As 2026 approaches, employers may want to assess the following wage-and-hour compliance issues: rising salary thresholds for overtime exemptions, widening gaps between federal and state minimum wage amounts, and increasingly complex state-specific duties tests and exemption standards. Each can present operational risk if job classifications and pay practices are not carefully aligned with both the Fair Labor Standards Act (FLSA) and stricter state laws. Employers can benefit from ensuring they have updated pay rates and job descriptions to align with the new and changing standards explained below.

Quick Hits

• Employers may want to prepare for 2026 by mapping exempt roles in Alaska, California, Maine, New York, and Washington to new salary thresholds and implementing adjustments aligned with effective dates.
• To avoid salary compression, employers may want to reconcile pay bands in the thirty-one states with higher minimum wages than federal law and ensure that any threshold multipliers are captured in exempt pay.
• Employers may also want to refresh exemption determinations in jurisdictions with state-specific duties tests, documenting how each role satisfies these tests and confirming whether any federal exemptions are not recognized locally.

1. Salary Thresholds for Exemptions: Key 2026 Changes

White-collar exemptions generally require both a salary basis and duties test. Where a state sets a higher salary threshold than the FLSA ($684 per week under current federal...

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