Restoring Overtime Pay Act of 2026
- Sponsor
- Rep. Takano, Mark [D-CA-39]
- Committees
- Education and Workforce Committee (primary)
- Last action
- May 15, 2026
Bottom line
This bill substantially expands overtime eligibility for millions of salaried workers by raising and automatically updating the salary threshold for FLSA exemptions and tightening the duties test.
What it actually does
This bill amends the Fair Labor Standards Act of 1938 (FLSA) to significantly raise the minimum salary threshold for executive, administrative, and professional (EAP) employees to be exempt from federal overtime pay requirements. It establishes a phased increase from $45,000 in 2026 to $75,000 in 2029, and then mandates annual automatic updates based on the 55th percentile of national weekly earnings for full-time salaried workers. Additionally, it limits the amount of non-exempt duties EAP employees can perform to 20% of their work time.
Proponents argue
Proponents argue that the current overtime salary threshold is outdated and allows many workers who are effectively middle-class to be denied overtime pay, leading to stagnant wages and economic insecurity. They contend that raising the threshold and ensuring automatic updates will restore the original intent of the FLSA, boost workers' purchasing power, reduce income inequality, and encourage employers to either pay overtime or hire more staff.
Opponents contend
Opponents typically argue that significantly raising the overtime threshold imposes substantial new labor costs on businesses, particularly small businesses and non-profits, which could lead to job losses, reduced benefits, or increased prices for consumers. They may also contend that it reduces flexibility for both employers and employees, and that automatic updates remove necessary regulatory flexibility and could lead to unpredictable economic burdens.
The bill is concise and its core provisions are clearly stated, making it accessible for a quick but informed review.
Section 2(a)(2), adding subsection (k)(2)(A) to 29 U.S.C. 213.
Establishes New Minimum Salary Thresholds for Overtime Exemption
This provision sets a new minimum salary an employee must earn to be considered exempt from overtime pay under the FLSA's executive, administrative, and professional (EAP) exemptions. It phases in increases: $45,000 (2026), $55,000 (2027), $65,000 (2028), and $75,000 (2029). This means employees earning below these thresholds, regardless of their job duties, would become eligible for overtime pay.
Supporters argue
Supporters argue this provision will restore overtime protections to millions of workers who have been excluded due to an outdated salary threshold, ensuring fair compensation for long hours and boosting economic security for middle-class families.
Critics contend
Opponents contend that these significant increases will impose substantial new costs on businesses, forcing them to reduce staff, cut benefits, or pass costs on to consumers, potentially harming economic growth.
Tradeoffs
Balances worker compensation and protection against business costs and operational flexibility.
Section 2(a)(2), adding subsection (k)(2)(A)(v) and (k)(2)(C) to 29 U.S.C. 213.
Mandates Automatic Annual Updates to Overtime Salary Threshold
Beginning January 1, 2030, the bill requires the salary threshold to be automatically updated annually. The update mechanism ties the threshold to the 55th percentile of weekly earnings for full-time salaried workers nationally, based on Bureau of Labor Statistics data from the second quarter of the preceding year. These updates will occur without requiring new rulemaking.
Section 3, amending Section 13(a)(1) of the FLSA (29 U.S.C. 213).
Establishes a 20% Limit on Non-Exempt Duties for EAP Employees
This provision amends the FLSA to specify that an employee cannot be considered exempt from overtime if they spend 20% or more of their work time on activities not directly or closely related to executive or administrative duties. This effectively reinstates and clarifies a "duties test" component, making it harder for employers to classify employees as exempt if they perform a significant amount of non-managerial or non-professional tasks.
States that Section 553 of title 5, United States Code (which governs notice and comment rulemaking for federal agencies) shall not apply to the annual updates of the salary threshold.
Section 2(a)(2), adding subsection (k)(2)(C)(ii) to 29 U.S.C. 213.
Why it matters:This is standard legislative practice to streamline administrative processes for formulaic updates, preventing delays and potential political interference in routine adjustments.
Case for: Proponents argue this ensures the automatic updates are truly automatic and not subject to political delays or challenges that could undermine the consistency of overtime protections.
Case against: Opponents might argue that removing notice and comment rulemaking limits public and stakeholder input on significant economic adjustments, even if formulaic, potentially leading to unintended consequences without proper review.
Estimated impact: Ensures the long-term stability and predictability of the automatic update mechanism, affecting millions of workers and employers over time.
Requires the Bureau of Labor Statistics (BLS) to publish weekly earnings data for full-time salaried workers by census region within 21 days after the end of each calendar quarter.
Section 2(b)
Why it matters:This is a necessary supporting mechanism for the automatic updates, ensuring the data required for calculation is publicly available and timely. It's not intended to be a primary policy driver but an essential operational component.
Case for: Proponents argue this ensures transparency and provides the necessary data infrastructure for the automatic salary threshold updates, making the process verifiable and consistent.
Case against: No specific opposition is typically raised against data publication requirements, though some might argue about the administrative cost or burden on BLS, or the granularity of data.
Estimated impact: Facilitates the accurate and timely implementation of the automatic overtime threshold updates, affecting millions of workers and employers.