The DOL Salary Threshold for 2026: Impact on Exempt Classifications
5/25/2026
If you last reviewed the exempt salary threshold in 2024, everything you concluded then is wrong now — and specifically, wrong in the direction of having planned for increases that never arrived.
This is a short factual guide to where the threshold actually stands in 2026, how it got here, and what employers should do about decisions they already made in anticipation of a rule that no longer exists.
The Current Numbers
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Test
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Level in effect for 2026
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Standard salary level (executive, administrative, professional)
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$684 per week ($35,568 annually)
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Highly compensated employee total annual compensation
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$107,432
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Portion of HCE compensation payable as salary
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At least $684 per week
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These are the levels established by the 2019 rule. They are the operative federal figures today.
How We Got Here
The sequence matters, because employers made real decisions at each stage.
- A final rule raised the standard salary level to $684 per week and the HCE threshold to $107,432.
April 2024. The DOL issued a final rule raising the standard level to $844 per week effective July 1, 2024, and to $1,128 per week effective January 1, 2025, with the HCE threshold rising in parallel and automatic triennial updates thereafter. Many employers began planning — and budgeting — for both increases.
Late 2024. Federal courts in Texas ruled against the 2024 rule, vacating it. The July 2024 increase, which had briefly taken effect, and the scheduled January 2025 increase were both invalidated.
- The DOL withdrew its appeals, ending the prospect of the rule being revived through litigation.
May 15, 2026. The DOL formally rescinded the 2024 rule, removing it from the regulations and confirming the 2019 levels as the operative standard.
The practical upshot: the federal threshold has not increased since 2019, and there is currently no scheduled increase and no automatic indexation.
Our Payroll Wage & Hour Training & Certification Program covers the current framework, and the DOL rules on overtime session addresses the federal analysis.
What This Means for Decisions You Already Made
Most employers took one of three actions in 2024. Each leaves a different question now.
If You Raised Salaries to Preserve Exemptions
You are compliant, and you are paying more than federal law requires.
Can you reverse the increase? Legally, generally yes — prospectively, with notice, subject to any contract, collective bargaining agreement, or state notice requirement. Practically, this is a compensation reduction and will be received as one. Consider also that some of those salaries may now be at or near a state threshold that does apply, in which case reducing them creates a new problem.
The more common approach is to leave the increases in place and treat them as a market adjustment.
If You Reclassified Employees to Non-Exempt
This is the harder situation, and the instinct to simply reverse it is a trap.
Reclassifying someone back to exempt is not a reversion to a prior correct state — it is a fresh classification decision that must independently satisfy both the salary test and the duties test. Two risks:
The duties test may never have been satisfied. Many employees reclassified in 2024 were reclassified because their salary fell below the proposed threshold, without anyone examining duties. If the duties test also fails, they were misclassified before 2024 and reclassifying them back re-creates that liability.
Reclassifying back invites scrutiny of the interim period. Having treated someone as non-exempt and paid them overtime, moving them back is an implicit assertion that the overtime was never owed. If a claim later arises, the record shows the employer's own uncertainty.
Where the duties test is clearly satisfied and the salary is above $684, reclassifying back is defensible. Do it deliberately, document the duties analysis, and involve counsel.
If You Did Nothing
Verify that "nothing" was correct. Confirm every exempt employee is above $684 per week and above any applicable state threshold, and that the duties test is satisfied.
Communicating This Internally
The rescission creates a specific communication problem: your managers' understanding of the threshold is probably two years old and wrong in a way that produces confident errors.
Three misconceptions worth correcting explicitly:
"The threshold went up to $844." It briefly did, in July 2024, before being vacated. A manager who remembers that increase and assumes it stuck will treat employees between $684 and $844 per week as non-exempt — which is conservative and therefore not a liability, but it may mean paying overtime that is not owed and, more importantly, it signals that classification decisions are being made from memory rather than from the current standard.
"It's going to $1,128 in January." This was widely communicated in 2024 and never happened. Some organizations still have budget models and offer-letter templates built on it.
"There's an automatic increase every three years now." The 2024 rule included triennial automatic updates. With the rule rescinded, that mechanism is gone at the federal level — though state indexation continues and is now the main source of annual movement.
Practical steps: search your internal documents, offer templates, job description libraries, and manager training materials for the figures $844 and $1,128, and remove them. Update any compensation planning model that assumed a rising federal floor. And state affirmatively in manager guidance that the federal figure is $684 per week and that the operative constraint in several states is higher.
The reason this matters more than it appears: classification decisions get made by hiring managers writing job descriptions and setting salaries, often without payroll involvement. If their reference numbers are wrong, the classification is decided wrongly before payroll ever sees it.
State Thresholds Are Now the Binding Constraint
For a significant share of employers, the federal number is no longer the operative one.
Several states set a minimum salary for exempt status above $684 per week, and some tie it to a multiple of the state minimum wage with annual indexation. Where a state threshold is higher, it controls.
Three consequences:
Annual review is required even though the federal number is static. A state that indexes its threshold to the minimum wage produces a new figure every January without any rulemaking.
Relocation can change classification. A remote employee who moves from a state with no threshold to a state with a high one can lose exempt status on the day of the move — with overtime liability beginning immediately and no notice to payroll unless the address change triggers a review.
Some states also apply narrower duties tests. Satisfying the federal duties test does not guarantee satisfying a state's version.
See our Multi-State Taxation training for the jurisdictional framework and multi-state payroll tax compliance for the operational controls.
The Threshold Is Not the Main Risk
Worth stating plainly: the salary level is the easiest test to satisfy and the least likely source of liability.
Because $684 per week is $35,568 annually, relatively few employees genuinely treated as exempt fall below it. The exposure concentrates elsewhere:
The duties test. Job titles carry no weight. The administrative exemption in particular requires the exercise of discretion and independent judgment on matters of significance — and applying established procedures, however skillfully, does not qualify. This is the most litigated and most misapplied exemption.
Salary basis violations. Improper deductions — partial-day absences, deductions for slow business when the employee was available, disciplinary suspensions of less than a full day outside narrow exceptions — can destroy an otherwise valid exemption, potentially for everyone in the same classification subject to the practice. A safe harbor exists for employers with a communicated policy, a complaint mechanism, and prompt reimbursement, but only if the policy predates the violation.
The regular rate for non-exempt employees. Nothing to do with the threshold, and the largest single source of wage-and-hour liability: overtime computed on the base hourly rate instead of the regular rate including non-discretionary bonuses and differentials.
Our guides on exempt vs. non-exempt classification and how to calculate overtime pay cover both areas.
What to Do in 2026
- Confirm the current federal levels — $684 per week and $107,432 — are what your classification analysis actually uses. Remove references to $844 and $1,128 from internal materials, which otherwise cause well-meaning managers to reach wrong conclusions.
- Check every state where you have employees for a higher threshold, and note which states index annually.
- Re-test the duties test for every exempt employee, from evidence rather than job descriptions. Prioritize working supervisors, administrative staff, IT support, inside sales, and anyone promoted to exempt without a change in actual work.
- Review pay history for salary basis violations, and confirm a safe harbor policy exists and is communicated.
- Revisit 2024 reclassifications deliberately, with a documented duties analysis and counsel involved before moving anyone back.
- Set a location-change trigger so a relocation prompts a threshold and duties review rather than only a mailing update.
- Document each determination. A short memo per role applying both tests converts an assumption into a considered determination, which affects willfulness — and willfulness controls both the lookback period and liquidated damages.
One final point on planning. The absence of a scheduled federal increase is not a reason to stop monitoring this area. Federal overtime rulemaking has reversed direction twice in three years, a future administration could propose a new threshold, and state indexation guarantees annual movement regardless of what happens federally. Treat the current $684 figure as the present state rather than a settled one, and keep the annual review on the calendar.
Frequently Asked Questions
What is the DOL salary threshold for 2026?
$684 per week, or $35,568 annually, for the executive, administrative, and professional exemptions, and $107,432 in total annual compensation for the highly compensated employee exemption. These are the levels set by the 2019 rule, which remain in effect after the 2024 rule was vacated in litigation and formally rescinded by the Department of Labor on May 15, 2026.
Did the salary threshold increase to $1,128?
No. The 2024 rule would have raised the standard level to $844 per week on July 1, 2024, and to $1,128 per week on January 1, 2025, but federal courts in Texas vacated the rule, the DOL withdrew its appeals, and the rule was formally rescinded in May 2026. Neither increase is in effect, and there is currently no scheduled federal increase and no automatic indexation.
Can an employer reverse salary increases made for the 2024 rule?
Generally yes, prospectively and with notice, subject to any contract, collective bargaining agreement, or state notice requirement — but it is a compensation reduction and will be received as one. Before reducing, check whether the salary is now at or near an applicable state threshold, since several states set levels above the federal figure and some index them annually.
Should employers reclassify employees back to exempt?
Only after a fresh analysis. Moving someone back to exempt is a new classification decision that must independently satisfy both the salary and duties tests — it is not a reversion to a prior correct state. Many 2024 reclassifications were driven purely by the proposed salary level without anyone examining duties, so if the duties test also fails, reclassifying back re-creates a pre-existing misclassification. Document the duties analysis and involve counsel.
Do state salary thresholds override the federal threshold?
The higher standard applies. Several states set a minimum salary for exempt status above $684 per week, and some tie it to a multiple of the state minimum wage with annual indexation — which means a new figure each January without any rulemaking. Some states also apply narrower duties tests, so satisfying the federal analysis does not guarantee compliance.
What is the biggest overtime compliance risk if not the salary threshold?
The duties test and the regular rate. Because $684 per week is a relatively low bar, few genuinely exempt employees fall below it. Liability concentrates in employees who meet the salary test but fail the duties test — particularly under the administrative exemption — in salary basis violations that can void exemptions across a whole classification, and in overtime computed on the base hourly rate rather than the regular rate including non-discretionary bonuses and shift differentials.
Going Deeper
Federal overtime rulemaking has changed direction repeatedly since 2024 and could change again. Confirm the current federal levels with the Department of Labor and check each state's threshold — several of which index annually — before relying on any classification decision.
