Approaching hiring strategically, as we outline in The How to Hire Handbook, means never getting caught understaffed, or with an overwhelmed and burnt out staff drowning in work and struggling to stay afloat. Even if you’ve anticipated your hiring needs and used tools like the Skill MatRx and the PRO Job Description to determine where you need help most, you still have to make pragmatic decisions based in the realities of your budget. Do you hire a full-time employee, part-time employee, or freelancer? How much do you pay them? Recent changes to the minimum salary requirements for overtime exemption might change how you answer this question in 2026. Here’s what the law looks like at the federal level and which states have passed their own laws governing overtime pay.
Federal Law
In 2024, the Department of Labor updated their regulations governing exemption from minimum wage and overtime requirements for executive, administrative, and professional employees compensated on a salary basis at a rate of at least $684 per week. This is how the Department of Labor defines those roles:
Executives: Primary duty must be managing the enterprise or managing a department of the enterprise, directing the work of at least two other full-time employees, and the employee must have a say in the hiring, firing, promoting, or any other status change of employees.
Administrators: Primarily perform office or non-manual work related to management or operations and “the exercise of discretion and independent judgment with respect to matters of significance.”
Professionals: Primarily perform “work requiring invention, imagination, originality, or talent” outside of an artistic field.
To understand these categories in the Department of Labor’s own words, see this webpage.
State Laws
Many states have enacted their own laws raising the minimum salary requirement for overtime exemption. In some states, the minimum salary requirement is tied to the minimum wage, so minimum wage increases also have the effect of increasing the minimum salary requirement. Familiarize yourself with the laws applicable to your state and also be sure to educate your employees if the changes apply to them. All of the following changes go into effect on January 1, 2026.
California: Executive, administrative, and professional employees paid at least twice the state minimum wage are exempt from overtime pay. As of January 1, 2026, minimum wage in California will rise to $16.90 per hour, which comes to $676 per 40-hour work week. So the threshold for overtime exemption in California will be twice that, or $1,352 per week.
Colorado: Executive, administrative, and professional employees are exempt from overtime pay if they are paid at least $1,111.23 per week.
Maine: Executive, administrative, and professional employees are exempt from overtime pay if their salary is greater than 3,000 times the state minimum wage divided by 52. The minimum wage in Maine will increase to $15.10 per hour on January 1, 2026, bringing the overtime exemption threshold to $871.16 per week.
New York: Executive, administrative, and professional employees are exempt from overtime pay if their salary is 75 times the state minimum wage. Minimum wage in New York will increase to $16 per hour on January 1, 2026. The minimum salary requirement for overtime exemption will come to $1,199.10 per week.
New York City, Westchester, and the Long Island counties of Suffolk and Nassau have enacted their own minimum wage increases, bringing the minimum wage up to $17 per hour in those areas as of January 1, 2026, bringing the minimum wage exemption threshold to $1,275.00 per week.
Washington: : Executive, administrative, and professional employees are exempt from overtime pay if they are paid at least $1,541.70 per week.
Note: Definitions of executive, administrative, and professional employee may vary from state to state. Consult your state laws or a legal expert for further clarification.
Don’t Get Caught By Surprise
These exemptions often come as a surprise to office workers when they learn that they are expected to be in the office over 40 hours a week without receiving overtime pay. New hires should also be told of these exemptions during the onboarding phase. Make sure that your HR department is fully cognizant of these changes and communicate with affected employees. If you’re unsure about how these changes will affect your hiring plans for the coming year, our experts in human resource planning, hiring, training/onboarding development, and compensation planning are here to help.
