Work 48 hours in a week at $18 an hour and federal law says your paycheck should show $936, not $864. The last eight hours are owed at time and a half, $27 each, under the Fair Labor Standards Act. The rule sounds simple, and for most hourly workers it is. The complications, and most of the wage theft, live in one question: who counts as “exempt.” With the rules freshly resettled this month after two years of litigation, here is where things actually stand in May 2026.
The stakes are not small. The Labor Department’s Wage and Hour Division recovers hundreds of millions of dollars in back wages for workers every year, and unpaid overtime is consistently one of the biggest categories. Much of it happens because workers assume a salary or a job title puts them outside the rule.
The basic federal rule
The FLSA requires covered, nonexempt employees to receive at least one and a half times their regular rate of pay for all hours worked beyond 40 in a workweek, as laid out in the Labor Department’s Fact Sheet 23. A few details people miss: the regular rate generally includes nondiscretionary bonuses and shift differentials, not just base wage. The workweek is any fixed 168-hour period your employer designates, and hours cannot be averaged across two weeks. And federal law has no daily overtime; 12 hours on Monday triggers nothing by itself if the week stays at 40 or under (some states, notably California, do impose daily overtime under state law).
What actually makes a worker exempt
The main exemptions, for executive, administrative, and professional employees, require passing three tests at once, described in Fact Sheet 17A: you must be paid on a salary basis, the salary must meet a minimum level, and your actual duties must primarily involve exempt work, such as managing two or more employees with hiring authority, exercising independent judgment on significant business matters, or performing work requiring an advanced degree.
All three prongs matter. A salaried “assistant manager” who spends most shifts running a register and stocking shelves can fail the duties test and be owed overtime despite the salary and the title. The Labor Department has repeatedly recovered back pay in exactly those cases.
Where the salary threshold stands in 2026
This is the part that changed recently, so it is worth being precise. The governing federal salary threshold is $684 per week, or $35,568 a year, with a $107,432 total-compensation level for the streamlined “highly compensated employee” test.
A 2024 Labor Department rule had raised the threshold, with a second step scheduled to reach $58,656. A federal district court in Texas vacated that rule nationwide in November 2024, holding the department had exceeded its authority, which snapped the threshold back to the 2019 levels. On May 14 of this year, the department published a technical amendment formally restoring the 2019 regulatory text, removing the vacated 2024 language from the books. Practical translation for workers: if you earn a salary under $684 a week, you are owed overtime no matter what your duties are. Above it, the duties test decides.
Myths that cost workers money
“I’m salaried, so no overtime.” False unless you also meet the salary level and duties tests. Salary is one prong of three.
“My title is manager.” Titles carry no weight. What you do all day is what counts.
“My boss offered comp time instead.” Private-sector employers generally cannot substitute time off in a later week for legally required overtime premiums. Comp time arrangements are largely a public-sector allowance.
“I agreed to a flat weekly amount, so I waived it.” FLSA overtime rights cannot be waived by agreement. An arrangement that pays less than time and a half for hours over 40 is simply noncompliant.
“Off-the-clock work doesn’t count.” Answering required emails at night, prep before a shift, and mandatory training are generally compensable hours that count toward the 40.
Your state may owe you more
The FLSA is a floor. States are free to set higher salary thresholds for exemption, daily overtime rules, or both, and several do. If you work in a state with its own overtime law, you are entitled to whichever standard is more protective. Your state labor department can tell you which rules apply where you work.
The new tax break on overtime pay
One more reason the exempt-versus-nonexempt line is worth real money right now: under the 2025 tax law, workers can deduct qualified overtime premium pay, the “half” portion of time and a half, on their federal returns for tax years 2025 through 2028, up to $12,500 a year ($25,000 for joint filers), phasing out above $150,000 of modified adjusted gross income ($300,000 joint). The IRS explains the details in its No Tax on Overtime guidance. The deduction only exists for overtime you are actually paid, which makes getting properly classified doubly valuable.
If you think you are owed back pay
Start keeping your own record of hours worked, even a simple notebook or phone note; courts and investigators credit contemporaneous records. Then you can raise it with your employer, or file a confidential complaint with the Wage and Hour Division at no cost, online or by phone, through the agency’s complaint process. The FLSA generally allows recovery of two years of back wages, three if the violation was willful, and it prohibits retaliation against workers who assert their rights. The clock runs continuously, so each week of delay is a week of pay that can fall off the back end of the claim.
This article was produced with AI assistance and reviewed by a human editor. Figures are linked to their primary sources; where a claim could not be verified from the public record, we say so.
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