A minimum salary threshold is the lowest weekly or annual salary an employee must earn to be classified as exempt from overtime pay under the Fair Labor Standards Act (FLSA). If an employee earns below this amount, they are entitled to overtime regardless of their job title or duties.
It is one of the key tests employers use to determine whether a worker qualifies for exempt status.
What is the current minimum salary threshold?
As of 2025, the federal minimum salary threshold is $684 per week, or $35,568 per year. This is the 2019 rule still in effect after a federal court vacated the Department of Labor’s 2024 rule, which had attempted to raise it to $1,128 per week.
Here is a quick breakdown of the thresholds currently in effect:
Employee type | Weekly minimum | Annual minimum |
Standard exempt employee | $684 | $35,568 |
Highly compensated employee (HCE) | N/A | $107,432 |
Note that some states set their own thresholds, which may be higher than the federal floor.
Who does the minimum salary threshold apply to?
It applies to employees classified as exempt under the executive, administrative, or professional (EAP) exemptions of the FLSA. These are commonly called white-collar exemptions.
To qualify as exempt, an employee must meet three conditions:
Be paid on a salary basis
Earn at or above the minimum salary threshold
Perform duties that meet the exemption criteria for their role
Meeting the salary threshold alone is not enough. The duties test must also be satisfied.
What happens if an employer does not meet the minimum salary threshold?
If an employee earns below the threshold, they must be treated as non-exempt. That means they are entitled to minimum wage and overtime pay for any hours worked over 40 in a workweek.
Misclassifying an employee as exempt when they do not meet the threshold can lead to:
Back pay for unpaid overtime
Penalties and fines from the Department of Labor
Employee lawsuits and legal fees
It is one of the more common and costly compliance mistakes employers make.
Do state minimum salary thresholds differ from the federal one?
Yes, and often significantly. Several states have set their own thresholds that exceed the federal requirement. Employers operating in those states must follow whichever rule is higher.
Examples of states with higher thresholds include California, New York, Washington, Alaska, and Maine. Employers with staff in multiple states need to track requirements at the state level, not just federally.
How often does the minimum salary threshold change?
At the federal level, it does not change on a set schedule. The Department of Labor periodically proposes rule updates, but these often face legal challenges. The current $684 per week threshold has been in place since 2020.
State thresholds tend to change more frequently, sometimes annually, often tied to cost of living adjustments or minimum wage increases.
Key takeaways
Summary | |
Definition | The minimum salary an employee must earn to qualify for overtime exemption under the FLSA |
Current federal threshold | $684 per week / $35,568 per year (2019 rule, currently in effect) |
Who it applies to | Employees classified under executive, administrative, or professional exemptions |
Risk of non-compliance | Back pay, Department of Labor penalties, and potential lawsuits |
State rules | Many states set higher thresholds that override the federal minimum |
Frequently Asked Questions
Does the salary threshold apply to all employees?
No. It only applies to employees being classified as exempt under the FLSA’s white-collar exemptions. Hourly workers are automatically non-exempt regardless of how much they earn.
Can bonuses count toward the threshold?
Yes, partially. Employers can use nondiscretionary bonuses or commissions to satisfy up to ten percent of the standard salary level, as long as they are paid at least annually.
What is a highly compensated employee threshold?
It is a separate, higher salary threshold for employees whose primary duty includes office or non-manual work. The current HCE threshold is $107,432 per year.
What should employers do if an employee falls below the threshold?
Either increase their salary to meet the threshold or reclassify them as non-exempt and begin tracking their hours for overtime purposes.
