A Quiet Reversal With Loud Consequences
The federal overtime rule that briefly extended wage protections to roughly four million additional salaried workers has been effectively rolled back, leaving those workers with fewer legal guardrails against unpaid overwork. The rule, which raised the salary threshold below which workers automatically qualify for overtime pay, was challenged in federal court and struck down – and the current administration has declined to appeal or replace it with a stronger version. What remains is an older, lower threshold that hasn’t kept pace with inflation, living costs, or the reality of how many Americans actually work.
For workers in retail management, hospitality supervision, healthcare administration, and countless other sectors where salaried roles are common, the rollback lands with real financial weight. A shift supervisor earning $40,000 a year who regularly works 50-hour weeks gets no overtime pay. Neither does a salaried office coordinator pulling 55-hour weeks to meet deadlines. Under the previous, higher threshold, both would have qualified for time-and-a-half. Now, they don’t.
What the Rule Actually Did – and Didn’t Do
The Fair Labor Standards Act requires employers to pay overtime – 1.5 times the regular rate – to workers who log more than 40 hours per week, but only if those workers earn below a set salary threshold. Above that threshold, employees classified as “exempt” have no automatic right to overtime, regardless of how many hours they actually work. The Biden administration raised that threshold significantly, from roughly $35,568 per year to $58,656, in an attempt to modernize protections that had stagnated for years.
A federal judge in Texas vacated the rule in November 2024, ruling that the Department of Labor had overstepped its authority by setting a threshold so high it effectively eliminated the duties test – the separate legal standard that evaluates whether an employee’s actual job responsibilities qualify them as a bona fide executive, administrative, or professional worker. That ruling reset the threshold back to its 2019 level of $35,568. The current administration has not announced any plan to restore the higher number or propose a new rule.
The duties test, theoretically, is supposed to be the real protection. If your job doesn’t genuinely involve management decisions, independent judgment, or specialized professional work, you shouldn’t be classified as exempt – no matter what your salary is. In practice, though, employers routinely give workers nominal supervisory titles that technically satisfy the duties test while those same workers spend most of their time on the floor doing the same tasks as hourly employees. The salary threshold was meant to serve as a floor that short-circuits those gray-area classifications before the duties test even applies.
Who Bears the Most Risk
The workers most exposed by the rollback are those earning between $35,568 and $58,656 per year – a salary band that covers an enormous slice of the American workforce. These are not highly compensated professionals with negotiating leverage. They are mid-level retail managers, restaurant shift leads, customer service supervisors, and entry-level salaried roles across industries that depend heavily on long hours and flexible scheduling. Many of these workers were hired with the implicit expectation that overtime was part of the deal – just unpaid.
The rollback also falls unevenly across geography. A $40,000 salary in rural Mississippi is a middle-class income. The same salary in Denver or Boston barely covers rent. Federal overtime thresholds apply uniformly, which means that cost-of-living gaps translate directly into protection gaps. Workers in high-cost metros who earn salaries that feel modest by local standards are still classified as exempt, still working extra hours without extra pay, and still have no federal recourse.
Women and workers of color are disproportionately represented in the salary bands most affected by the rollback. Salaried administrative and service roles – which skew female and nonwhite – cluster in exactly the income range where the higher threshold would have provided the most protection. The rollback doesn’t create that disparity, but it reinforces an existing structural condition where workers with less bargaining power are more likely to be in jobs that exploit the exempt classification.
There is a separate and underappreciated financial dynamic at play here. When workers are paid a flat salary regardless of hours worked, employers have a direct incentive to schedule them for as many hours as possible. The overtime threshold is, at its core, a pricing mechanism – it makes long hours expensive for employers, which discourages overwork. Without it, the cost of requiring a salaried worker to stay four extra hours on a Friday is exactly zero. That arithmetic doesn’t go unnoticed in industries where labor is the largest operating expense.
Some states have their own, higher overtime thresholds – California and New York being the most prominent – and workers in those states retain stronger protections regardless of what happens at the federal level. But for workers in states without their own rules, the federal floor is all they have. With that floor now sitting at a level set in 2019 dollars, the real value of that protection continues to erode quietly, without any new rule change required. Inflation alone chips away at it every year.
The question no one has a clean answer to yet is whether Congress will step in. Legislating a new threshold has been attempted before and stalled. The political dynamics of raising labor costs for small businesses – many of which rely heavily on salaried workers classified as exempt – make this a hard vote for legislators in competitive districts. Without legislative action or a new rulemaking push from the Department of Labor, the 2019 threshold stands. And a worker earning $36,000 a year who clocks 55 hours a week will keep doing it for free.
