Set Minimum Salary for Overtime Exemption

Summary#

The Restoring Overtime Pay Act of 2026 would amend the Fair Labor Standards Act of 1938; it does not create a new Act or agency. Its stated goal is to set a minimum salary threshold for the executive, administrative and professional overtime exemption, then update that threshold automatically each year. The bill has been introduced and referred to a House committee; it is not law.

  • The Labor Secretary must require workers using this exemption to be paid on a salary or equivalent fee basis, at least at the bill’s threshold.
  • The threshold would start at $45,000, rise to $55,000 in 2027, $65,000 in 2028 and $75,000 in 2029, then use the national 55th percentile of weekly earnings of full-time salaried workers from the specified Bureau of Labor Statistics data.
  • After that, the Secretary must update the threshold annually. The Secretary may set a higher threshold through notice-and-comment rulemaking; later automatic updates would use whichever is higher: the 55th-percentile amount or the updated higher threshold.
  • The Bureau of Labor Statistics must publish weekly earnings data by Census region within 21 days after each calendar quarter ends.
  • For retail or service establishment employees, the bill changes wording in the exemption provision: it replaces “less than 40” with “not less than 20” and changes which activities are referenced. The supplied materials do not include the full current provision, so the exact effect of this change is unclear.

What it means for you#

  • Employees using the executive, administrative or professional exemption: If the bill became law, an employee paid below the applicable threshold could not qualify for this exemption, even if the other exemption requirements were met. That does not by itself guarantee overtime pay; other coverage and eligibility rules still matter.
  • Employers: Employers would have to meet the salary threshold to use this exemption. The bill does not require employers to raise pay, change job duties or provide overtime in every case.
  • Retail and service employers and employees: The bill changes a duties-related test for this exemption, but its exact practical effect cannot be verified from the supplied text alone.
  • Department of Labor and Bureau of Labor Statistics: The Secretary must set and announce the threshold; the Bureau must publish regional weekly earnings data. The bill does not create a new independent agency.
  • Other workers and the public: The bill does not directly change the federal overtime rate, set a general maximum on work hours, or change other exemptions.

Money#

No publicly available information on the bill’s estimated public or private costs.

  • The bill assigns threshold-setting and notice duties to the Labor Secretary and quarterly data-publication duties to the Bureau of Labor Statistics, but gives no staffing or cost estimate.
  • It does not set a fee, fine, tax, appropriation or benefit payment.
  • Employers’ costs could depend on how many workers are affected and how employers respond; the supplied materials do not estimate those amounts.

What is unclear#

  • The Fair Labor Standards Act’s full current text was not supplied, so the bill’s exact change to the retail/service duties test cannot be checked against current law.
  • The bill does not explain how the Secretary would choose the data set and method for a higher threshold, beyond requiring that they be capable of annual updates.
  • It does not give the future dollar amounts for the 55th-percentile threshold or annual updates.
  • The bill takes effect on the first day of the third month after enactment, but enactment has not occurred. Passage is uncertain.
  • The supplied materials do not estimate how many workers or employers would be affected.

Case for#

  • The bill appears intended to make salary level a clear condition for using this overtime exemption.
  • A threshold that rises on a set schedule and then updates annually could keep the salary test from remaining fixed over time.
  • Requiring public earnings data by region could make some of the underlying wage information available to the public.

Case against#

  • One concern is that automatic annual increases could raise employer costs, but the bill provides no estimate of how many workers would be affected or by how much.
  • The 2030 threshold and later updates rely on a national earnings measure, while the Bureau must publish regional data; the bill does not use those regional figures to set the threshold.
  • The retail/service duties-test change is difficult to assess without the full current statutory wording.
  • Employers and workers may have limited time to prepare for revised thresholds: the Secretary must give notice at least 60 days before a revised amount takes effect.