On Thursday, May 14, the U.S. Department of Labor (DOL) issued a technical amendment formally restoring the pre-2024 regulatory text governing overtime exemptions under the Fair Labor Standards Act (FLSA), implementing federal court orders that had already vacated the Biden-era salary threshold rule. For employers across the country, this development carries immediate and practical implications.
A. The FLSA’s Overtime Exemptions
Under the FLSA, bona fide executive, administrative, and professional employees who meet certain duties tests and whose salaries exceed a defined threshold are exempt from the Act’s overtime pay requirements. Generally, three prongs must be met for an employee to be considered exempt: (1) the employee’s job duties must primarily involve executive, administrative, or professional duties as defined by the regulations (the duties test); (2) the employee must be paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed (the salary basis test); and (3) the amount of salary paid must meet a minimum specified amount (the salary level test).
B. The 2024 Rule
In 2024, the Biden-era DOL finalized a rule raising the standard salary threshold in two steps: first to $43,888 annually ($844 per week), effective July 1, 2024, and then to $58,656 annually ($1,128 per week), effective January 1, 2025.
The 2024 Rule also raised the annual compensation threshold for highly compensated employees (HCEs) to $132,964 and then $151,164 on July 1, 2024 and January 1, 2025, respectively.
Had the 2024 Rule taken full effect, it would have significantly expanded the number of workers entitled to overtime pay, requiring employers to either increase salaries above the higher thresholds or reclassify affected employees as non-exempt and pay overtime accordingly.
C. The Courts Step In
The 2024 Rule never fully took hold. Before the second, higher threshold could take effect, two federal district courts in Texas vacated the rule entirely. The technical amendment cites those district court decisions, as well as the Fifth Circuit’s subsequent dismissal of the related appeals on May 5 and May 7, 2026, respectively, as the basis for formally restoring the pre-2024 regulatory text.
D. The DOL’s Technical Amendment
The technical amendment, published in the Federal Register on May 15, 2026, removes the 2024 Rule’s regulatory text from the Code of Federal Regulations (CFR) and republishes the operative regulations from the 2019 rule in their place.
To implement these judicial decisions, the final rule amends the DOL’s regulations to reinstate the regulatory text promulgated in the 2019 final rule. The change is effective immediately. Specifically, the DOL determined that a delayed effective date was unnecessary because the court orders vacating the 2024 Rule are already operative, and delaying the correction of the CFR text could mislead employees and employers who consult it to understand their rights and responsibilities under the FLSA.
E. Key Thresholds Now in Effect
To qualify as an exempt executive, administrative, or professional employee, an employee must be compensated on a salary basis at a rate of not less than $684 per week ($35,568 annually), exclusive of board, lodging, or other facilities.
An employee with total annual compensation of at least $107,432 is deemed exempt under the FLSA if the employee customarily and regularly performs any one or more of the exempt duties or responsibilities of an executive, administrative, or professional employee. Total annual compensation must include at least $684 per week paid on a salary or fee basis, and may also include commissions, nondiscretionary bonuses, and other nondiscretionary compensation earned during a 52-week period.
For employers other than the federal government operating in the Commonwealth of the Northern Mariana Islands, Guam, Puerto Rico, or the U.S. Virgin Islands, the applicable salary threshold is $455 per week. For employers other than the federal government in American Samoa, the threshold is $380 per week.
For computer employees specifically, the compensation requirement may alternatively be met by compensation on an hourly basis at a rate of not less than $27.63 per hour.
F. The 10 Percent Bonus Rule
Up to 10% of the required salary amount may be satisfied by the payment of nondiscretionary bonuses, incentives, and commissions, provided they are paid annually or more frequently. If by the last pay period of the 52-week period the sum of the employee’s weekly salary plus nondiscretionary bonus, incentive, and commission payments received falls short of the required level, the employer may make one final payment sufficient to achieve the required level no later than the next pay period after the end of the year. This is a useful tool for employers whose compensation structures include performance-based pay components.
G. What Happens Next
With the technical amendment set to be published in the Federal Register, the $684-per-week ($35,568 annually) salary threshold is now the enforceable standard. While overtime rulemaking was not on the DOL’s spring regulatory agenda, the DOL had previously indicated in a court filing that it planned to decide how to proceed with the overtime rule by June 30, and the publication of this amendment ahead of that deadline suggests the agency has resolved its internal deliberations, at least for now.
While this technical amendment resolves the immediate regulatory uncertainty, it does not foreclose the DOL from pursuing notice-and-comment rulemaking in the future to revise the overtime salary threshold. The amendment itself could also face legal challenge from advocacy groups or affected parties who may contend that a full notice-and-comment process was required, though the DOL’s rationale, grounded in the Administrative Procedure Act’s (APA) good-cause exception, provides a reasonable defense against such a challenge.
H. Key Takeaways for Employers
- Confirm compliance with the $684/week threshold. The operative salary threshold for executive, administrative, and professional employees under the FLSA is $684 per week ($35,568 annually). Employers should confirm their exempt employees meet this standard.
- Review your HCE classifications. The HCE total annual compensation threshold has reverted to $107,432. Employers should confirm their highly compensated employees meet this standard.
- Consider the 10% bonus rule. Up to 10% of the required salary threshold may be satisfied through nondiscretionary bonuses, incentives, and commissions paid at least annually. This flexibility can be a valuable tool for employers with performance-based compensation structures.
- Duties tests remain unchanged. The salary threshold is only one prong of the exempt analysis under the FLSA. The duties requirements for executive, administrative, and professional employees remain unchanged and should be assessed carefully on an employee-by-employee basis.
- Stay alert to further rulemaking. While this technical amendment provides near-term clarity, the DOL’s regulatory posture on overtime could evolve. Employers should monitor any subsequent DOL guidance or rulemaking activity and consult counsel to evaluate the impact of any future changes on their workforce classifications.