FLSA Salary Thresholds: What Employers Need to Know for 2026
With gig and remote work redefining the modern workforce, proper classification is one of the biggest compliance challenges employers will face in 2026. The Department of Labor and IRS are stepping up enforcement, targeting companies that blur the line between independent contractors (1099) and employees (W-2).
There's No Such Thing As A 1099 Employee
The Proposed Change
The rule increases the minimum salary for exempt “white-collar” employees to $1,128 per week ($58,656 annually). It also raises the “highly compensated employee” threshold to $151,164 annually. The DOL intended the higher rate to take effect in 2025, with automatic updates every three years to keep pace with wage growth.
The Legal Challenge
Several employer groups and states sued, arguing that the rule exceeds the DOL’s authority and unfairly burdens small businesses. A Texas federal court has temporarily paused enforcement, creating a split: some employers are proceeding under the new rule, while others are holding at the previous 2020 threshold of $684 per week ($35,568 annually).
The Compliance Dilemma
Until the courts issue a final decision, employers are in limbo. The safest move? Plan as though the rule will stand. Review exempt classifications, model the cost of “raise versus reclassify,” and be ready to adjust payroll quickly if enforcement resumes. Staying proactive avoids back-pay liability later.
What HR Should Do Now
Audit all exempt roles under $60,000, update job descriptions to reflect actual duties, and prepare communication templates for reclassification scenarios. Educate managers about how overtime and time tracking will change if roles convert to non-exempt. Finally, keep watching for updates from the DOL and federal courts—because in 2026, the only certainty is change.
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Erin Eilers, M.S., PHR
Eilers HR Consulting
erin@eilershr.com | (561) 876-4750
