Overtime Rules and the Salaried Worker

On November 15, 2024, a federal judge in the Eastern District of Texas vacated the Labor Department's 2024 overtime rule — four months after it took effect and six weeks before its biggest change was scheduled to arrive. The rule had raised the salary level for the white-collar exemption to $43,888 a year on July 1, 2024, and was set to lift it to $58,656 on January 1, 2025. Neither figure survives. The threshold is back to $684 a week, or $35,568 a year, the level the department set in 2019.

For employers, the whiplash was real. A compensation manager in Dallas spent the summer of 2024 rebuilding her company's pay grades around the new federal numbers, then scrapped the plan in November and rebuilt them again. She described the year as drafting two different budgets, each of which was obsolete within months.

For salaried workers, the confusion has been quieter and more durable. Tens of millions of employees are classified as exempt from overtime under the Fair Labor Standards Act, and the legal fight over the salary level has left many unsure which rules apply to them. The answer decides whether the 45th hour of the week is paid at 1.5 times the regular rate or not at all. This article explains the two-part test that decides exemption — the salary threshold and the duties test — where states have written their own rules, and how to check your own classification in about ten minutes.

The test that decides who gets overtime

Under the Fair Labor Standards Act of 1938, most employees must be paid time and a half for hours worked beyond 40 in a workweek. The law carved out an exception for people it calls bona fide executive, administrative, and professional employees — the white-collar exemption — on the theory that these workers are paid for results, not for hours. The rules live in Section 13(a)(1) of the act and in the department's regulations at 29 CFR Part 541, which define who qualifies and who does not.

The test has two parts, and both must hold. A worker must be paid on a salary basis at or above a minimum salary level, and the worker's primary duty must actually be executive, administrative, or professional work. Fail either test and the worker is nonexempt — entitled to overtime at 1.5 times the regular rate after 40 hours, with no legal ceiling on weekly hours for adults over 16. Salaried status alone decides nothing: plenty of salaried employees are nonexempt, and their employers already pay them overtime.

The salary part is the part that makes headlines. The Labor Department's Wage and Hour Division sets the standard salary level — currently $684 a week, or $35,568 a year — plus a separate total-compensation test for highly compensated employees at $107,432 a year, and its own figure, $27.63 an hour, for computer employees paid hourly. The Bureau of Labor Statistics counts about 58 percent of wage and salary workers as paid at hourly rates; for the other roughly two in five, classification is a question with real money attached.

The salary-basis requirement is subtler. Exempt workers must receive a predetermined amount each pay period that is not reduced because of the quality or quantity of work. Employers may dock pay in limited situations — a full day of personal leave, or time covered by the Family and Medical Leave Act — but a company that routinely cuts a salaried worker's pay for partial-day absences risks destroying the exemption for the whole group in that position, courts have held. The duties part is where classifications actually get litigated, and it deserves its own section.

A threshold that kept moving

The salary level has been a moving target for two decades, which is a large part of why workers are confused. In 2004, the department set it at $455 a week — about $23,660 a year. In 2016, under the Obama administration, it raised the level to $913 a week, roughly $47,476 a year, and estimated that about 4.2 million workers would become newly eligible for overtime. A federal judge in the Eastern District of Texas enjoined that rule in November 2016, before it took effect, and the Fifth Circuit later affirmed. The 2019 rule set the level at $684 a week, or $35,568 a year, with the $107,432 highly compensated figure, and the department estimated that about 1.3 million workers became newly eligible when it took effect in January 2020.

The 2024 rule was bigger. Announced in April 2024, it raised the standard salary level to $844 a week, or $43,888 a year, on July 1, 2024, and was scheduled to raise it again to $1,128 a week, or $58,656 a year, on January 1, 2025, under a new methodology based on the 35th percentile of weekly earnings among full-time salaried workers in the South. The department estimated that the first increase would make about 4.3 million workers newly eligible, with roughly 2.9 million more after the second. The highly compensated threshold was set to rise to $132,964 and then $151,164, and future updates were scheduled every three years starting in 2027.

Then came the litigation. In a suit brought by the State of Texas and business groups, the Eastern District of Texas held in November 2024 that the department had overstepped by letting the salary test do work the statute reserved for the duties test, and it vacated the rule nationwide. The same objection had run through the 2016 challenge, and the outcome repeated it. The scheduled January 2025 increase never took effect. The Labor Department appealed, but as of early 2026 the level had not moved, and the department's own website lists $684 a week as the current standard.

For a worker near the line — a regional coordinator earning $40,000, say — the practical result was a year of whiplash: exempt in January, newly eligible in July, exempt again by Thanksgiving.

What the duties test actually asks

The salary number gets the attention, but the duties test is what separates a genuinely exempt manager from someone with a manager's title and a nonexempt workload. The executive category requires that the employee's primary duty be managing the enterprise or a recognized department or subdivision, that the employee customarily and regularly direct the work of two or more other employees, and that the employee have authority to hire or fire or make recommendations that carry particular weight. The administrative category covers office or non-manual work directly related to the management or general business operations of the employer or its customers, performed with discretion and independent judgment on significant matters. A purchasing agent who chooses vendors within a budget, an HR generalist who interprets policy — these are the classic administrative roles.

The professional category has two branches. Learned professionals must perform work requiring advanced knowledge, usually acquired through prolonged, specialized instruction — the four-year degree is the common shorthand. Creative professionals must perform work requiring invention, imagination, or originality in a recognized artistic field.

Two points matter in practice. First, primary duty means the most important duty, judged by factors that include the relative importance of the duties, the amount of time spent on them, and how the employee is paid — it is not simply whichever duty takes the most hours. Second, the label and the job description do not decide the question. Courts look at what the employee actually does — which is why a manager who spends most of the week doing the same production work as the people she supervises can lose the exemption in court. A marketing director who writes the copy herself, supervises no one, and answers to the chief executive only for her own output may fail the executive and administrative tests alike.

"The salary level is the part everyone argues about, but the duties test is where people actually lose," said a wage-and-hour lawyer in Chicago who has defended misclassification suits for more than 20 years. "A job description written by HR will not save an employer whose manager spends 40 hours a week on the line."

The good news for workers is that the same facts that decide litigation are available to you: what you did last month, whom you directed, and what happened to your pay when you were away.

Where the states wrote their own rules

The federal fight has not stopped the states. Several have their own salary thresholds and their own overtime rules, and those apply regardless of what happens in the federal courts. In a state with a higher threshold, an employer who applies only the federal figure is misclassifying workers even though the federal rule looks lawful.

California is the most demanding. Exempt employees there must earn at least twice the state minimum wage — about $68,600 a year in 2025 — and California requires overtime pay after eight hours in a day and double time after 12, a rule with no federal equivalent. Washington State ties its threshold to 1.75 times the state minimum wage, which put the figure near $60,600 in 2025, and it rises every January. Colorado has stepped its threshold up each year since 2020, to about $67,700 in 2025, and also requires overtime after 12 hours in a day. New York sets its own levels, higher in the city and its suburbs than upstate — about $58,500 in the New York City area in 2025 and roughly $55,300 elsewhere.

State overtime rules that bind regardless of the federal threshold; figures are approximate and change each January.

State	Exempt salary threshold	Extra overtime rules
Federal (FLSA)	$35,568 a year	None beyond 40-hour week
California	About $68,600 (2025)	1.5 times after eight hours a day; double time after 12
Washington	About $60,600 (2025)	None beyond 40-hour week
Colorado	About $67,700 (2025)	1.5 times after 12 hours a day
New York	About $58,500, city area (2025)	None beyond 40-hour week

For workers in these states, the state number is the one that matters. A Denver office coordinator paid $50,000 a year sits below Colorado's threshold, so she is entitled to overtime there even though she is well above the federal level. Payroll systems that compute exemption from a single national figure miss this, and employees who know their state's number are the ones who catch the error.

How to check your own classification

You can run most of this check yourself in about ten minutes with a pay stub and a rough calendar of your last month of work. First, the pay basis. Is your pay a fixed salary that does not change with your hours, or is it hourly, or does it shift with time worked? If you are paid hourly, you are nonexempt by definition, and any week over 40 hours should show overtime pay. If you are paid a salary but your stub shows your hours varying and your pay changing with them, the salary-basis requirement is already in doubt.

Second, the salary level. Divide your annual pay by 52, or check the weekly figure on your stub. If you are below $684 a week, the federal exemption fails, and if you work in California, Washington, Colorado, or New York, compare against your state's higher figure instead. If you are above the level, the test is not over; you still need the duties.

Third, the duties. Write down what you actually did in an average week: how much time managing people and budgets, how much doing the work you manage, whether you set policy or carry it out, whether your recommendations on hiring and firing are followed. The Labor Department's Fact Sheet 17A walks through the categories item by item, and its overtime page links the full set of guidance.

A few signs that your classification deserves a closer look:

• You routinely work 45 hours or more and have never seen an overtime line on a stub.
• Your pay is docked for partial-day absences, which the salary-basis rule generally forbids for exempt workers.
• Your title includes "manager" or "supervisor," but you spend most of your week doing the same work as the people you oversee.
• Your employer does not track your hours at all, even though you are classified as exempt.
• Your salary sits just under a threshold that changed during the 2024 fight.

Any one of these is worth a conversation; two or more is worth a formal review. Keep a simple log of hours and duties for a month before you raise it — it is the same evidence a court would want.

What to do if the answer is no

If the check says you are misclassified, you have options, and they are more practical than most people assume. Start inside. Wage and hour lawyers say the majority of misclassification cases they see could have been resolved with a written request to payroll or HR citing the specific rule — your state's threshold or the duties test. The message should be short, factual, and dated: "I believe my position does not meet the exemption requirements under [state or federal law]; please confirm my classification and my overtime pay." Most employers fix the pay going forward; the fight, when there is one, is usually about the past.

If the employer declines, the federal route is open to almost any worker. The Labor Department's Wage and Hour Division investigates complaints confidentially, and no lawyer is required; the agency said it recovered about $357 million in back wages in fiscal 2024, and its toll-free helpline answers questions in more than 200 languages. Workers can also file a private lawsuit. The FLSA allows recovery of unpaid overtime for up to two years — three if the violation was willful — plus an equal amount in liquidated damages and, for prevailing plaintiffs, attorney's fees, which is why these cases find lawyers. The anti-retaliation rule is strong. Firing or disciplining a worker for complaining about pay is illegal, and retaliation can add damages of its own.

Two cautions. First, do not quit over this; a claim is worth more while you still work there, and you keep the salary while the process runs. Second, understand what success looks like. Reclassification often means a switch to hourly pay and time and a half after 40 hours, which usually raises effective pay for someone working 50-hour weeks and may simply change the accounting for someone who works a strict 40. Run the numbers before you push, using the overtime calculator to see the difference at your own hours.

What to watch next

What happens next is genuinely uncertain, and that itself is information. The Fifth Circuit appeal of the 2024 rule could go either way; a new administration could write a different rule with a higher or lower threshold; and the states that moved first — California, Washington, Colorado, New York — show no sign of retreating. What is certain is that the salary level will not sit at $684 a week forever. It has moved roughly every five years for two decades, and the political incentives on both sides point toward another revision.

In the meantime, the practical move is to know your own numbers: your pay basis, your salary against both the federal and state thresholds, and the honest content of your workweek. Those three facts take about ten minutes to assemble, and they are the same facts a court, a compliance officer, or a future employer will use. The rules may change again next year, but the test for exemption has two parts, and no court has ever said the duties part is optional. Check your classification now, before the next rule arrives, so that when it does, you will know which side of the line you are on.