The federal overtime exemption threshold is the minimum salary an employee must earn, and the minimum conditions they must meet, to be classified as exempt from overtime pay under the Fair Labor Standards Act (FLSA). As of 2026, that threshold remains $684 per week ($35,568 per year) after a federal court vacated the Biden DOL’s 2024 rule and the Trump administration declined to appeal. A new proposed rule targeting $55,068 per year is under regulatory review. Employers who have not audited their exempt classifications recently may be carrying risk they do not see coming.
What Is the Federal Overtime Exemption Threshold in 2026?
The current federal exemption threshold is $684 per week ($35,568 per year) for standard white-collar exemptions and $107,432 per year for highly compensated employees, according to the DOL’s current salary levels guidance. These are the 2019 figures, restored after the Biden-era increases were struck down in full.
| Rule / Event | Standard Salary Leve | HCE Level | Status |
|---|---|---|---|
|
2019 DOL Rule |
$684/week ($35,568/yr) |
$107,432/yr |
In effect (2026) |
|
Biden Rule – Phase 1 (July 2024) |
$844/week ($43,888/yr) |
$132,964/yr |
Vacated |
|
Biden Rule – Phase 2 (Jan 2025) |
$1,128/week ($58,656/yr) |
$151,164/yr
|
Vacated
|
|
Trump DOL Proposed Rule
|
~$1,059/week ($55,068/yr) |
TBD |
Pending, not finalized
|
Earning above $35,568 per year does not automatically make an employee exempt. All three FLSA requirements must be satisfied.
The Three-Part Test for Exempt Status
To qualify as exempt, an employee must meet all of the following:
- Salary basis test: Paid a fixed, predetermined salary not subject to improper deductions
- Salary level test: Earns at least $684 per week ($35,568 per year) at the federal level
- Duties test: Primary job duties fall within an executive, administrative, or professional category
Violating the salary basis test, for example by docking pay for a partial-day absence unrelated to FMLA or accrued PTO, can cause an employee to lose exempt status retroactively. Under the FLSA, that triggers overtime liability going back two years for standard violations and three years for willful ones, plus liquidated damages and attorneys’ fees.
White-Collar Exemptions at a Glance
| Exemption | Primary Duty | Key Condition |
|---|---|---|
|
Executive |
Managing the enterprise or a department
|
Must direct 2+ employees; authority over hiring/firing |
|
Administrative |
Office work related to management or business operations |
Must exercise discretion and independent judgment |
|
Professional |
Work requiring advanced knowledge in a specialized field |
Knowledge typically acquired through formal education |
No salary level, however high, substitutes for the duties test. An employee earning $200,000 per year who does not satisfy the applicable duties test is nonexempt and entitled to overtime.
What Happened to the 2024 DOL Rule?
The Biden DOL finalized a rule in April 2024 to raise the threshold in two phases, first to $43,888 per year in July 2024, then to $58,656 per year in January 2025. A federal court vacated the rule in full in November 2024, finding the DOL exceeded its statutory authority by setting thresholds so high as to functionally eliminate the duties test. The Trump administration declined to appeal and has since proposed a new threshold of approximately $55,068 per year. As of May 2026, no final rule has been enacted.
5 Steps Arizona Employers Should Take Now
- Audit every exempt classification. Verify that each exempt employee satisfies all three FLSA requirements and document the duties-test rationale in writing.
- Identify at-risk employees. Pull a list of exempt employees earning between $35,568 and $55,068 per year. These are the employees most directly affected if the proposed rule is finalized.
- Model your options. When a threshold rises, you can either raise the employee’s salary to preserve exempt status or reclassify them as nonexempt. The right choice depends on their typical hours and compensation structure.
- Review salary basis practices. Check payroll records for improper deductions from exempt employees’ salaries and correct any patterns before a DOL audit finds them.
- Monitor the Federal Register. Any new DOL rule requires a public comment period before taking effect. Subscribe to regulatory updates or ask employment counsel to flag new rulemaking activity.
State Thresholds That Exceed Federal Law
Arizona follows the federal threshold. However, employers with workers in other states should be aware of higher state-level requirements:
| State | Annual Equivilant |
|---|---|
|
California |
$70,304/year |
|
washington |
$80,168/year |
|
New York |
$66,300/year (NYC area) |
|
Colorado |
$57,783/year |
|
Alaska |
$58,240/year (effective July 1, 2026) |
Frequently Asked Questions
What is the overtime exemption threshold for 2026?
$684 per week ($35,568 per year) for standard white-collar exemptions and $107,432 per year for highly compensated employees.
Did the DOL raise the threshold in 2025?
No. The 2024 rule was vacated by a federal court in November 2024, and the Trump administration declined to appeal.
Could the threshold change in 2026?
Yes. The Trump DOL has proposed raising it to approximately $55,068 per year, but no final rule has been enacted as of May 2026.
Do Arizona employers follow the federal threshold?
Yes. Arizona has no separate state overtime threshold, so the federal $684 per week standard applies.
Farhang & Medcoff represents employers in Tucson, Phoenix, and throughout Arizona on wage and hour compliance, employee classification, and employment law matters. If you have questions about overtime exemptions or want to get ahead of a possible threshold change, contact our employment law team or visit our Labor & Employment practice page.