Restoring Overtime Pay Act of 2026 Sets $75,000 Salary Floor for Overtime Eligibility by 2029

The Restoring Overtime Pay Act of 2026 is a major overhaul of the Fair Labor Standards Act that aims to put more money in the pockets of salaried workers who find themselves working late without extra pay. Starting just three months after it becomes law, the bill kicks off a four-year climb for the minimum salary an employee must earn to be considered 'exempt' from overtime. The threshold starts at $45,000 and jumps annually until it hits $75,000 in 2029. After that, the government stops picking a flat number and switches to an automatic update system based on the 55th percentile of national weekly earnings for full-time workers. This means if you’re making a modest salary but working 50 hours a week, your employer will soon have to either give you a significant raise to keep you exempt or start paying you time-and-a-half for those extra hours.

The Paycheck Protection Phase-In

Under the current rules, many 'assistant managers' or junior professionals are stuck in a gray zone where they earn enough to be denied overtime but not enough to feel truly compensated for their long hours. This bill changes the math. Following the initial $45,000 floor, the limit rises to $55,000 in 2027, $65,000 in 2028, and $75,000 in 2029 (SEC. 2). For a retail shift lead currently making $48,000 and working 50 hours a week, this bill would effectively mean a choice for their boss: pay them roughly $10,000 more in base salary by 2027 or pay for those 10 hours of overtime every single week. By 2030, the threshold will adjust automatically every year based on Bureau of Labor Statistics data, ensuring that inflation doesn't quietly eat away at these protections over the next decade.

Redefining the 'Boss' Role

It’s not just about the money; it’s about what you actually do all day. Section 3 of the bill tightens the 'duties test,' which determines who counts as a professional or executive. Currently, some industries allow exempt employees to spend a large chunk of their time on manual or routine tasks. This bill sets a hard 20% limit. If an 'administrative' employee spends more than one day a week (20% of their workweek) doing tasks that aren't directly related to their high-level exempt duties—like a floor manager spending half their shift stocking shelves or running a cash register—they lose their exempt status and become eligible for overtime pay regardless of their salary. This is a massive shift for industries like retail and hospitality where 'manager' is often a title that comes with more work but no extra pay.

The Bottom Line for Business and Staff

While this is a win for worker take-home pay, it presents a serious puzzle for small business owners and office managers who are already balancing tight margins. Implementation starts quickly—on the first day of the third month after enactment (SEC. 4)—leaving little time for payroll restructuring. Employers will need to be meticulous about tracking hours for staff who were previously 'off the clock' and may need to hire more part-time help to avoid the time-and-a-half costs. There is also some room for debate in the language of Section 3; defining what is 'closely related' to exempt duties could lead to some awkward conversations between HR and employees about how they actually spend their minutes. However, for the millions of workers who have seen their 'exempt' status turn into a loophole for unpaid labor, this bill provides a clear, data-driven path back to a standard 40-hour workweek.