FLSA Overtime Thresholds and Exemptions: Salary Basis and State Floors

The federal FLSA overtime salary threshold is $684 per week, or $35,568 per year, for the standard executive, administrative, and professional exemption. That figure comes from the 2019 rule and is the enforceable federal standard today because a Texas federal court struck down the Department of Labor’s 2024 rule on November 15, 2024, before its largest increase could take effect.¹ Anyone reading about a $43,888 or $58,656 threshold is reading about numbers that no longer apply.

Why the Current Number Is $684 and Not the 2024 Figure

The Department of Labor published a final rule on April 26, 2024, that raised the salary threshold in two phases.² Phase one took effect July 1, 2024, and moved the standard weekly figure from $684 to $844 ($43,888 annualized).³ Phase two was scheduled for January 1, 2025, and would have raised it to $1,128 per week ($58,656 annualized). The rule also lifted the highly compensated employee threshold from $107,432 to $132,964 in phase one and would have reached $151,164 in phase two.⁴

On November 15, 2024, the U.S. District Court for the Eastern District of Texas vacated the entire rule in Texas v. U.S. Department of Labor. The decision did not simply block phase two; it wiped out phase one as well, retroactively.² The thresholds reverted to the 2019 levels: $684 per week for the standard exemption and $107,432 in total annual compensation for highly compensated employees.¹

The Department of Labor appealed to the U.S. Court of Appeals for the Fifth Circuit on February 28, 2025. That appeal is still pending, and the current administration has not proposed new overtime rulemaking. Until something changes, the 2019 numbers govern.

The Current Federal Thresholds in One Place

For the standard executive, administrative, and professional exemption, a salaried employee must be paid at least $684 per week ($35,568 per year) on a salary basis.⁵

For the highly compensated employee shortcut, total annual compensation must reach at least $107,432, and at least $684 of that must be paid each week on a salary or fee basis. Commissions and non-discretionary bonuses count toward the $107,432, but the weekly $684 has to be guaranteed regardless of performance.⁶

Computer employees can be paid on the standard salary basis at $684 per week or on an hourly basis at no less than $27.63 per hour.⁷⁸ Meeting the salary number is only the first gate; the employee must also pass the duties test for their exemption category, and a job title alone proves nothing.

Paying Enough Isn’t Enough: The Salary Basis Rule

An exempt employee must receive a fixed, predetermined amount each pay period that doesn’t rise or fall based on the quality or quantity of work. If the employee performs any work in a given week, they generally must be paid their full weekly salary.⁵

Only a narrow list of deductions is permitted without breaking the exemption: full-day absences for personal reasons unrelated to illness, full-day absences under a bona fide sick leave plan, unpaid disciplinary suspensions of one or more full days for workplace conduct violations, penalties for safety rule infractions of major significance, and weeks of unpaid FMLA leave.⁹ Docking pay because a salaried employee left two hours early, or taking a half-day deduction for a doctor’s appointment, is not on the list.

Regular improper deductions can cost the exemption for every employee in the same job classification working for the same manager. Isolated mistakes are forgiven if the employer reimburses the employee promptly. A written safe harbor policy that prohibits improper deductions, includes a complaint channel, and commits to reimbursement doesn’t prevent every dispute but does provide a defense.⁵

Using Bonuses to Meet Up to 10 Percent of the Threshold

Non-discretionary bonuses, incentive payments, and commissions can satisfy up to 10 percent of the standard salary threshold. Under the $684 figure, that means up to $68.40 per week can come from these payments, as long as the employee still receives at least $615.60 per week in guaranteed salary.¹⁰

These payments must be made at least annually. If at the end of a 52-week period the combined salary and bonuses fall short of the required annual total, the employer has one pay period to make a catch-up payment covering the gap. Miss that window and the employee is owed overtime for every extra hour worked across the full 52-week period. The catch-up payment counts only toward the year it’s making up, not the current year.¹⁰

State Thresholds That Override the Federal Floor

The $684 federal figure is a floor. Several states set their own salary thresholds well above it, and employers must apply whichever standard is higher. As of 2026, at least half a dozen states maintain exempt salary thresholds that significantly exceed the federal minimum, with annualized figures running from roughly $45,000 to over $80,000 depending on the state and the size of the employer. Some states tie the threshold to a multiple of the state minimum wage, so the figure moves up automatically each year.

Employers with staff in more than one state may need to apply different thresholds to different workers. Check your state labor department or wage and hour division for the current number where your employees actually work.

What Misclassification Costs

An employee who fails either the salary test or the duties test is non-exempt and owed overtime at one and a half times the regular rate for hours over 40 in a workweek. Back pay reaches two years, or three years if the violation was willful.¹¹ Courts can add liquidated damages equal to the back pay, which effectively doubles the bill. The Department of Labor can also assess civil penalties of up to $2,515 per violation for repeated or willful violations, and the employer may owe the employee’s attorney fees. Willful violations can carry criminal exposure.¹²

What to Do Now

Employers who raised salaries to reach the $844 phase-one figure in July 2024 aren’t required to keep those raises, and they aren’t required to reverse them either. The question is practical rather than legal: what does rolling back a raise do to retention. For anyone who reclassified employees as non-exempt during the months the 2024 rule was in force, work through each position against the $684 weekly figure and the applicable duties test before changing anything back.

Employees who suspect misclassification should check both sides of the test. Does the salary hit at least $684 per week, paid on a true salary basis. Do the actual day-to-day duties fit one of the exemption categories. A shortfall on either side means overtime is owed. The Department of Labor’s Wage and Hour Division takes complaints and investigates at no cost to the worker.

The Fifth Circuit appeal remains open, and the outcome is uncertain. For planning purposes, treat $684 per week as the operative federal FLSA overtime salary threshold, and layer any higher state figure on top of it.

1
U.S. Department of Labor. Earnings Thresholds for the Executive, Administrative, and Professional Exemption From Minimum Wage and Overtime Protections Under the FLSA
2
U.S. Department of Labor. Fact Sheet 17A: Exemption for Executive, Administrative, Professional, Computer and Outside Sales Employees Under the Fair Labor Standards Act
3
eCFR. 29 CFR 541.600 – Amount of Salary Required
4
eCFR. 29 CFR 541.601 – Highly Compensated Employees
5
U.S. Department of Labor. Fact Sheet 17G: Salary Basis Requirement and the Part 541 Exemptions Under the Fair Labor Standards Act
6
U.S. Department of Labor. Fact Sheet 17H: Highly-Compensated Employees and the Part 541 Exemption Under the Fair Labor Standards Act
7
eCFR. 29 CFR 541.400 – Computer Employees
8
eCFR. 29 CFR Part 541 Subpart F – Outside Sales EmployeesFact Sheet 17S: Higher Education Institutions and Overtime Pay Under the Fair Labor Standards Act
9
eCFR. 29 CFR 541.602 – Salary Basis
10
U.S. Department of Labor. Fact Sheet 17U: Nondiscretionary Bonuses and Incentive Payments and Part 541 Exempt Employees
11
Office of the Law Revision Counsel. 29 USC 255 – Statute of Limitations
12
U.S. Department of Labor. Civil Money Penalty Inflation Adjustments