The federal overtime salary threshold is $684 a week, and it shapes benefit eligibility.
The FLSA white-collar exemptions turn on a salary level, a salary basis and a duties test, and where an employee lands decides overtime, hours tracking and often which benefit class they belong to.
The basics for employers.
A plain-English summary. This is general information, not legal advice, and the rules change, so check the current text.
Standard Salary Level
$684 per week, or $35,568 a year, for the executive, administrative and professional exemptions, in addition to the salary basis and duties tests.
Highly Compensated Employees
$107,432 in total annual compensation, including at least $684 per week paid on a salary or fee basis, with a shorter duties test.
What Happened in 2024
A 2024 rule would have raised the levels to $844 and then $1,128 a week. A federal court in Texas vacated it in November 2024, and the Department of Labor rescinded it in May 2026.
How it plays out.
The salary level is only the first of three tests. An employee must be paid on a salary basis and perform exempt duties, and a title or a salary above the threshold does not create an exemption on its own. Misclassification is one of the most common wage and hour findings.
Because the 2024 increases never took effect, the federal levels sit at the 2019 figures. Michigan’s wage law has its own overtime provisions, so confirm both the federal and the Michigan rules before treating an employee as exempt.
Employers that raised salaries or reclassified employees to nonexempt in anticipation of the 2024 dates now face a deliberate choice about whether to keep that status, because reversing it affects pay, scheduling and the benefit class.
Where this shows up in your plan.
Classification drives benefit class. Many plan documents define eligible employees by full-time status, hours worked or class, and a move from exempt to nonexempt can change how hours are counted for the Affordable Care Act’s 130-hour monthly full-time measure.
Overtime also changes the regular rate. Employer contributions to a bona fide health or retirement plan are excluded from the regular rate under the FLSA, while cash paid in place of benefits generally is not, so how a benefit is paid changes the overtime math.
Where an exempt employee’s status changes, communicate the benefit effect at the same time as the pay effect: eligibility date, premium share and any waiting period should be settled before the first nonexempt payroll.
Setting it up.
Test Every Exempt Role
Check salary level, salary basis and duties for each exempt employee.
Check Michigan Law
Confirm the Michigan overtime rules alongside the federal tests.
Map Class to Eligibility
Confirm that plan documents define eligibility the way payroll classifies employees.
Document the Decision
Keep the reasoning for each classification where HR and payroll can both find it.
Mistakes to avoid.
Relying on Job Title
Duties decide the exemption, not the title.
Treating the Threshold as the Test
Salary level is one of three required tests.
Forgetting Michigan Law
The state overtime provisions apply alongside the federal rules.
Other rules employers work with.
Exempt vs Nonexempt Employees and Benefit Eligibility
How classification flows into eligibility.
Overtime, Regular Rate and Benefit Contributions
Which benefit payments count in the regular rate.
Worker Classification and Benefits Eligibility
Employees, contractors and leased workers.
Required Workplace and Benefit Notices Checklist
Posters and plan notices on a calendar.
Form I-9, E-Verify and Benefits Eligibility
Hiring-day verification and onboarding.
Non-Compete Agreements and Employee Benefits
Covenants, severance and continued coverage.
Pay Equity, Pay Discussions and Benefits
Equal pay, pay discussions and benefits as pay.
Remote and Hybrid Employees: Benefits and Employment Law
Time, leave, accommodation and eligibility for remote staff.
Laws and Rules Referenced
Fair Labor Standards Act (29 U.S.C. 201 et seq.) — The federal wage and hour statute.
Defining the Exemptions, 29 CFR Part 541 — The salary level, salary basis and duties tests for the white-collar exemptions.
Department of Labor, Overtime — Agency guidance on overtime and the exemptions.
Regular rate exclusions, 29 U.S.C. 207(e) — What is and is not counted in the regular rate.
Quick answers.
Short answers to what employers ask most. This is general information, not legal or tax advice.
What is the federal salary threshold?
$684 per week, or $35,568 a year, for the standard white-collar exemptions.
What is the highly compensated employee level?
$107,432 in total annual compensation, including at least $684 per week paid on a salary or fee basis.
Did the 2024 increases take effect?
No. A federal court vacated the 2024 rule in November 2024, and the Department of Labor rescinded it in May 2026.
Does a salary above the threshold make an employee exempt?
No. The employee must also be paid on a salary basis and perform exempt duties.
How does classification affect benefits?
It can change how hours are counted, which benefit class applies and whether cash paid in lieu of benefits enters the overtime rate.
More employment law guides for Michigan employers.
Harassment and Discrimination Rules for Michigan Employers
Employer duties and the benefit-plan questions that follow.
ADA and Religious Accommodations for Michigan Employers
Employer duties and the benefit-plan questions that follow.
Independent Contractor and Joint Employer Classification Guide
Employer duties and the benefit-plan questions that follow.
Employee Handbooks and Arbitration Agreements Michigan Guide
Employer duties and the benefit-plan questions that follow.
Reductions in Force, WARN Act and Benefits Continuation
Employer duties and the benefit-plan questions that follow.
Whistleblower and Retaliation Protections for Michigan Employers
Employer duties and the benefit-plan questions that follow.
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