The Current FLSA Salary Threshold for Overtime Exemptions

As of September 2026, the federal FLSA salary requirements for most executive, administrative, and professional exemptions are $684 per week, or $35,568 per year. An employee must also be paid on a proper salary basis and perform qualifying exempt duties; earning the salary alone does not remove overtime rights.

The U.S. Department of Labor briefly raised the threshold to $844 per week in July 2024, but a federal court vacated the 2024 overtime rule on November 15, 2024. That restored the $684 weekly standard and the $107,432 annual threshold for highly compensated employees. Michigan workers should know that federal rules are the baseline, while state or local wage laws may provide greater protection in some situations.

I am Jonathan R. Marko, a nationally recognized Michigan trial attorney and legal commentator who represents workers in employment disputes and fights for accountability when employers violate wage laws. Marko Law has secured over $2 billion for clients, and this guide explains FLSA salary requirements in plain language so you can better understand whether overtime protections may apply.

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Current FLSA Salary Requirements and Exemption Tests Explained

To understand how federal wage laws operate, workers and employers must look at the complete statutory framework. Understanding what the Fair Labor Standards Act is begins with its core mandate: non-exempt employees must receive overtime pay at one and one-half times their regular hourly rate for all hours worked over 40 in a workweek.

Qualifying for an exemption under federal regulations requires passing three distinct legal tests. Meeting one or two criteria is insufficient; an employee must satisfy all three concurrently to lose overtime protection under the standard FLSA overtime exemptions.

1. The Salary Level Test: The employee must earn at least the federal statutory minimum, which currently sits at $684 per week (equivalent to $35,568 annually).
2. The Salary Basis Test: The worker must receive a predetermined, fixed salary that is not subject to reduction based on the quality or quantity of work performed.
3. The Duties Test: The worker's actual daily job responsibilities—not their job title or written description—must meet specific legal definitions established by federal regulations.

Executive, Administrative, and Professional (EAP) Duties Tests

A job title alone never makes an employee exempt. Corporate defense attorneys often argue that a prestigious title justifies withholding overtime, but courts examine the primary duty of the position. According to federal regulations outlined in DOL Fact Sheet #17A, each white-collar category requires specific operational responsibilities.

The Executive Exemption applies when an employee's primary duty involves managing the enterprise, a recognized department, or a subdivision. The employee must regularly direct the work of two or more full-time employees (or the equivalent in part-time staff) and hold the authority to hire or fire, or have significant weight given to their recommendations regarding hiring, firing, advancement, or promotion.

The Administrative Exemption requires the performance of office or non-manual work directly related to the management or general business operations of the employer or the employer's clients. The role must include the exercise of discretion and independent judgment with respect to matters of significance. Routine clerical work, basic data entry, or following standardized scripts does not qualify.

The Professional Exemption covers learned and creative professionals. Learned professionals must perform work requiring advanced knowledge in a specialized field of science or learning, customarily acquired by a prolonged course of specialized intellectual instruction (such as certified accountants, engineers, or registered nurses). Creative professionals must perform work requiring invention, imagination, originality, or talent in a recognized field of artistic or creative endeavor.

How Permissible Deductions Impact FLSA Salary Requirements

Under the salary basis rule, an exempt employee must receive their full predetermined salary for any week in which they perform work, regardless of how many or how few hours they log. If an employer docks pay because business is slow or because a project finished early, the salary basis is destroyed.

Federal rules in DOL Fact Sheet #17G allow salary deductions only under narrow, specific circumstances:

• Full-day absences for personal reasons other than sickness or disability.
• Full-day absences due to sickness or disability if made under a bona fide sick leave plan or policy.
• Offsetting amounts received by an employee for jury fees, witness fees, or temporary military pay.
• Penalties imposed in good faith for infractions of major safety rules.
• Unpaid disciplinary suspensions of one or more full days imposed in good faith for workplace conduct infractions pursuant to a written policy.
• Proportionate pay for initial or terminal weeks of employment, or unpaid leave taken under the Family and Medical Leave Act (FMLA).

When an employer makes improper deductions from salary, they risk losing the overtime exemption for an entire class of workers. However, employers can protect themselves through the regulatory "safe harbor" provision. To maintain the exemption, the employer must have a clearly communicated written policy prohibiting improper deductions, establish an internal complaint mechanism, reimburse employees for improper deductions within a reasonable timeframe, and demonstrate a good-faith commitment to future compliance.

Bonus Credits, Fee Basis, and Alternative Exemption Thresholds

Employers are permitted to use certain incentive structures to satisfy up to 10 percent of the standard salary level requirement. Under federal rules, nondiscretionary bonuses, incentive payments, and commissions paid on an annual or more frequent basis may count toward 10 percent of the required $684 weekly floor (up to $68.40 per week).

To utilize this credit, the employer must pay the employee at least 90 percent of the standard salary ($615.60 per week) on a regular salary basis. If the worker's combined salary and bonus earnings do not reach the $35,568 annual equivalent by the end of the 52-week period, the employer has one pay period to make a catch-up payment to preserve the exemption.

Understanding the difference between a salary and an hourly employee also involves analyzing hourly and fee-basis alternatives recognized by the Department of Labor.

Administrative, professional, and computer employees may also be paid on a fee basis. A fee payment is an agreed-upon sum for a single job or discrete project regardless of the time required. To qualify as exempt, the fee must yield at least $684 for a standard 40-hour workweek when calculated against the time actually spent. For example, if an artist is paid $350 for a project taking 20 hours of work, the implied rate is $700 for a 40-hour week, satisfying the salary level test.

Computer systems analysts, programmers, software engineers, and similarly skilled tech workers can be classified as exempt if they earn at least $684 per week on a salary basis, or an hourly rate of not less than $27.63 per hour.

Highly Compensated Employee (HCE) Rules and Relaxed Duties

The Highly Compensated Employee exemption provides a simplified legal pathway for classifying high-earning workers. Under the standard restored following federal court rulings, as reflected in official Department of Labor earnings thresholds, an employee must receive total annual compensation of at least $107,432.

This total compensation figure must include at least $684 per week paid on a salary or fee basis. The remaining compensation can include commissions, nondiscretionary bonuses, and other incentive pay, without being subject to the 10 percent cap that applies to standard white-collar exemptions.

HCE classification utilizes a relaxed duties test: the worker does not need to satisfy every element of a standard EAP test, but their primary duty must involve office or non-manual work, and they must customarily and regularly perform at least one of the exempt executive, administrative, or professional duties.

Special Territory and Industry FLSA Salary Requirements

Federal regulations account for distinct economic conditions in specific jurisdictions and specialized industries. While the standard $684 weekly threshold applies throughout the continental United States and Michigan, separate federal salary baselines apply in certain regions:

• Puerto Rico, Guam, the U.S. Virgin Islands, and the Northern Mariana Islands: $455 per week ($23,660 annually).
• American Samoa: $380 per week ($19,760 annually).
• Motion Picture Industry: $1,043 per week (or a proportionate daily rate), provided specific industry job requirements are satisfied.

Certain occupations are entirely excluded from the salary requirements. Licensed physicians, practicing attorneys, and bona fide elementary or secondary school teachers are exempt from both the salary level and salary basis tests. Outside sales employees who regularly work away from the employer's place of business securing sales or contracts are likewise exempt without regard to a minimum salary threshold.

Federal Threshold Vacatur vs. Michigan Employment Laws

Wage thresholds have undergone significant litigation over recent years. In 2024, the Department of Labor issued a final rule designed to raise standard salary thresholds to $844 per week on July 1, 2024, and $1,128 per week on January 1, 2025.

On November 15, 2024, the U.S. District Court for the Eastern District of Texas vacated the 2024 rule nationwide, concluding that the substantial salary increases effectively displaced the statutory duties test. As a result, the federal baseline reverted to the 2019 levels of $684 per week and $107,432 for highly compensated employees.

In Michigan, employers and employees must navigate both federal standards and state statutes. The Michigan Workforce Opportunity Wage Act establishes state-level minimum wage and overtime requirements. When evaluating local employment conditions, such as through our Detroit salary vs hourly guide, parties must apply whichever standard offers greater protection to the worker.

Workplace rules also intersect with broader state standards, including clarifying whether breaks are required in Michigan. If state law or a collective bargaining agreement establishes a higher standard or restricts bonus offsets, the employer must adhere to that higher standard.

Resolving Misclassification and Unpaid Overtime Disputes

Misclassifying non-exempt employees as exempt salaried staff is one of the most widespread wage violations we encounter in trial practice. Employers often assign workers inflated titles—such as "lead supervisor" or "assistant director"—while requiring them to perform routine manual labor, customer service, or production work for 50 to 60 hours per week without overtime pay.

Workers frequently ask, am I entitled to overtime pay if I work more than 40 hours a week? When an employee does not meet the legal duties test, the answer is generally yes, regardless of whether they receive a fixed salary.

If misclassification occurs, workers have the right to seek back wages. Under the FLSA, employees can recover:

• Unpaid Overtime Wages: Calculated at one and one-half times the regular hourly rate for all overtime hours worked.
• Liquidated Damages: An additional equal amount (100% penalty) unless the employer proves it acted in good faith with reasonable grounds to believe it complied with the law.
• Attorney Fees and Litigation Costs: Mandated under federal law to ensure workers can secure legal representation.

The statute of limitations under the FLSA is two years for standard violations and three years for willful wage violations. Workers wondering can I sue my employer for unpaid wages or overtime or exploring how to file a wage or overtime complaint under the FLSA should preserve paystubs, timecards, job descriptions, work emails, and personal logs of hours worked to support their claims.

Frequently Asked Questions About FLSA Salary Rules

What is the current federal minimum salary threshold for exempt employees?

As of September 2026, the federal minimum salary threshold for standard executive, administrative, and professional exemptions is $684 per week, which equals $35,568 per year. Highly compensated employees must receive at least $107,432 annually, including $684 per week on a salary basis. Authoritative guidance is detailed in the DOL Handy Reference Guide to the FLSA.

Can an employee be exempt if their salary meets the threshold but job duties do not?

No. An employee is never exempt based on salary alone. Both the salary level test and the statutory duties test must be satisfied concurrently. If a worker earns $70,000 per year on a salary basis but performs routine administrative tasks or manual labor without exercising independent discretion or managerial authority, they are legally non-exempt and entitled to overtime pay.

What should employees do if their employer makes improper pay deductions?

If an employer reduces a salaried exempt employee's predetermined pay for partial-day absences, quality issues, or business slow periods, the salary basis may be invalidated. Employees should submit a written inquiry or dispute to HR or payroll. Employers who lack a compliant safe-harbor policy or refuse to reimburse improper deductions risk losing exemption status across the affected unit. Furthermore, employees are protected under federal law if they raise wage concerns; learn more about whether an employer can retaliate against a worker for filing a wage claim.

Conclusion

Understanding wage rights requires cutting through corporate misinformation and examining actual day-to-day job duties alongside statutory pay thresholds. Employers across Detroit, Wayne County, Oakland County, Macomb County, and throughout Michigan are legally obligated to classify their workforce properly and pay all earned overtime wages.

At Marko Law, we have built a reputation for standing up to institutional misconduct, corporate wage theft, and improper employment practices. To date, Marko Law has secured over $2 billion for their clients through trial verdicts and negotiated resolutions. If you believe your employer has improperly classified your position, made unlawful deductions from your salary, or failed to pay you mandatory overtime, contact our team today.

Call Marko Law at 313-777-7777 or visit our Michigan employment and labor law attorneys page for a free, confidential case review.

Disclaimer: The information provided in this guide is for general educational purposes only and does not constitute individualized legal advice. Wage and hour laws involve complex statutory exceptions and deadlines that vary based on individual circumstances and jurisdictions. Contact an attorney to discuss the specific facts of your case.