Restoring Overtime Pay Act of 2026 Sets Phased-In Salary Floor Reaching $75,000 by 2029

The Restoring Overtime Pay Act of 2026 is a significant overhaul of how we define who gets paid for extra hours. Right now, many salaried workers in 'white-collar' roles are exempt from overtime pay if they earn above a certain relatively low threshold. This bill changes the math by aggressively raising that salary floor over the next few years. Starting just three months after it passes, the minimum salary to be exempt from overtime hits $45,000. It then climbs annually: $55,000 in 2027, $65,000 in 2028, and $75,000 in 2029. By 2030, the threshold will be tied to the 55th percentile of weekly earnings for full-time workers nationwide, ensuring the limit keeps pace with actual wages rather than getting stuck in the past.

The Paycheck Shift

For a mid-level manager at a retail store or a junior software developer currently making $50,000 and working 50 hours a week, this bill is a game changer. Under Section 2, once the 2027 threshold of $55,000 kicks in, that employee would either need a raise to stay exempt or their employer would have to start paying them time-and-a-half for those 10 extra hours. This isn’t just about the money; it’s about time. Employers who don’t want to pay the premium might finally start hiring more staff or better managing schedules to keep everyone under the 40-hour mark. It’s a direct attempt to fix the 'salary trap' where workers are paid a fixed rate but expected to work unlimited hours.

Redefining the 'Daily Grind'

The bill doesn't just look at your paycheck; it looks at what you actually do all day. Section 3 tightens the 'duties test.' Currently, some managers spend half their day stocking shelves or running a cash register but are still denied overtime because of their title. This bill cuts the allowed time for non-exempt work from 40% down to 20%. If you’re a 'supervisor' but you spend 30% of your shift doing the same manual tasks as your hourly team, your employer can no longer claim you’re exempt from overtime pay. This removes the old loophole for retail and service workers, making the rules the same whether you’re in an office or a warehouse.

The Cost of Doing Business

While this is a win for worker wallets, it presents a real puzzle for small business owners and non-profits operating on tight margins. If you run a local agency with three salaried coordinators making $48,000 each, you’re looking at a mandatory salary bump or a significant increase in payroll tracking and overtime costs by 2027. The bill does offer a predictable schedule for these increases, giving businesses a roadmap to adjust their budgets, but the jump to $75,000 by 2029 is a steep climb. Additionally, the Secretary of Labor is given the power to set even higher thresholds if the data supports it, meaning the floor could move even faster than the bill’s baseline suggests.