Back in early 2024, when the Department of Labor finalized a rule pushing the overtime salary threshold up to over $58,000 a year, a lot of business owners scrambled. Some raised salaries to keep valued employees exempt. Others reclassified people as hourly and started tracking time for the first time in years. It was disruptive, it cost money, and most owners did it because the rule was the law — not because they wanted to.
The DOL overtime rule 2026 reversal just made all of that optional. On May 14, 2026, the Wage and Hour Division restored the 2019 overtime framework, which sets the exempt salary threshold back at $684 a week — $35,568 a year. The 2024 rule is gone. If you adjusted your pay structure to comply with it, you’re now sitting on changes the federal government no longer requires.
That’s not as simple as “switch it back.” Here’s how to think about it.
How the DOL overtime rule 2026 reversal happened
The 2024 overtime rule was never on stable ground. A federal court in the Eastern District of Texas vacated it in November 2024, and the ruling applied nationwide, not just to the parties in the case. For a while, employers were left in limbo — the rule was dead in the courts but still sitting in the federal register. The DOL’s May 2026 technical amendment finally cleaned that up, formally removing the 2024 rule from the books and reverting enforcement to the 2019 salary level.
So the legal baseline today is the same $684-a-week threshold that’s been in place since 2019. Nothing requires you to pay exempt employees more than that, unless your state sets a higher bar — and a number of states do.
Why “just revert it” is the wrong instinct
I get why a business owner’s first reaction is to roll back a salary bump the moment it’s no longer required. The instinct makes sense on a spreadsheet. But comp changes don’t live on a spreadsheet — they live in how your employees feel about their job.
If you raised someone from $42,000 to $45,000 to keep them exempt under the old rule, cutting that back now reads as a pay cut, even if you frame it as “returning to compliance.” Employees don’t track DOL rulemaking. They track what’s in their paycheck. Reversing a raise — even a regulatory one — tends to cost more in trust and turnover than it saves in payroll.
There’s also a state-law wrinkle. Federal law sets a floor, not a ceiling. Several states — California, New York, Washington, and Colorado among them — have their own exempt salary thresholds that are already higher than the restored federal number. If you’re in one of those states, the DOL overtime rule 2026 reversal changes nothing for you. You still have to meet the higher state minimum. Multi-state employers need to check this state by state, not assume the federal rollback applies everywhere they operate.
What to actually evaluate
Before changing anything, look at three things. First, which employees did you adjust specifically because of the 2024 rule, and which were raised for other reasons (market rate, retention, a promotion) that happened to coincide with it? Only the first group is actually up for reconsideration.
Second, what does your state require independent of the federal rule? If your state threshold already exceeds $35,568, the DOL overtime rule 2026 change is irrelevant to your exempt classifications — you were never going to drop below your state’s number anyway.
Third, if you reclassified someone from exempt to hourly nonexempt in 2024 and built timekeeping and overtime tracking around that change, ask whether reverting is even worth the administrative whiplash. Switching someone back to exempt status now means another round of notices, payroll changes, and explaining to that employee why their job just changed status twice in two years. Sometimes the cleanest move is to leave a classification alone even when the rule that drove it no longer exists.
This is exactly the kind of churn a PEO is built for
This is the second major overtime rule reversal in under two years, layered on top of the DOL’s independent contractor rule changes and the FTC’s noncompete ban getting blocked in court. Every one of these required business owners to re-evaluate pay structures, job classifications, or policies — and then, in several cases, re-evaluate them again when the rule got undone.
That’s the real cost of operating in this regulatory environment right now: not any single rule, but the constant churn of compliance work that gets created and then unwound. A PEO doesn’t make the rules stop changing. What it does is carry the burden of tracking which changes are live, which states have their own thresholds, and what your specific workforce actually needs to do about it — so you’re not the one re-reading DOL technical amendments to figure out if your payroll is still compliant.
Want a second opinion on whether your current exempt classifications still make sense? I’ll look at what you changed in 2024, what your state actually requires, and whether reverting is worth the disruption. No sales pitch. Just the numbers.
Related: The DOL’s New Independent Contractor Rule Just Took Effect · The FTC Tried to Ban Noncompetes — A Federal Court Just Blocked It · The PEO Industry in 2025: Trends, Consolidation, and What It Means for Your Business