U.S. Department of Labor Reverts to 2019 Minimum Salary Threshold for Exempt Employees, Which is Lower Than Colorado’s Minimum Salary Threshold

John Agbonika, Associate

            On May 15, 2026, the U.S. Department of Labor (“DOL”) published its final rule (“2026 Rule”)[1] revising the Fair Labor Standards Act (“FLSA”) minimum salary threshold necessary for exemptions to the FLSA’s overtime requirements for executive, administrative, and professional (“EAP”) employees back to the 2019 minimum salary level, which is lower than Colorado’s minimum salary threshold for exempt employees.

Background

            Under the FLSA, EAP employees are either exempt or non-exempt from federal overtime laws depending on their salary level and their job duties.[2] In a previous blog,[3] we informed our readers that the 2024 Rule sought to increase the required minimum salary threshold from $684 per week (or $35,568 annually) to $844 per week ($43,888 annually).[4]

The 2026 Rule

            Following multiple challenges to the 2024 Rule from the business community and the State of Texas, two federal courts in Texas vacated the 2024 Rule after determining that the DOL exceeded its authority under the FLSA by making the salary level the primary factor in determining exempt status rather than employees’ job duties.[5] Accordingly, the DOL issued the 2026 Rule as a “technical correction” to amend the DOL’s regulations and to reinstate the regulatory text promulgated in the 2019 final rule, as it appeared in the Code of Federal Regulations (“CFR”) immediately prior to the effective date of the 2024 rule. In other words, the current minimum salary for exemption as an EAP employee is $684 per week (or $35,568 annually) and the HCE exemption threshold is $107,432 annually. 

            For employers in many states, the 2026 Rule provides much-needed clarity after nearly two years of litigation and uncertainty regarding employee classification and salary requirements.

Relevance of the 2026 Rule to Colorado Employers

            The practical impact of the 2026 Rule will be minimal for Colorado employers because Colorado independently imposes a significantly higher minimum salary threshold for overtime exemption requirements in the Colorado Overtime and Minimum Pay Standards Order (“COMPS Order”) and the 2026 Publication and Yearly Calculation of Adjusted Labor Compensation (“2026 PAY CALC”) Order. Specifically, Colorado EAP employees are exempt from overtime if they earn a salary of $1,111.23 per week ($57,784 rounded annual equivalent), and HCEs earning $130,014 annually are exempt from overtime.

Employer Considerations

            Although the federal minimum salary threshold remains important for Colorado employers operating across multiple jurisdictions or managing remote workforces nationwide, it will not impact Colorado employees who are considered exempt from overtime based upon the COMPS Order’s higher salary threshold. Campbell Litigation will continue to monitor developments in overtime exemption rules, and is available to assist employers in evaluating their employee classification practices under federal and state employment laws.

[1] See https://www.federalregister.gov/documents/2026/05/15/2026-09839/defining-and-delimiting-the-exemptions-for-executive-administrative-professional-outside-sales-and

[2] The job duties and salary levels include the following: (1) the employee’s job duties must primarily involve EAP duties as defined by DOL regulations; (2) the employee must be paid a predetermined and fixed salary that is not subject to reduction because of variations in the quality or quantity of work performed; and (3) the amount of salary paid must meet a minimum specified amount. See 29 CFR part 541

[3] See https://www.rockymountainemployersblog.com/blog/2024/5/16/department-of-labor-issues-final-rule-raising-the-minimum-salary-requirements-for-executive-administrative-professional-and-highly-compensated-employees-for-overtime-exemptions-under-the-flsa

[4] The minimum salary threshold was to further increase to $1,128 per week ($58,656 annually) in January 1, 2025, and increase again in July 1, 2027, and then three years thereafter. Furthermore, the rule would have raised the Highly Compensated Employee (HCE) annual pay overtime exemption from $107,432 to $132,964, and eventually to $151,164.

[5] See Texas v. U.S. Dep’t of Labor, 756 F. Supp. 3d 361 (E.D. Tex. 2024); see also Flint Avenue, LLC v. U.S. Dep’t of Labor, No. 5:24-cv-00130-C, Dkt. No. 62. The U.S. Court of Appeals for the Fifth Circuit dismissed the appeal in the aforesaid cases on May 5, 2026, and May 7, 2026, respectively.