On May 14, 2026, the U.S. Department of Labor issued a final rule formally removing the vacated 2024 Biden-era overtime regulation from the Code of Federal Regulations. The action…
On May 14, 2026, the U.S. Department of Labor issued a final rule formally removing the vacated 2024 Biden-era overtime regulation from the Code of Federal Regulations. The action restores the Part 541 regulations governing exemptions under the Fair Labor Standards Act (FLSA) to their pre-2024 form. For employers across the country, the rescission delivers welcome regulatory certainty and eliminates any lingering obligation to plan for the higher salary levels contemplated under the now-vacated rule.
With this final action, the salary threshold for the executive, administrative, and professional (EAP) exemptions remains $684 per week, or $35,568 annually. The threshold for the highly compensated employee (HCE) exemption likewise remains at $107,432 per year. These figures, which were in effect prior to the 2024 rulemaking, will continue to govern exemption analyses unless and until the Department issues new rulemaking on the subject.
The practical impact is significant. Employers that had previously raised salaries, reclassified workers, or modeled compensation changes in anticipation of the higher thresholds under the 2024 rule no longer face a federal mandate to do so. However, employers that have already implemented changes should think carefully before reversing course, as employee relations, contractual commitments, and state law obligations may continue to shape compensation decisions independent of the federal floor.
This is an opportune moment for employers to revisit their FLSA classification practices. Reviewing position descriptions, duties tests, and payroll records helps ensure that exempt employees genuinely satisfy both the salary basis and duties requirements under the restored regulations. Employers operating in jurisdictions with their own wage-and-hour rules, such as California, New York, and Washington, should also confirm that classifications meet applicable state thresholds, which in many cases exceed the federal minimums.
Looking ahead, employers should continue to monitor the Department of Labor for any future rulemaking activity concerning the EAP and HCE exemptions. While the current rescission provides stability, the regulatory landscape surrounding overtime exemptions has historically been subject to change across administrations.
This article is intended for general informational purposes only and does not constitute legal advice. Employers with specific questions about FLSA classification or compliance should consult qualified counsel for guidance tailored to their circumstances.