43,888 annually) effective July 1, 2024. 
• To $1,128 per week ($58,656 annually) effective Jan. 1, 2025.

It also would have increased the highly compensated employee threshold from $107,432 annually to $132,964 and then to $151,164 and provided for automatic updates every three years beginning in 2027.

But in November 2024, a federal district court in Texas vacated the rule nationwide. The court held that the 2024 increases were set at levels that effectively displaced the duties test, which, unlike the salary requirements, appears in the text of the FLSA. The court’s ruling restored the pre-July 2024 salary thresholds and prevented the January 2025 increase from taking effect.

The DOL appealed the district court’s decision in December 2024. After the Trump Administration took over in January 2025, however, the DOL asked the U.S. Court of Appeals for the Fifth Circuit to hold the case in abeyance while the agency reconsidered its position. That procedural step signaled the agency was unlikely to continue defending the rule as written, although employers still faced some uncertainty over whether the DOL might pursue a replacement rule.

The latest DOL action resolves that uncertainty, at least for now. The DOL withdrew its appeals and formally rescinded the 2024 minimum salary rule, officially restoring the 2019 salary thresholds. The agency described the action as a technical amendment conforming the regulations to court decisions that had already rendered the 2024 rule unenforceable. The rule takes effect immediately.

What This Means for Employers

The final rule leaves in place the current federal thresholds established under the DOL’s 2019 rule:

• $684 per week ($35,568 annually) for white-collar exemptions subject to a salary basis requirement (salary basis requirements do not apply to doctors, lawyers, teachers, and outside sales employees). 
• $107,432 in total annual compensation for the highly compensated employee exemption (including at least $684 per week paid on a salary or fee basis).

Employers should remember that salary level is only one part of the exemption analysis; employers also must satisfy the salary basis and duties tests. Further, employers must account for state and local laws that impose higher salary thresholds or otherwise provide more protective standards.

The rescission does not foreclose future DOL rulemaking raising the salary level for exempt status. Notably, in September 2024, the U.S. Court of Appeals for the Fifth Circuit upheld the DOL’s authority to set a salary floor for application of the white-collar exemptions. Thus, further rulemaking is possible.

Jackson Lewis attorneys will continue to monitor DOL rulemaking to revisit the FLSA’s exempt salary thresholds. If you have questions about DOL’s latest regulatory action and its impact on your business, please contact your Jackson Lewis attorney.