Federal Overtime Salary Threshold: 2026 Rules Explained

The federal overtime salary threshold determines whether your salaried employees qualify for overtime pay. Right now, if you pay a salaried employee less than $43,888 per year, they're likely entitled to time-and-a-half for hours worked beyond 40 in a week, regardless of their title or salary status.

This matters because misclassifying employees isn't just an honest mistake. It's expensive. The average cost to defend an employment lawsuit runs $75,000 to $125,000, and that's before any settlement or back wages you might owe. The U.S. Department of Labor assessed nearly $26 million in fines against employers in 2023 alone—the highest on record in a decade.

The rules changed in 2024, then got challenged in court, leaving many small business owners confused about what applies right now. This article breaks down the current enforceable threshold, explains when your salaried team members qualify for overtime, and gives you clear next steps to stay compliant without becoming a labor law expert.

TL;DR: What you need to know about the federal overtime salary threshold

• Current threshold: $43,888 per year ($844/week) as of July 2024—this is what you follow right now
• Proposed increase blocked: The DOL tried to raise it to $58,656 on January 1, 2025, but a federal court put that on hold in November 2024
• Salary ≠ automatic exemption: Your salaried employees need to pass both a salary test AND a duties test to be exempt from overtime
• If employees earn below $43,888: They get overtime for hours over 40/week, even if they have a "manager" title
• State rules can be stricter: Some states require higher thresholds—always follow the rule most favorable to employees
• What to do now: Review your salaried employees earning under $43,888 and make sure you're tracking their hours and paying overtime correctly

What is the federal overtime salary threshold?

The federal overtime salary threshold is the minimum annual salary an employee has to earn to potentially be exempt from overtime pay under the Fair Labor Standards Act (FLSA). If a salaried employee earns less than this amount, they're entitled to overtime—typically time-and-a-half—for any hours worked beyond 40 in a workweek.

Here's what trips up most small business owners: paying someone a salary doesn't automatically make them exempt from overtime. You can't just hand someone a manager title, put them on salary, and avoid paying overtime. The law doesn't work that way.

Three tests determine overtime exemption, and an employee must pass all three. Miss even one, and you owe overtime.

How the salary threshold fits into federal overtime law

The FLSA uses three tests to determine if a salaried employee is exempt from overtime:

• The salary basis test: The employee must receive a predetermined salary that doesn't fluctuate based on hours or quality of work.
• The salary threshold test: That salary must meet or exceed the federal minimum—currently $43,888 per year ($844 per week).
• The duties test: The employee's primary job responsibilities must involve executive, administrative, or professional work as defined by the Department of Labor's exemption criteria.

Think of these as three gates. Your employee needs to pass through all three to be overtime-exempt. The salary threshold is just the first gate—earning above it doesn't guarantee exemption if their actual job duties don't qualify.

The federal threshold sets the baseline, but it's exactly that: a minimum standard. Your state or city might require higher thresholds, and when that happens, you follow the stricter rule.

Do salaried employees get overtime?

Yes, many salaried employees are entitled to overtime pay.

This surprises business owners who assume "salary" means "no overtime." It doesn't. Being paid a salary is just one piece of the overtime exemption puzzle, and salary alone never exempts anyone from overtime eligibility.

If your salaried employee earns below the federal threshold or doesn't perform exempt job duties, you owe them overtime for hours beyond 40 per week. Period.

When salaried employees are entitled to overtime

Your salaried employees qualify for overtime in two situations:

• Their salary falls below the threshold. If you're paying someone $40,000 per year, they're below the current $43,888 federal threshold. They get overtime, even if their job title sounds important and they genuinely manage other people.
• Their job duties don't meet exemption criteria. Even if someone earns $50,000 per year, if they spend most of their time doing non-exempt work—like ringing up customers, restocking shelves, or following someone else's detailed instructions—they're not actually performing executive, administrative, or professional duties. They qualify for overtime.

Common myth: "My assistant manager is salaried, so I don't pay overtime." Reality: If that assistant manager spends most of their shift doing the same work as hourly employees—taking orders, cleaning, handling inventory—their duties likely don't meet the exemption test. You owe overtime regardless of their title or salary.

Current federal overtime salary threshold (2024–2026)

As of right now, the enforceable federal overtime salary threshold is $35,568 per year ($684 per week). This is the threshold from the 2019 overtime rule.

The Department of Labor had increased this threshold to $43,888 per year ($844 per week) on July 1, 2024, with plans to raise it again to $58,656 annually ($1,128 per week) on January 1, 2025. However, a federal court in Texas vacated the entire 2024 rule on November 15, 2024, including the July increase that had already taken effect. The threshold reverted back to $35,568.

For highly compensated employees (HCE), the current threshold is $107,432 annually. The DOL had raised this to $132,964 on July 1, 2024, with plans to increase it to $151,164 on January 1, 2025, but those increases are also vacated.

Why the federal overtime salary threshold increase was blocked

On November 15, 2024, the U.S. District Court for the Eastern District of Texas vacated the DOL's 2024 overtime rule. The court found that the DOL exceeded its authority by setting salary thresholds so high that they effectively eliminated the duties test—making salary, rather than job responsibilities, the primary factor in determining overtime exemption.

What this means for you: Follow the 2019 threshold of $35,568 per year ($684 per week). Don't implement the higher thresholds unless new regulations or court decisions change the current status.

If you already raised salaries or reclassified employees in preparation for the 2024 increases, you're not required to roll those changes back. You can maintain higher salaries or keep employees as non-exempt if that works better for your business. The ruling simply prevents the government from enforcing the higher thresholds—it doesn't prohibit you from voluntarily exceeding them.

Stay alert. According to the DOL's official notice, lawsuits regarding the 2024 rule are pending in other federal courts, and the United States has filed an appeal. The legal landscape could shift, so check for updates regularly. For now, $35,568 is your number.

When do employers have to pay overtime to salaried employees?

You must pay overtime to salaried employees when they fail either the salary test or the duties test under the FLSA.

Here are the scenarios where overtime is required:

• Salary below $35,568 per year: Overtime required for any hours over 40 per week, regardless of job duties or title
• Salary above threshold but duties don't qualify: Employee earns above $35,568 but spends most of their time on non-exempt work—overtime required
• Salaried non-exempt employees: You can pay employees a salary and still classify them as non-exempt, which means tracking hours and paying overtime

Common classification mistakes that trigger overtime obligations:

• Assuming job titles determine exemption status (they don't)
• Believing salary eliminates overtime obligations (it doesn't without passing the duties test)
• Failing to track hours for salaried non-exempt employees (you must track and pay overtime)
• Misunderstanding what qualifies as exempt duties under executive, administrative, or professional exemptions

When in doubt, err on the side of paying overtime. The average cost to defend an employment lawsuit runs $75,000 to $125,000, before any settlement or back wages. Misclassification penalties cost far more than overtime would have in the first place.

Federal vs. state overtime salary thresholds

Federal law sets the baseline overtime salary threshold at $35,568 per year ($684 per week), but some states have their own thresholds that exceed the federal minimum.

When state and federal thresholds differ, you must follow whichever law is more favorable to the employee—which almost always means the higher threshold.

States with higher salary thresholds for 2026 include:

• Alaska: $49,545.60 per year ($952.80 per week)
• California: $70,304 per year ($1,352 per week) for employers of all sizes
• Colorado: Varies by employer size and location
• Maine: $43,951 per year ($845.21 per week)
• New York: $64,350 per year ($1,237.50 per week) in NYC and Nassau, Suffolk, and Westchester counties; $60,405.80 per year ($1,161.65 per week) in other areas
• Washington: $69,305.60 per year ($1,322.80 per week) for employers with up to 50 employees

If you operate in multiple states, track each location's specific requirements. The federal threshold of $35,568 applies everywhere, but states with higher standards override federal rules within their borders.

Check your state's Department of Labor website or consult an employment attorney to confirm your obligations. Getting this wrong isn't just a paperwork issue—it's a compliance violation that can trigger audits, fines, and lawsuits.

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Federal overtime salary threshold FAQs

What is the federal overtime salary threshold?

The federal overtime salary threshold is $35,568 per year ($684 per week) as of 2026. This is the minimum salary an employee must earn to potentially qualify for overtime exemption under the Fair Labor Standards Act. If an employee earns below this amount, they're automatically entitled to overtime pay for hours worked beyond 40 in a week, regardless of their job title or duties. However, earning above this threshold doesn't guarantee exemption—employees must also pass the duties test to be classified as overtime-exempt.

What are the federal rules for overtime pay?

Under the FLSA, non-exempt employees must receive overtime pay at time-and-a-half (1.5 times their regular rate) for all hours worked beyond 40 in a workweek. A workweek is seven consecutive 24-hour periods. There's no limit on how many hours employees can work, but employers must pay the overtime premium for hours over 40. Overtime applies to a workweek basis—you can't average hours across multiple weeks. Some employees are exempt from overtime if they meet salary and duties requirements.

What is the federal exempt salary threshold in 2026?

The federal exempt salary threshold in 2026 is $35,568 per year ($684 per week). This applies to executive, administrative, and professional exemptions. To be exempt from overtime, employees must earn at least this amount, be paid on a salary basis, and perform exempt duties. The highly compensated employee threshold is $107,432 per year. Some states have higher thresholds—check your state's requirements to ensure compliance.

What is the salary cut-off for overtime?

The salary cut-off for overtime is $35,568 per year ($684 per week) under federal law. Employees earning below this amount are entitled to overtime pay for hours over 40 per week, regardless of their job title. Employees earning above this amount may still qualify for overtime if their job duties don't meet the exemption criteria. Remember that some states have higher cut-offs than the federal standard, and you must follow whichever law is more protective to employees.

What employers should do next

Start by reviewing your current employee classifications. Pull up your list of salaried employees and identify anyone earning below $35,568 per year—they need to be classified as non-exempt and receive overtime pay. Next, look at employees earning above the threshold. Do their actual day-to-day duties match the FLSA's exemption criteria? Don't rely on job titles or what their job description says they should do. Look at what they actually spend most of their time doing.

The federal overtime salary threshold isn't about memorizing numbers—it's about understanding that salary alone never equals exemption. Your employees need to pass both the salary test and the duties test to be exempt from overtime. Miss either one, and you owe time-and-a-half. Right now, that federal threshold sits at $35,568 per year. The rules tried to change in 2024, but a court blocked the increase. What happens next is uncertain. How you handle it should be straightforward.

Managing overtime gets complicated fast when you're tracking hours for salaried non-exempt employees alongside your hourly team. Homebase handles the calculations automatically—hours, breaks, overtime—and keeps you compliant with federal, state, and local rules without the guesswork. If you're tired of double-checking timesheets and worrying about compliance, try it free.

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