Overtime threshold hike proposed

Summary#

The Restoring Overtime Pay Act of 2026 would amend the Fair Labor Standards Act of 1938. Its stated goal is to set and automatically update a minimum salary threshold for the overtime exemption in section 13(a)(1); it would also change a duties rule for some retail and service employees. The bill has not become law.

  • The Labor Secretary would have to require covered employees to be paid on a salary or equivalent fee basis at or above the threshold to qualify for the exemption.
  • The threshold would start at $45,000 on the bill’s effective date, then rise to $55,000 in 2027, $65,000 in 2028, and $75,000 in 2029.
  • From 2030, the threshold would be tied to the 55th percentile of weekly earnings for full-time salaried workers nationwide. The Secretary may set a higher threshold; later automatic updates would use the greater of that threshold and the 55th-percentile amount.
  • For employees in retail or service establishments seeking the executive or administrative exemption, the bill would change the duties rule so that spending at least 20% of work hours on activities not directly or closely related to executive or administrative work would exclude them from that exemption.
  • The Bureau of Labor Statistics would have to publish weekly earnings data by Census region within 21 days after each calendar quarter ends. The Secretary would have to announce revised thresholds at least 60 days before they take effect.

What it means for you#

  • Employees covered by the section 13(a)(1) exemption: A salary below the applicable threshold would mean the employee could not qualify for that exemption. It would not by itself guarantee overtime pay: other exemptions or rules may apply.
  • Retail and service employees in executive or administrative roles: The bill would make the 20% duties limit part of the exemption rule. The change applies to this exemption, not to every employee at a retail or service business.
  • Employers: Those relying on this exemption would have to meet the salary threshold and applicable duties rules to use it.
  • Federal agencies: The Labor Department would have duties to set or update thresholds and publish notices; the Bureau of Labor Statistics would have to publish the specified earnings data.
  • The bill does not set up an application or appeal process, or create a new employee benefit program. Its effective date would be the first day of the third month beginning after enactment.

Money#

No publicly available information on the bill’s cost is included in the supplied material.

  • The bill assigns publication and threshold-setting duties to federal agencies, but gives no staffing or spending estimate.
  • It sets no new fee, fine, tax, or benefit payment.
  • Employers’ costs, including any changes to pay or overtime, are not estimated.

What is unclear#

  • The Fair Labor Standards Act itself was not supplied, so I could not verify the full current-law wording or all effects of the bill’s edits against current law.
  • The bill does not define “full-time salaried workers” or specify the data method for measuring the 55th percentile.
  • It does not explain how the new threshold would interact with other overtime exemptions.
  • The bill does not describe enforcement, employee complaint procedures, or how disputes over job duties would be decided.
  • The bill’s start date depends on enactment, and passage is uncertain: it has been referred to a Senate committee.

Case for#

  • The bill appears intended to make the salary threshold predictable and keep it linked to earnings over time.
  • A higher threshold could mean more employees are unable to qualify for this exemption solely on the basis of salary.
  • The duties limit could reduce the ability to classify retail or service employees as exempt when a substantial share of their work is unrelated to executive or administrative duties.
  • Publishing regional earnings data could give the public more information about earnings, though the threshold itself is based on national data.

Case against#

  • The bill sets a steep series of increases before the threshold becomes linked to earnings, which could require employers to change pay or overtime practices. The bill does not estimate those costs.
  • Automatic updates would take effect without the usual notice-and-comment rulemaking process for each update.
  • The bill does not explain how the duties limit would be measured or resolved in a dispute.
  • The added data and update duties may require agency resources, but the bill provides no cost estimate.