The Fair Labor Standards Act requires overtime pay beyond forty hours a week, with exceptions. The largest covers executive, administrative and professional employees, and qualifying requires two things: the job must involve genuine managerial or professional duties, and the salary must exceed a floor set by the Labor Department.
That floor is currently 35,568 dollars a year, or 684 dollars a week. Because it is a fixed dollar amount rather than a percentile, ordinary wage growth pushes more workers above it every year without any decision being made. The threshold does not need to be lowered to cover fewer people. It only needs to be left alone.
The threshold has moved rarely. It was raised in 2004 after a long gap, again in 2019, and an attempt in 2016 was blocked in court before it took effect. Between adjustments the real value falls with every year of wage growth, so the share of salaried workers protected by overtime has declined steadily since the 1970s without any deliberate decision to narrow it.
In April 2024 the Labor Department finalised a rule raising the floor in two steps. From July 2024 it went to 43,888 dollars, and from January 2025 it would have reached 58,656. The Department estimated that the first increase restored overtime eligibility to about one million workers and the second would have covered three million more.
On 15 November 2024, Judge Sean Jordan of the Eastern District of Texas vacated the rule nationwide in State of Texas v. Department of Labor. The July increase was undone along with the January one. Employers who had raised salaries to comply spent the following weeks deciding whether to unwind the change.
The disruption was not trivial. Employers who had reclassified staff or raised salaries in July had to decide whether to reverse those changes in November, and many chose not to, since cutting someone's pay is harder than raising it. The result is that some workers kept an increase that no longer had any legal basis, while workers at firms that had waited got nothing.
The reasoning was narrow and worth stating precisely, because it is often misreported. The court did not hold that the threshold cannot rise. It held that this threshold rose so far that it displaced the statutory duties test.
The statute exempts employees whose work is executive, administrative or professional in character. The salary floor exists as a screening device. Judge Jordan found that by January 2025 the rule would have excluded roughly two of every five employees who plainly met the duties requirements, which made salary rather than duties the operative test. That, he held, exceeded what Congress delegated.
In May 2026 the Labor Department formally rescinded the 2024 rule, restoring the 2019 figures as the governing standard.
The distinction matters for what happens next. Because the ruling turned on how far the threshold rose rather than on whether the Department may set one at all, a smaller increase would rest on firmer ground. Several employment lawyers noted at the time that a rule landing nearer the 2019 methodology would be much harder to challenge, which is a narrower path than either side's public position suggests.
The disagreement is narrower than the volume of litigation suggests. Almost nobody argues the threshold should stay at 35,568 dollars permanently, and the Labor Department under both parties has raised it periodically since 1938.
What is disputed is how far, how fast, and who decides. One side sees a floor eroding by default and an agency correcting it. The other sees an agency using a salary number to rewrite an exemption Congress defined by job duties, in a way that reverses with each administration.
There is also broad agreement on the mechanism that would end the cycle. Indexing the threshold to a wage measure, so it adjusts automatically, was in the 2024 rule and has appeared in proposals from both directions. The disagreement is over what the starting level should be, not over whether automatic updating is sensible.
The overtime fight has the same shape as several others. An agency acts because Congress has not. A court finds the agency exceeded its authority, often citing the end of Chevron deference. The rule is vacated, the status quo returns, and everyone says Congress should legislate.
That has been said about net neutrality, about student debt, and now about overtime. Bills to raise the threshold by statute have been introduced repeatedly and have not passed, which is the honest measure of where agreement sits.
For a worker earning 40,000 dollars as a shift supervisor, none of this is abstract. The threshold determines whether the sixty hour weeks are paid or unpaid, and it has been determined four times in three years by three different institutions, none of which was Congress.
The threshold is also not the only lever. Some states set their own, and California and New York already require substantially higher salaries before an employee can be treated as exempt. A worker's protection therefore depends on which state they work in, which is the same patchwork outcome that appears whenever a federal rule is struck down and nothing replaces it.
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