Employment Alert: DOL Rescinds Overtime Rule, Reinstating Lower Salary Thresholds

Effective May 15, 2026, the U.S. Department of Labor (DOL) rescinded the Biden Administration’s 2024 overtime rule, restoring the federal overtime exemption salary thresholds implemented during President Trump’s first term.

The move follows multiple federal court decisions in Texas that struck down the 2024 rule.

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Current Federal Salary Thresholds

As a result of this action, the following federal salary thresholds remain in effect for employees classified as exempt under the executive, administrative, and professional (EAP) exemptions:

• $684 per week ($35,568 annually) for most exempt employees; and
• $107,432 annually for highly compensated employees.

The Biden-era rule would have increased the standard salary threshold to approximately $58,656 annually and included automatic increases every three years.

What This Means for Employers

For most employers, this announcement formalizes what had already been occurring in practice after federal courts blocked implementation of the 2024 rule last year. Employers are no longer required to comply with the higher salary thresholds.

However, employers should keep several important considerations in mind:

• State law may impose higher salary thresholds than federal law for exempt employees, especially in states such as New York and California;
• Employees must still satisfy the applicable duties tests to qualify for exempt status under the FLSA; and
• Employers that previously increased salaries or reclassified employees in response to the now-rescinded rule should carefully evaluate whether any changes to compensation or classifications are appropriate.

Next Steps

Employers should consider reviewing exempt employee classifications, compensation structures, and applicable state law requirements to ensure continued compliance.

Stein Adler is Here to Help

If you have questions about how these developments may impact your employee classifications, compensation practices, or overtime compliance obligations, please contact Jonathan Adler, Casey Hail, or Melanie Sarver.