Employers should promptly review their overtime exemption practices in light of a significant regulatory development affecting the Fair Labor Standards Act (FLSA). On May 15,…
Employers should promptly review their overtime exemption practices in light of a significant regulatory development affecting the Fair Labor Standards Act (FLSA). On May 15, 2026, the U.S. Department of Labor published a Federal Register notice removing the vacated 2024 final rule and republishing the FLSA white-collar exemption regulations as they existed before that rule took effect. This action restores the framework that governed overtime exemptions prior to the Department's now-invalidated revisions.
The Department's action implements federal court judgments that vacated the 2024 final rule, which had revised the salary thresholds and other criteria applicable to the white-collar exemptions. The Department's republication followed the Fifth Circuit's dismissals of the Department's appeals on May 5 and May 7, 2026. With those dismissals, the legal uncertainty over which thresholds apply has come to an end, and employers now have a definitive regulatory baseline against which to measure their classification and compensation practices.
The restored pre-2024 framework governs the executive, administrative, professional, outside sales, and computer employee exemptions under the FLSA. Employers that had adjusted salaries, reclassified employees, or implemented other changes in anticipation of, or in response to, the 2024 rule should now confirm that their classifications, salary levels, and payroll practices align with the reinstated standards. This review should include a careful examination of job duties, salary basis compliance, and the applicable salary level tests as they existed prior to the 2024 rule.
Because some employers made compensation or classification changes during the period of regulatory flux, special care should be taken in evaluating whether further adjustments are appropriate and how any changes are communicated to affected employees. Reverting employee compensation or status carries practical and morale considerations alongside legal ones, and decisions should be documented carefully. Recordkeeping, timekeeping, and overtime calculation practices should also be reviewed to ensure consistency with the restored regulations.
Looking ahead, employers should monitor any subsequent guidance from the Department of Labor and continue to track state and local wage and hour requirements, which may impose additional or more stringent obligations than federal law.
This article is provided for general informational purposes only and does not constitute legal advice. Clients facing specific questions about FLSA exemption classification or related wage and hour issues should consult with counsel for advice tailored to their circumstances.