On May 15, 2026, the Department of Labor issued a final rule removing Biden-era regulations that aimed to expand employees’ eligibility for overtime premium pay. The new final rule effectively reinstates the 2019 regulatory text that existed prior to the Biden-era rule.
As background, the Fair Labor Standards Act (“FLSA”) requires covered employers, including public school districts, to pay employees a minimum wage and, for employees who work more than 40 hours in a workweek, overtime premium pay of at least 1.5 times the employee’s regular rate of pay. Section 13(a)(1) of the FLSA exempts from the minimum wage and overtime pay requirements “any employee employed in a bona fide executive, administrative, or professional capacity” (including teachers). In determining whether employees fit into one of the previously mentioned categories, an employee must generally meet all three tests:
- be paid a pre-determined, fixed salary, not subject to reduction because of variations in the quality or quantity of work performed;
- be paid at least a specified weekly salary level; and
- primarily perform executive, administrative, or professional duties, as provided in the regulations.
The Department’s regulations also provide a test for highly compensated employees who are paid a salary, earn above a higher total annual compensation level, and satisfy a minimal-duties test.
As we reported previously, on April 26, 2024, the DOL issued a now-repealed final rule increasing the specified weekly salary level, mentioned in the second prong of the above test, as well as the earnings threshold for highly compensated employees. However, the 2024 rule quickly became the subject of litigation, and the United States District Courts for the Eastern and Northern Districts of Texas ultimately issued orders vacating the rule. The U.S. Court of Appeals for the Fifth Circuit dismissed appeals in both cases.
By issuing the new final rule, the DOL implemented these judicial decisions and reinstated the regulations as they existed before 2024. Accordingly, the specified weekly salary threshold will remain at $684 per week (equivalent to $35,568 per year), rather than $1,128 per week (equivalent to $58,656 per year), set by the 2024 rule. Moreover, the highly compensated employee threshold remains at $107,432 per year instead of $151,164 per year.
In contrast with previous expectations, school districts will no longer face increased overtime costs for certain district employees. With the Department’s new rule, overtime exemption thresholds remain consistent with those established in 2019.
Source: Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees; Implementation of Federal Court Judgments, 91 Fed. Reg. 27833 (May 15, 2026) (to be codified at 29 CFR Part 541).
