Sponsors (23)
Official title: To amend the Fair Labor Standards Act of 1938 to establish a minimum salary threshold for bona fide executive, administrative, and professional employees exempt from Federal overtime compensation requirements, and automatically update such threshold each year, and for other purposes.
Introduced May 15, 2026 by Mark Takano · Last progress May 15, 2026
The bill increases take‑home pay and clarity for many salaried workers by raising and indexing the overtime exemption threshold and tightening duties rules, but it also raises costs and compliance burdens for employers—especially small businesses—which may lead to reduced hours, altered job structures, higher prices, or slower hiring.
Salaried workers — including many middle‑class employees and low‑income retail/service staff — who are reclassified from exempt to nonexempt will become eligible for overtime pay and related protections as the exemption salary threshold rises (to $75,000 by 2029 and then indexed), increasing take‑home pay for eligible workers.
Employers and workers gain clearer, more predictable rulemaking because future exemption thresholds are tied to a data benchmark (BLS 55th percentile) and BLS will publish regional earnings quarterly, reducing ad‑hoc adjustments and improving transparency.
Employers get clearer guidance on which duties disqualify an exemption (explicitly excluding activities not directly related to executive/administrative duties), reducing ambiguity about classification and compliance risk.
Small and other employers face higher payroll and compliance costs if more salaried staff become nonexempt or must be paid above the threshold, increasing business operating expenses.
Workers (especially those whose jobs are borderline exempt) may see employers reduce hours, cut benefits, or convert salaried roles into part‑time, hourly, or contractor positions to avoid overtime costs, which could lower take‑home pay and reduce job quality.
Higher labor costs for employers could be passed to households through higher consumer prices or could slow hiring and wage growth, affecting household budgets and employment opportunities.
Based on analysis of 4 sections of legislative text.
Raises and indexes the FLSA white‑collar salary thresholds (phase 45k→75k then percentile‑based) and narrows the retail/service exemption so more salaried workers are overtime‑eligible.
Creates new, higher minimum-salary tests for the FLSA "white-collar" (executive, administrative, professional) exemptions and tightens the rule for retail and service employees; the salary test phases up from $45,000 to $75,000 then switches to an annually updated BLS percentile-based threshold, and agencies must publish certain earnings data and apply the new rules after a short effective-date delay.