New Federal Law for Salaried Employees: Threshold and Duties Tests

The federal overtime rules for salaried employees currently run on the 2019 thresholds: a salaried worker is exempt from overtime only if they earn at least $684 per week ($35,568 per year), are paid on a true salary basis, and perform job duties that fall within one of the recognized exemption categories. A 2024 Department of Labor rule that would have raised those numbers sharply was struck down in federal court in November 2024, so the higher figures many employers prepared for are not in effect.¹ Several states set their own, higher thresholds that override the federal floor.

Why the Higher 2024 Numbers Don’t Apply

In April 2024, the DOL finalized a rule raising the standard salary threshold in two steps: to $844 per week ($43,888 annually) on July 1, 2024, then to $1,128 per week ($58,656 annually) on January 1, 2025. The rule also would have lifted the highly compensated employee threshold to $132,964 and then $151,164, with automatic updates every three years tied to Bureau of Labor Statistics data.²

On November 15, 2024, the U.S. District Court for the Eastern District of Texas vacated the entire rule. A second court in the Northern District of Texas issued a similar ruling in December 2024. Every piece of the rule fell: the July 2024 bump, the January 2025 bump, the higher highly compensated threshold, and the automatic updates.¹ The DOL appealed to the Fifth Circuit, but no replacement rule has been announced. Until either the appeals resolve or the DOL issues something new, the 2019 numbers are the federal standard.

Employers that raised salaries when the July 2024 threshold briefly took effect are not required to roll those raises back, but they are also no longer legally obligated to keep pay at that level to preserve an exemption.

The Current Federal Salary Threshold

For a salaried employee to be exempt from overtime under the Fair Labor Standards Act, two things have to be true at the same time: the pay meets the minimum salary level, and the actual job duties fit an exemption category. Meeting one without the other doesn’t work.³

The salary floor is $684 per week, or $35,568 per year. Anyone earning less than that on a salary is automatically non-exempt, no matter what their title says or what their job involves. Non-exempt means overtime at one and a half times the regular rate for every hour past 40 in a workweek.

The pay also has to be on a true salary basis: a fixed, predetermined amount each pay period that doesn’t rise or fall based on how much or how well the person worked. If the employee does any work at all in a given week, the full weekly salary is owed, with only narrow exceptions for things like full-day personal absences and unpaid disciplinary suspensions. Docking a salaried exempt worker’s pay for leaving early or a slow afternoon can destroy the exemption entirely, and in some cases can strip exempt status from every other employee in the same job classification.³

Bonuses and Commissions Toward the Threshold

Employers can use nondiscretionary bonuses, incentive payments, and commissions to cover up to 10 percent of the standard salary level, as long as those payments are made at least annually. That means the guaranteed weekly salary can run as low as $615.60, with the remaining $68.40 per week made up through qualifying bonuses over the year.⁴

Only nondiscretionary bonuses count. That’s a bonus the employer has committed to in advance, tied to a production target, a sales figure, or a similar measurable benchmark. A surprise holiday gift or discretionary year-end payment doesn’t qualify because the employee had no expectation of receiving it.

If the bonus payments come up short at the end of a 52-week period, the employer gets one extra pay period to make a catch-up payment. That catch-up covers the prior year only. Without it, the employee was never properly exempt for that stretch, and the employer owes overtime for every qualifying hour worked across the full 52 weeks.⁴

Highly Compensated Employees

Higher earners face a separate exemption test with a lower duties bar. Under the current federal standard, an employee earning at least $107,432 in total annual compensation can be exempt if they regularly perform at least one duty that qualifies under the executive, administrative, or professional categories. At least $684 per week of that total has to be paid on a salary or fee basis; the rest can come from bonuses, commissions, and other payments.²

The standard test requires the exempt duty to be the employee’s primary duty. The highly compensated test only requires that the employee regularly perform at least one qualifying duty, with the higher compensation level doing the rest of the work. The vacated 2024 rule would have pushed this figure to $151,164, but that number is not in effect.

The Duties Tests

Paying someone above the salary threshold doesn’t make them exempt on its own. What they actually do at work has to fit one of the recognized categories. Job titles carry no weight in this analysis. An “assistant manager” who spends most shifts stocking shelves and running a register is performing non-exempt work regardless of the badge.

Executive

The employee’s primary duty must be managing the business or a recognized department. They have to regularly direct the work of at least two full-time employees or the equivalent, and they must have real authority over hiring and firing, or at least give recommendations on personnel decisions that carry significant weight.⁵

Administrative

Primary duty is non-manual work directly tied to business operations or management. The second requirement is the one that trips employers up: the employee has to exercise genuine discretion and independent judgment on matters that actually affect the company. A clerk processing invoices according to set procedures doesn’t meet this test even if the salary is high enough.⁶

Professional

The learned professional exemption covers work requiring advanced knowledge in a specialized academic field, typically gained through extended formal education. Doctors, lawyers, engineers, architects, and accountants are the standard examples. The work has to be primarily intellectual and require consistent judgment, not the mechanical application of learned procedures. A technician following standardized protocols is not in the same category as a physician diagnosing patients.⁷

Computer Employees

Systems analysts, programmers, software engineers, and workers in similar roles can be exempt if their primary duties involve systems analysis, software design, or comparable high-level technical work. This exemption allows either a salary of at least $684 per week or an hourly rate of at least $27.63.⁸ Help desk staff, hardware repair workers, and employees who just use software as a tool generally don’t qualify.

Outside Sales

Employees whose primary duty is making sales or obtaining contracts, and who regularly perform that work away from the employer’s place of business, can be exempt. This is the only white-collar exemption with no minimum salary requirement.⁹

Workers Who Cannot Be Exempt Regardless of Pay

The white-collar exemptions do not reach manual labor, construction, manufacturing, or similar hands-on work no matter how well it pays. Skilled tradespeople like electricians, plumbers, mechanics, and carpenters remain non-exempt. So does a well-paid foreman or lead worker whose primary duty is doing the same physical work as the crew rather than actually managing them.¹⁰ First responders, paramedics, and law enforcement officers are also excluded from these exemptions, even in supervisory roles; the FLSA handles their overtime under separate provisions.

States That Set the Threshold Higher

The federal $684 is a floor. Several states require significantly higher salaries before an employer can classify a worker as exempt, and employers have to follow whichever standard favors the employee. As of 2026, Washington state requires at least $1,541.70 per week, California requires $1,352, and New York requires between $1,199.10 and $1,275 depending on location. Colorado and Maine also set thresholds above the federal number. In those states, the federal figure is effectively beside the point.

If You Think You’ve Been Misclassified

Misclassifying workers as exempt when they don’t meet both the salary and duties tests carries serious financial exposure for employers. An employee who wasn’t paid required overtime can recover the full unpaid wages plus an equal amount in liquidated damages, essentially doubling the recovery, and the court must award reasonable attorney’s fees.¹¹ The DOL can also impose civil money penalties of up to $2,515 per violation for repeated or willful failures.¹²

You have two years from each unpaid overtime violation to file. If the employer’s conduct was willful, meaning they knew it was illegal or showed reckless disregard for the law, the window stretches to three years.¹³ The clock runs separately for each paycheck, so even if the earliest violations are past the deadline, more recent ones probably aren’t.

To file a complaint with the DOL’s Wage and Hour Division, call 1-866-487-9243 or submit a request on the agency’s website. The DOL cannot reveal your identity to your employer, and retaliation for filing or cooperating with an investigation is illegal.¹⁴ You can also file a private lawsuit in federal or state court without going through the DOL first.¹¹

1
U.S. Department of Labor. Overtime Pay
2
U.S. Department of Labor. Earnings Thresholds for the Executive, Administrative, and Professional Exemption
3
U.S. Department of Labor. Fact Sheet 17G: Salary Basis Requirement and the Part 541 Exemptions Under the Fair Labor Standards Act
4
U.S. Department of Labor. Fact Sheet 17U: Nondiscretionary Bonuses and Incentive Payments (Including Commissions) and Part 541 Exempt Employees
5
U.S. Department of Labor. Fact Sheet 17B: Exemption for Executive Employees Under the Fair Labor Standards Act
6
U.S. Department of Labor. Fact Sheet 17C: Exemption for Administrative Employees Under the Fair Labor Standards Act
7
U.S. Department of Labor. Fact Sheet 17D: Exemption for Professional Employees Under the Fair Labor Standards Act
8
U.S. Department of Labor. Fact Sheet 17E: Exemption for Employees in Computer-Related Occupations Under the Fair Labor Standards Act
9
eCFR. 29 CFR Part 541 Subpart F – Outside Sales Employees
10
Office of the Law Revision Counsel. 29 USC 213 – Exemptions
11
Office of the Law Revision Counsel. 29 USC 216 – Penalties
12
U.S. Department of Labor. Civil Money Penalty Inflation Adjustments
13
Office of the Law Revision Counsel. 29 USC 255 – Statute of Limitations
14
U.S. Department of Labor. How to File a Complaint