$41,000.
That’s roughly what it can cost an employer in back overtime, liquidated damages, and legal fees — for an employee who was paid a salary the entire time.
Here’s what happened.
In April 2024, the federal government tried to raise the salary threshold for overtime exemption. Employers scrambled. Some gave raises. Some reclassified people. Some just waited to see what happened.
In May 2026, the rule got killed. Rescinded. Reverted. The threshold is back to $684 a week — $35,568 a year — the same number that’s been in place since 2019.
So a lot of business owners are breathing a sigh of relief right now. “Good, we don’t have to give those raises after all.”
Except that’s not the win they think it is.
Because the salary threshold was never the only test. There’s a second one — the duties test — and it doesn’t care what the number on the pay stub says.
Picture this: an HR Director has a floor supervisor — call her Renee — paid a salary comfortably above $684 a week. On paper, exempt. Case closed, right?
Except Renee spends 80% of her week doing the same hands-on production work as the people she supervises. Almost no discretion. Almost no independent judgment. Under the duties test, she never should have been classified as exempt — regardless of her salary.
Nobody checked. Nobody had to, as long as the salary number looked fine.
Then a former employee files a wage complaint. The Department of Labor doesn’t ask what the pay stub said. They ask what Renee actually did all day.
Two years of unpaid overtime. Liquidated damages, doubling it. That’s the math behind a number like $41,000.
Here’s the part I want CEOs to sit with: the news cycle about “the threshold went back down” is a distraction if you’ve never actually audited the duties side. The salary number was never your protection. It was half the test.
If your compliance plan for this rule change is “check the pay stub,” you’re missing the half that actually gets employers sued.
Have your exempt classifications been reviewed against the duties test — not just the salary number — in the last two years?
