Minimum Salary Requirements for Overtime Exemption in 2025

The federal Fair Labor Standards Act (FLSA) requires that employers pay non-exempt employees overtime for all hours worked in excess of 40 hours in a workweek. Some states require overtime in additional circumstances. However, there are federal and state exemptions from these requirements for employees who meet certain salary and duties tests. Here are some key things to know for both federal exemptions and state exemptions from overtime for 2025.

Federal exemptions from overtime

The FLSA allows for exemptions from the federal overtime (and minimum wage) requirements for certain employees who work in administrative, professional and executive jobs (known as "exempt" employees). To be considered "exempt," these employees must generally satisfy three tests.

Currently, to fall within the executive, administrative and professional (EAP) employee exemptions, an employee generally must:

1. Be paid a salary, meaning they are paid a predetermined and fixed amount that is not subject to reduction because of variations in the quality or quantity of work performed (the salary-basis test);
2. Be paid at least a specified weekly salary level (the salary-level-test); and
3. Primarily perform executive, administrative or professional duties, as provided in the U.S. Department Of Labor's regulations (the duties test).

Increase to federal minimum salary requirement set for January 1, 2025

Effective January 1, 2025, the minimum salary required for the EAP exemptions from overtime under federal law will increase from $844 per week to $1,128 per week.* If an employee is paid a salary that is less than $1,128 in 2025, they will be entitled to overtime whenever they work more than 40 hours in a workweek.

*As of the date of this publication, the federal increase to $1,128 per week is still scheduled to take effect on January 1, 2025. However, the change is the subject of multiple legal challenges. Employers should watch for developments closely in case the status of the increase changes.

Some states are also increasing minimum salary requirements

Many states have their own salary and duties tests for determining whether an employee is exempt from overtime under state rules. Generally, if state law is more protective (i.e., requires a higher salary amount or has duties tests that are more difficult to satisfy), then state law should be followed.

Three states have minimum salary requirements for overtime exemption that will increase on January 1, 2025 and will exceed the new federal level. These changes are summarized below.

California

To qualify for the administrative, professional and executive exemptions in California, employees must meet certain salary and duties tests and must be paid at least twice the state minimum hourly wage based on a 40-hour week.

On November 5, 2024, voters in the state were asked via a ballot measure whether the state should increase its minimum wage.  As of the time of publication of this Tip of the Week, the results of the vote are still too close to call.

If the ballot measure is ultimately approved by voters, California's minimum wage would increase for employers with 26 or more employees to $17 per hour on or about December 18, 2024 and then to $18 per hour on January 1, 2025. For smaller employers, the minimum wage would increase to $17 per hour on January 1, 2025.

Here’s how the state’s minimum weekly salary requirement for overtime exemption would change if voters ultimately approved the ballot measure:

If the ballot measure is ultimately rejected by voters, California's minimum wage would increase to $16.50 per hour on January 1, 2025, regardless of employer size.

Here’s how the state’s minimum weekly salary requirement for overtime exemption would change if voters ultimately rejected the ballot measure:

Computer software employees may be paid on an hourly or a salary basis to qualify for exemption from California's overtime requirements. Beginning January 1, 2025, computer software employees must earn at least the following to be exempt from overtime:

• $56.97 per hour (for all hours worked); or
• A monthly salary of $9,888.13; and
• An annual salary of $118,657.43

New York

To be classified as exempt from New York's overtime requirements, executive and administrative employees must meet minimum salary requirements and satisfy certain duties tests.

For these two exemptions, the state typically has set the minimum salary requirement at/or about 75 times the state minimum wage. The state’s minimum wage will increase on January 1, 2025.

As a result of the new minimum wage, the state is increasing the minimum salary requirement for the executive and administrative exemptions to $1,237.50 per week on January 1, 2025 in New York City and Nassau, Suffolk, and Westchester counties. In areas other than New York City and Nassau, Suffolk, and Westchester counties, the state will increase the minimum salary requirement for the executive and administrative exemptions to $1,161.65 per week on January 1, 2025.

Note: There is also a professional exemption under state law. For the professional exemption, employees must satisfy certain duties tests, but there is no minimum salary requirement under state law. For 2025, federal law currently establishes a minimum salary of $1,128 per week for the professional exemption. Employers seeking to classify employees as exempt from overtime should ensure employees meet both federal and state exemption criteria.

Washington

In Washington, employees must satisfy certain salary and duties tests to be classified as exempt from overtime under state law. As a result of a new state minimum wage, employers with 50 or fewer employees must pay a salary of at least $1,332.80 per week in 2025 for the overtime exemption. For larger employers, the minimum salary requirement for overtime exemption is $1,499.40 per week in 2025. 

Note: Employers may pay exempt computer professionals by the hour, provided they pay at least $58.31 per hour in 2025.

 What about Alaska, Colorado and Maine?

Alaska, Colorado and Maine also increase their minimum salary requirements for overtime exemption on an annual basis, but unlike the situation in years past, their scheduled increases will be below the federal minimum salary requirement in 2025. As a result, the federal minimum salary requirement of $1,128 for overtime exemption will generally apply in Alaska, Colorado and Maine in 2025.

Conclusion

Before classifying and treating any employee as exempt from overtime, employers should confirm that the employee satisfies all applicable tests for overtime exemption under federal and state laws. If an employee is covered by both federal and state law but doesn't meet both sets of tests, employers should consult with counsel to determine how they should classify the employee in that particular situation.