Exempt employees just shifted back – and the reset hits payroll, classification audits, and salary calls
The Labor Department just killed the 2024 FLSA overtime rule. Exempt salary thresholds are back to 2019 numbers – effective immediately.
The US Department of Labor on May 15, 2026 formally scrapped the 2024 overtime rule and restored the salary thresholds that were in place before July of that year. The cleanup, published in the Federal Register, closes out roughly 18 months of legal back-and-forth for HR and payroll teams.
The 2024 rule, issued in April that year, would have lifted the minimum salary for the Fair Labor Standards Act's white-collar exemptions – covering executive, administrative, and professional employees – to $844 per week on July 1, 2024, and again to $1,128 per week on January 1, 2025. It also pushed the highly compensated employee threshold to $132,964, then $151,164, and built in automatic updates every three years.
None of it held. Two federal district courts in Texas struck the rule down – the Eastern District in November 2024, the Northern District a month later. The Fifth Circuit dismissed the appeals on May 5 and May 7, 2026. With the litigation finally over, the Wage and Hour Division said it needed to update the Code of Federal Regulations so employers and employees checking the rules would not be confused about what the law actually is.
The result is a return to the 2019 numbers. The standard salary level for exempt employees is $684 per week, or $35,568 a year. The highly compensated employee threshold is $107,432, of which at least $684 a week has to be paid on a salary or fee basis. Lower thresholds still apply in certain US territories, including American Samoa, Puerto Rico, Guam, the US Virgin Islands, and the Northern Mariana Islands.
The Department skipped the usual notice-and-comment process, saying the amendment simply conforms the regulations to the courts' rulings and does not involve any agency discretion. Officials also said an immediate effective date was needed because the court orders are already operative, and any delay risked misleading employees and employers consulting the CFR about their rights and obligations under the FLSA.
It is not necessarily the last word. The Department signaled in a footnote that the technical amendment does not stop it from running future notice-and-comment rulemaking to update the part 541 regulations. In other words, a new salary threshold could still be on the table – just not this one, and not now.
For HR, the practical takeaways are immediate. Companies that lifted salaries in 2024 to keep workers exempt are now doing so without federal pressure to maintain those levels. Teams that reclassified employees from exempt to non-exempt ahead of the higher thresholds are no longer required by federal law to keep them there – though state wage rules, internal communications, and employee morale are separate considerations. Audit work tied to the 2024 thresholds can be wound down. Duties tests still matter, because the salary level is only one of three tests for the exemption.
The rule was signed by Andrew B. Rogers, Administrator of the Wage and Hour Division, on May 13, 2026, and took effect on publication.
