Rule2026-09839
Defining and Delimiting the Exemptions for Executive, Administrative, Professional, Outside Sales, and Computer Employees; Implementation of Federal Court Judgments
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Metadata and text below are from the Federal Register, a public-domain U.S. government work. Always verify the official published version before relying on it for any legal matter.
Published
May 15, 2026
Effective
May 15, 2026
Issuing agencies
Labor DepartmentWage and Hour Division
Abstract
This document implements the judgments of federal courts vacating the Department of Labor's (Department) 2024 final rule revising regulations issued under the Fair Labor Standards Act (FLSA or Act) implementing the exemptions from minimum wage and overtime pay requirements for executive, administrative, professional, outside sales, and computer employees. Through this technical amendment, the Department is removing from the Code of Federal Regulations (CFR) the regulatory text from the now-vacated 2024 rule and republishing in its place the regulatory text as it existed prior to the effective date of that rule.
Full Text
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<title>Federal Register, Volume 91 Issue 94 (Friday, May 15, 2026)</title>
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[Federal Register Volume 91, Number 94 (Friday, May 15, 2026)]
[Rules and Regulations]
[Pages 27833-27837]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-09839]
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DEPARTMENT OF LABOR
Wage and Hour Division
29 CFR Part 541
[Docket No. WHD-2026-0100]
RIN 1235-AA57
Defining and Delimiting the Exemptions for Executive,
Administrative, Professional, Outside Sales, and Computer Employees;
Implementation of Federal Court Judgments
AGENCY: Wage and Hour Division, Department of Labor.
ACTION: Final rule; technical amendment.
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SUMMARY: This document implements the judgments of federal courts
vacating the Department of Labor's (Department) 2024 final rule
revising regulations issued under the Fair Labor Standards Act (FLSA or
Act) implementing the exemptions from minimum wage and overtime pay
requirements for executive, administrative, professional, outside
sales, and computer employees. Through this technical amendment, the
Department is removing from the Code of Federal Regulations (CFR) the
regulatory text from the now-vacated 2024 rule and republishing in its
place the regulatory text as it existed prior to the effective date of
that rule.
DATES: This rule is effective May 15, 2026.
FOR FURTHER INFORMATION CONTACT: Daniel Navarrete, Director of Division
of Regulations, Legislation, and Interpretation, Wage and Hour
Division, U.S. Department of Labor, Room S-3502, 200 Constitution
Avenue NW, Washington, DC 20210, telephone: (202) 693-0406 (this is not
a toll-free number). Alternative formats are available upon request by
calling 1-866-487-9243. If you are deaf, hard of hearing, or have a
speech disability, please dial 7-1-1 to access telecommunications relay
services.
SUPPLEMENTARY INFORMATION:
[[Page 27834]]
I. Background
A. The FLSA and the Part 541 Regulations
The FLSA generally requires covered employers to pay employees at
least the federal minimum wage for all hours worked and overtime at a
rate of not less than one and one-half times the employee's regular
rate of pay for all hours worked over 40 in a workweek.\1\ The FLSA
includes a number of exemptions from its wage and hour requirements,
including section 13(a)(1), which exempts ``any employee employed in a
bona fide executive, administrative, or professional capacity . . . or
in the capacity of [an] outside salesman (as such terms are defined and
delimited from time to time by regulations of the Secretary [of Labor],
subject to the provisions of [the Administrative Procedure Act] . . .
).'' \2\ These FLSA exemptions are commonly known as the ``white
collar'' or ``EAP'' exemptions.
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\1\ See 29 U.S.C. 206(a), 207(a).
\2\ 29 U.S.C. 213(a)(1).
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Pursuant to its explicit rulemaking authority, the Department has
long maintained regulations that generally require each of the
following three tests to be met for an employee to be exempt: (1) the
employee's job duties must primarily involve executive, administrative,
or professional duties as defined by the regulations (the duties test);
(2) the employee must be paid a predetermined and fixed salary that is
not subject to reduction because of variations in the quality or
quantity of work performed (the salary basis test); and (3) the amount
of salary paid must meet a minimum specified amount (the salary level
test).\3\ See generally 29 CFR part 541. In 2004, the Department
created an alternative test for highly compensated employees (the ``HCE
test''), pairing a reduced job duties requirement with an annual
earnings threshold substantially higher than the standard salary level
requirement.\4\
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\3\ The salary basis and salary level tests do not apply to
doctors, lawyers, teachers, and outside sales employees. See 29 CFR
541.303(d), 541.304(d), 541.500(c).
\4\ See 69 FR 22122, 22172 (Apr. 23, 2004).
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On September 27, 2019, the Department published a final rule to
increase the part 541 earnings thresholds from those set in the
Department's 2004 rule.\5\ As relevant here, that rule raised the
salary level from $455 per week to $684 per week (equivalent to $35,568
per year for a full-year worker).\6\ The rule also raised the HCE
test's total annual compensation requirement from $100,000 per year to
$107,432 per year (of which $684 per week must be paid on a salary or
fee basis).\7\ The 2019 rule took effect on January 1, 2020; the salary
level itself was not challenged.\8\
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\5\ 84 FR 51230.
\6\ See id. at 51238.
\7\ See id. at 51250.
\8\ Although a lawsuit was filed challenging the 2019 rule, that
case ultimately concerned the Department's authority to have a
salary level test, not the level set in that rule. See Mayfield v.
U.S. Dep't of Lab., 117 F.4th 611, 615 (5th Cir. 2024).
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B. 2024 Part 541 Rule
Four years later, on April 26, 2024, the Department published a
final rule to again raise the part 541 earnings thresholds (2024
rule).\9\ The 2024 rule featured two increases to the standard salary
level and the HCE total annual compensation threshold, with the salary
level slated to increase to $844 per week on July 1, 2024, further rise
to $1,128 per week on January 1, 2025, and the HCE total annual
compensated level to increase to $132,964 and $151,164 on these
respective dates. The rule also provided for automatic triennial
updates to the earnings thresholds. The 2024 rule took effect on July
1, 2024 (except as applied to the State of Texas in its capacity as an
employer).\10\
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\9\ 89 FR 32842.
\10\ See id. In Texas v. U.S. Dep 't of Labor, 738 F. Supp. 3d
807 (E.D. Tex. 2024), the court preliminarily enjoined the
Department from implementing and enforcing the 2024 rule against the
State of Texas in its capacity as an employer.
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C. Judicial Vacatur of the 2024 Rule
Four lawsuits challenged the 2024 rule: one filed by the State of
Texas and one by a group of 13 business plaintiffs in the U.S. District
Court for the Eastern District of Texas (these were subsequently
consolidated into one case); one commenced by a business plaintiff,
Flint Avenue, LLC, in the U.S. District Court for the Northern District
of Texas; and one initiated by the Association of Christian Schools
International, initially filed in the U.S. District Court for the
Middle District of Tennessee and subsequently transferred to the U.S.
District Court for the District of Columbia.\11\ On November 15, 2024,
the U.S. District Court for the Eastern District of Texas issued an
order vacating the 2024 rule in Texas v. U.S. Dep't of Labor, 756 F.
Supp. 3d 361 (E.D. Tex. 2024). On December 30, 2024, the U.S. District
Court for the Northern District of Texas likewise issued an order
vacating the 2024 rule in Flint Avenue, LLC v. U.S. Dep't of Labor, No.
5:24-cv-00130-C, Dkt. No. 62. These orders remain final judgments
following the dismissal of the appeal in each case by the U.S. Court of
Appeals for the Fifth Circuit on May 5 and 7, 2026, respectively.\12\
In light of these judgments, the operative version of the Department's
part 541 regulations is the version of these regulations that was in
place on June 30, 2024, prior to the effective date of the 2024 rule,
and which the Department has been enforcing.
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\11\ See Ass'n of Christian Schs. Int'l v. U.S. Dep't of Lab.,
No. 24-cv-00984, Dkt. No. 20 (M.D. Tenn. Sept. 11, 2024) (granting
joint motion to transfer). The case was ultimately dismissed on May
7, 2026. Ass'n of Christian Schs. Int'l v. U.S. Dep't of Lab., No.
24-cv-02618, Dkt. No. 51 (D.D.C.) (dismissal filing).
\12\ See Texas v. U.S. Dep't of Lab., No. 24-40777, Dkt. No. 82
(5th Cir. May 5, 2026) (order dismissing appeal); Flint Ave., LLC v.
U.S. Dep't of Lab., No. 25-10349, Dkt. No. 58 (5th Cir. May 7, 2026)
(same).
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Accordingly, to implement these judicial decisions, this final rule
amends the Department's part 541 regulations to reinstate the
regulatory text promulgated in the 2019 final rule, as it appeared in
the CFR immediately prior to the effective date of the 2024 rule. Put
simply, this action is a technical correction accounting for changes in
the law that have already occurred.
II. Procedural and Other Matters
Section 553(b)(B) of the Administrative Procedure Act (APA)
provides that an agency is not required to publish a notice of proposed
rulemaking in the Federal Register and solicit public comments when the
agency has good cause to find that doing so would be ``impracticable,
unnecessary, or contrary to the public interest.'' \13\ The Department
finds that good cause exists to dispense with public notice-and-comment
rulemaking procedures in this final rule, inasmuch as this final rule
merely conforms the text in the CFR to reflect the courts' vacatur of
the 2024 rule by removing the 2024 rule regulatory text and replacing
it with the text from the 2019 rule. Because the Department is merely
giving effect to the courts' orders and is not exercising discretion
with respect to this action (i.e., it is simply republishing in the CFR
the regulatory text that existed prior to the 2024 rule), any notice
and comment process would be unnecessary.\14\
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\13\ 5 U.S.C. 553(b)(B).
\14\ The Department's issuance of this technical amendment to
ensure that the CFR is now accurate does not foreclose the
Department from engaging in notice and comment rulemaking in the
future to update the part 541 regulations.
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Section 553(d) of the APA provides that substantive rules should
take effect not less than 30 days after the date they are published in
the Federal Register unless ``otherwise provided by the agency for good
cause found[.]'' \15\ The
[[Page 27835]]
Department finds that it has good cause to make this rule effective
immediately upon publication. As discussed above, this rule merely
updates the CFR to reflect the courts' vacatur of the 2024 rule.
Accordingly, the Department determines that a delayed effective date is
unnecessary, because the court orders vacating the 2024 rule are
already operative. Delaying the ministerial act of removing the
regulatory text of the vacated rule and restoring the operative
regulatory text in the CFR could also lead to confusion among the
public about the state of the law as mandated by courts. Delay could,
for example, mislead employees and employers who consult the CFR to
learn about their rights and responsibilities under the FLSA. To avoid
such confusion, it is in the public interest that the Department
correct the CFR to reflect the courts' orders as expeditiously as
possible following the conclusion of the above-mentioned litigation.
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\15\ 5 U.S.C. 553(d)(3).
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The Office of Information and Regulatory Affairs has determined
that this technical amendment is not significant for purposes of
Executive Orders 12866 and 13563. Additionally, no analysis is required
under the Regulatory Flexibility Act because, for the reasons discussed
above, the Department is not required to engage in notice and comment
under the APA.\16\ This technical amendment does not implicate the
Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1531 et. seq., as it
does not result in the expenditure of $100,000,000 or more (adjusted
annually for inflation) in any one year by State, local, and tribal
governments, in the aggregate, or by the private sector. This technical
amendment does not have significant federalism implications under
Executive Order 13132, and it is not subject to the requirements of the
Paperwork Reduction Act (44 U.S.C. 3501 et seq.), because it does not
contain a collection of information as defined in 44 U.S.C. 3502(3).
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\16\ See 5 U.S.C. 601(2) (defining rules requiring a regulatory
flexibility analysis); id. at 604(a) (requiring final regulatory
flexibility analysis for rules where the agency was ``required . . .
to publish a general notice of proposed rulemaking'').
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The Congressional Review Act (CRA), 5 U.S.C. 801 et seq., generally
provides that before certain actions may take effect, the agency
promulgating the action must submit a report, which includes a copy of
the action, to each House of the Congress and to the Comptroller
General of the United States. This technical amendment is not a ``major
rule'' for CRA purposes, see 5 U.S.C. 804(2), but rather is
administrative in nature and only implements the district courts'
rulings, and thus is not subject to the 60-day delayed effective date
generally prescribed for major rules, see 5 U.S.C. 801(a)(3). In
addition, as discussed above, the Department has determined that good
cause exists to issue this technical amendment without notice-and-
comment procedures. Pursuant to 5 U.S.C. 808(2), this technical
amendment is thus not subject to the CRA's timing requirements.
List of Subjects in 29 CFR Part 541
Labor, Minimum wages, Overtime pay, Salaries, Teachers, Wages.
For the reasons stated in the preamble, the Wage and Hour Division,
Department of Labor, amends 29 CFR part 541 as follows:
PART 541--DEFINING AND DELIMITING THE EXEMPTIONS FOR EXECUTIVE,
ADMINISTRATIVE, PROFESSIONAL, COMPUTER AND OUTSIDE SALES EMPLOYEES
0
1. The authority citation for part 541 continues to read as follows:
Authority: 29 U.S.C. 213; Pub. L. 101-583, 104 Stat. 2871;
Reorganization Plan No. 6 of 1950 (3 CFR, 1945-53 Comp., p. 1004);
Secretary's Order 01-2014 (Dec. 19, 2014), 79 FR 77527 (Dec. 24,
2014).
0
2. Remove Sec. 541.5:
Sec. 541.5 [Removed]
0
3. Amend Sec. 541.100 by revising paragraph (a)(1) to read as follows:
Sec. 541.100 General rule for executive employees.
(a) * * *
(1) Compensated on a salary basis pursuant to Sec. 541.600 at a
rate of not less than $684 per week (or $455 per week if employed in
the Commonwealth of the Northern Mariana Islands, Guam, Puerto Rico, or
the U.S. Virgin Islands by employers other than the Federal government,
or $380 per week if employed in American Samoa by employers other than
the Federal government), exclusive of board, lodging or other
facilities;
* * * * *
0
4. Amend Sec. 541.200 by revising paragraph (a)(1) to read as follows:
Sec. 541.200 General rule for administrative employees.
(a) * * *
(1) Compensated on a salary or fee basis pursuant to Sec. 541.600
at a rate of not less than $684 per week (or $455 per week if employed
in the Commonwealth of the Northern Mariana Islands, Guam, Puerto Rico,
or the U.S. Virgin Islands by employers other than the Federal
government, or $380 per week if employed in American Samoa by employers
other than the Federal government), exclusive of board, lodging or
other facilities;
* * * * *
0
5. Amend Sec. 541.204 by revising paragraph (a)(1) to read as follows:
Sec. 541.204 Educational establishments.
(a) * * *
(1) Compensated on a salary or fee basis at a rate of not less than
$684 per week (or $455 per week if employed in the Commonwealth of the
Northern Mariana Islands, Guam, Puerto Rico, or the U.S. Virgin Islands
by employers other than the Federal government, or $380 per week if
employed in American Samoa by employers other than the Federal
government), exclusive of board, lodging, or other facilities; or on a
salary basis which is at least equal to the entrance salary for
teachers in the educational establishment by which employed; and
* * * * *
0
6. Amend Sec. 541.300 by revising paragraph (a)(1) to read as follows:
Sec. 541.300 General rule for professional employees.
(a) * * *
(1) Compensated on a salary or fee basis pursuant to Sec. 541.600
at a rate of not less than $684 per week (or $455 per week if employed
in the Commonwealth of the Northern Mariana Islands, Guam, Puerto Rico,
or the U.S. Virgin Islands by employers other than the Federal
government, or $380 per week if employed in American Samoa by employers
other than the Federal government), exclusive of board, lodging or
other facilities; and
* * * * *
0
7. Amend Sec. 541.400 by revising the first sentence of paragraph (b)
to read as follows:
Sec. 541.400 General rule for computer employees.
* * * * *
(b) The section 13(a)(1) exemption applies to any computer employee
who is compensated on a salary or fee basis at a rate of not less than
$684 per week (or $455 per week if employed in the Commonwealth of the
Northern Mariana Islands, Guam, Puerto Rico, or the U.S. Virgin Islands
by employers other than the Federal government, or $380 per week if
employed in American Samoa by employers other than the Federal
government), exclusive of board, lodging, or other facilities. * * *
* * * * *
0
8. Revise Sec. 541.600 to read as follows:
[[Page 27836]]
Sec. 541.600 Amount of salary required.
(a) To qualify as an exempt executive, administrative or
professional employee under section 13(a)(1) of the Act, an employee
must be compensated on a salary basis at a rate of not less than $684
per week (or $455 per week if employed in the Commonwealth of the
Northern Mariana Islands, Guam, Puerto Rico, or the U.S. Virgin Islands
by employers other than the Federal Government, or $380 per week if
employed in American Samoa by employers other than the Federal
Government), exclusive of board, lodging or other facilities.
Administrative and professional employees may also be paid on a fee
basis, as defined in Sec. 541.605.
(b) The required amount of compensation per week may be translated
into equivalent amounts for periods longer than one week. For example,
the $684-per-week requirement will be met if the employee is
compensated biweekly on a salary basis of not less than $1,368,
semimonthly on a salary basis of not less than $1,482, or monthly on a
salary basis of not less than $2,964. However, the shortest period of
payment that will meet this compensation requirement is one week.
(c) In the case of academic administrative employees, the
compensation requirement also may be met by compensation on a salary
basis at a rate at least equal to the entrance salary for teachers in
the educational establishment by which the employee is employed, as
provided in Sec. 541.204(a)(1).
(d) In the case of computer employees, the compensation requirement
also may be met by compensation on an hourly basis at a rate not less
than $27.63 an hour, as provided in Sec. 541.400(b).
(e) In the case of professional employees, the compensation
requirements in this section shall not apply to employees engaged as
teachers (see Sec. 541.303); employees who hold a valid license or
certificate permitting the practice of law or medicine or any of their
branches and are actually engaged in the practice thereof (see Sec.
541.304); or to employees who hold the requisite academic degree for
the general practice of medicine and are engaged in an internship or
resident program pursuant to the practice of the profession (see Sec.
541.304). In the case of medical occupations, the exception from the
salary or fee requirement does not apply to pharmacists, nurses,
therapists, technologists, sanitarians, dietitians, social workers,
psychologists, psychometrists, or other professions which service the
medical profession.
0
9. Amend Sec. 541.601 by revising paragraphs (a) and (b)(1) and (b)(2)
to read as follows:
Sec. 541.601 Highly compensated employees.
(a)(1) Beginning on January 1, 2020, an employee with total annual
compensation of at least $107,432 is deemed exempt under section
13(a)(1) of the Act if the employee customarily and regularly performs
any one or more of the exempt duties or responsibilities of an
executive, administrative or professional employee as identified in
subparts B, C or D of this part.
(2) Where the annual period covers periods both prior to and after
January 1, 2020, the amount of total annual compensation due will be
determined on a proportional basis.
(b)(1) ``Total annual compensation'' must include at least $684 per
week paid on a salary or fee basis as set forth in Sec. Sec. 541.602
and 541.605, except that Sec. 541.602(a)(3) shall not apply to highly
compensated employees. Total annual compensation may also include
commissions, nondiscretionary bonuses and other nondiscretionary
compensation earned during a 52-week period. Total annual compensation
does not include board, lodging and other facilities as defined in
Sec. 541.606, and does not include payments for medical insurance,
payments for life insurance, contributions to retirement plans and the
cost of other fringe benefits.
(2) If an employee's total annual compensation does not total at
least the amount specified in the applicable subsection of paragraph
(a) by the last pay period of the 52-week period, the employer may,
during the last pay period or within one month after the end of the 52-
week period, make one final payment sufficient to achieve the required
level. For example, for a 52-week period beginning January 1, 2020, an
employee may earn $90,000 in base salary, and the employer may
anticipate based upon past sales that the employee also will earn
$17,432 in commissions. However, due to poor sales in the final quarter
of the year, the employee actually only earns $12,000 in commissions.
In this situation, the employer may within one month after the end of
the year make a payment of at least $5,432 to the employee. Any such
final payment made after the end of the 52-week period may count only
toward the prior year's total annual compensation and not toward the
total annual compensation in the year it was paid. If the employer
fails to make such a payment, the employee does not qualify as a highly
compensated employee, but may still qualify as exempt under subparts B,
C, or D of this part.
* * * * *
0
10. Amend Sec. 541.602 by revising the first sentence of paragraph
(a)(3) and the first sentence of paragraph (a)(3)(i) to read as
follows:
Sec. 541.602 Salary basis.
(a) * * *
(3) Up to ten percent of the salary amount required by Sec.
541.600(a) may be satisfied by the payment of nondiscretionary bonuses,
incentives and commissions, that are paid annually or more frequently.
* * *
(i) If by the last pay period of the 52-week period the sum of the
employee's weekly salary plus nondiscretionary bonus, incentive, and
commission payments received is less than 52 times the weekly salary
amount required by Sec. 541.600(a), the employer may make one final
payment sufficient to achieve the required level no later than the next
pay period after the end of the year. * * *
* * * * *
0
11. Amend Sec. 541.604 by revising paragraph (a) and the third
sentence in paragraph (b) to read as follows:
Sec. 541.604 Minimum guarantee plus extras.
(a) An employer may provide an exempt employee with additional
compensation without losing the exemption or violating the salary basis
requirement, if the employment arrangement also includes a guarantee of
at least the minimum weekly-required amount paid on a salary basis.
Thus, for example, an exempt employee guaranteed at least $684 each
week paid on a salary basis may also receive additional compensation of
a one percent commission on sales. An exempt employee also may receive
a percentage of the sales or profits of the employer if the employment
arrangement also includes a guarantee of at least $684 each week paid
on a salary basis. Similarly, the exemption is not lost if an exempt
employee who is guaranteed at least $684 each week paid on a salary
basis also receives additional compensation based on hours worked for
work beyond the normal workweek. Such additional compensation may be
paid on any basis (e.g., flat sum, bonus payment, straight-time hourly
amount, time and one-half or any other basis), and may include paid
time off.
(b) * * * Thus, for example, an exempt employee guaranteed
compensation of at least $725 for any week in which the employee
performs any work, and who normally works four
[[Page 27837]]
or five shifts each week, may be paid $210 per shift without violating
the $684-per-week salary basis requirement. * * *
0
12. Amend Sec. 541.605 by revising paragraph (b) to read as follows:
Sec. 541.605 Fee basis.
* * * * *
(b) To determine whether the fee payment meets the minimum amount
of salary required for exemption under these regulations, the amount
paid to the employee will be tested by determining the time worked on
the job and whether the fee payment is at a rate that would amount to
at least the minimum salary per week, as required by Sec. Sec.
541.600(a) and 541.602(a), if the employee worked 40 hours. Thus, an
artist paid $350 for a picture that took 20 hours to complete meets the
$684 minimum salary requirement for exemption since earnings at this
rate would yield the artist $700 if 40 hours were worked.
0
13. Remove and reserve Sec. 541.607.
Sec. 541.607 [Reserved]
Dated: May 13, 2026.
Andrew B. Rogers,
Administrator, Wage and Hour Division.
[FR Doc. 2026-09839 Filed 5-14-26; 8:45 am]
BILLING CODE 4510-27-P
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</html>Indexed from Federal Register on May 15, 2026.
This is legal information, not legal advice. Laws vary by jurisdiction and change frequently. Always verify current law with official sources and consult a licensed attorney in your jurisdiction for advice on your specific situation.