Restoring Overtime Pay Act of 2026
- Sponsor
- Sen. Sanders, Bernard [I-VT]
- Committees
- Health, Education, Labor, and Pensions Committee (primary)
- Last action
- May 18, 2026
Bottom line
The bill raises the salary threshold for overtime exemption and tightens the duties test, making millions more salaried workers eligible for overtime pay or higher base salaries.
What it actually does
This bill significantly amends the Fair Labor Standards Act of 1938 by establishing a new, higher minimum salary threshold for executive, administrative, and professional employees to be exempt from federal overtime pay requirements. It phases in increases to this threshold, reaching $75,000 by 2029, and then mandates automatic annual updates based on national wage data. Additionally, it revises the 'duties test' by codifying a 20 percent limit on non-exempt work for all such employees to qualify for overtime exemption.
Proponents argue
Supporters argue that the bill restores the original intent of overtime laws, ensuring that salaried workers are fairly compensated for working more than 40 hours a week. They contend that the current threshold is outdated and allows employers to misclassify employees, thereby denying them deserved overtime pay and contributing to wage stagnation.
Opponents contend
Critics contend that the bill would impose significant new labor costs on businesses, particularly small and medium-sized enterprises, potentially leading to reduced hiring, slower wage growth for some, or increased automation. They argue it reduces employer flexibility and could lead to more rigid job roles and administrative burdens.
The bill text is very short and straightforward, making it highly accessible for any reader to understand its core provisions quickly.
Section 2(a)(2) of the bill, amending FLSA Section 13(k)
Establishes and Automatically Updates Minimum Salary Threshold for Overtime Exemption
This provision amends the Fair Labor Standards Act to mandate a minimum salary threshold for executive, administrative, and professional employees to be exempt from overtime pay. It sets a phased increase for this threshold: $45,000 starting upon enactment, $55,000 on January 1, 2027, $65,000 on January 1, 2028, and $75,000 on January 1, 2029. Beginning January 1, 2030, and annually thereafter, the threshold will automatically update to the 55th percentile of weekly earnings for full-time salaried workers nationally, as determined by the Bureau of Labor Statistics.
Supporters argue
Proponents argue this provision ensures fair pay for salaried workers, preventing employers from misclassifying employees to avoid overtime. They contend it will boost worker purchasing power and reduce income inequality by requiring proper compensation for long hours.
Critics contend
Opponents argue that this provision significantly increases labor costs for businesses, particularly small businesses, potentially leading to reduced hiring, slower wage growth for some, or increased automation to offset costs. They also raise concerns about the administrative burden of compliance.
Tradeoffs
This provision balances the goal of ensuring fair compensation and preventing worker exploitation against the potential for increased operational costs and administrative burdens for employers, which could impact hiring decisions and business flexibility.
Section 3 of the bill, amending FLSA Section 13(a)(1)
Revises Nonexempt Duties Limit for Overtime Exemption
This provision amends the Fair Labor Standards Act to clarify and tighten the 'duties test' for executive, administrative, and professional (EAP) employees to qualify for overtime exemption. It explicitly states that an employee shall not be exempt if they spend 'not less than 20' percent of their time on activities 'not directly or closely related to the performance of executive or administrative activities.' This codifies a 20% limit on non-exempt work for all EAP employees, making it harder to classify employees as exempt if they perform significant non-exempt duties.
This amendment inserts '(except as provided under subsection (k)(2)(C))' after 'Administrative Procedure Act' in the existing FLSA language. This means that the automatic annual updates to the salary threshold, as specified in subsection (k)(2)(C), are explicitly exempted from the notice and comment rulemaking requirements of the Administrative Procedure Act (APA).
Section 2(a)(1)(B) of the bill, amending FLSA Section 13(a)(1)
Why it matters:This is a common legislative technique to streamline future administrative actions, ensuring that the automatic updates occur without requiring a lengthy and potentially contentious public rulemaking process each year. While efficient, it also removes a layer of public and stakeholder input.
Case for: Proponents would argue that exempting automatic updates from APA rulemaking ensures timely, predictable, and depoliticized adjustments to the overtime threshold, making the process more efficient and less susceptible to delays or political interference.
Case against: Opponents might argue that removing APA review reduces transparency and public accountability for significant economic policy changes. They could contend that it removes an important check on administrative power and limits the ability of affected parties to provide input on the methodology or impact of the updates.
Estimated impact: Ensures the salary threshold will increase annually without requiring new rulemaking, impacting millions of workers and businesses over time by making the updates automatic and non-negotiable.