On May 14, 2026, the U.S. Department of Labor issued a final rule formally rescinding the 2024 overtime rule, restoring the Fair Labor Standards Act (FLSA) white-collar exemption salary thresholds to their 2019 levels. The technical amendment was published in the Federal Register on May 15, 2026, closing a prolonged period of regulatory uncertainty for employers across the country. The DOL's action followed the Fifth Circuit's May 5, 2026 dismissal of the final appeal challenging the 2024 rule, clearing the path for the agency to formalize its return to the prior framework.
With the rescission now in effect, the salary threshold for the FLSA's executive, administrative, and professional (EAP) exemptions reverts to $684 per week, or $35,568 annually. The threshold for the highly compensated employee (HCE) exemption returns to $107,432 per year. The planned increases that prompted many employers to raise salaries, reclassify positions, or restructure compensation programs in anticipation of the 2024 rule are no longer operative. Employers are once again measured against the standards that governed white-collar exemption analysis prior to the rescinded rulemaking.
The practical implications warrant immediate attention. Employers should reassess exempt classifications across their workforce to confirm continued alignment with both the salary basis test and the applicable duties tests under the reinstated standards. Payroll systems, timekeeping configurations, and HRIS exemption codes should be reviewed to ensure they reflect the correct thresholds. Particular care is appropriate where employers raised salaries to maintain exempt status under the 2024 rule; while compensation can ordinarily be adjusted prospectively, any change carries employee-relations, contractual, and state-law considerations that should be evaluated before action is taken.
Employers should also remain mindful that several states impose their own salary thresholds and duties tests that may exceed the federal floor. Federal compliance under the restored 2019 standards does not eliminate state-level obligations, and a coordinated review of both regimes is prudent.
This article is intended as a general overview and does not constitute legal advice. Employers with questions about how the rescission affects their specific classifications, payroll practices, or compensation strategies should consult qualified counsel for tailored guidance.