Washington lowered the federal exempt-salary bar. In California, ignore it.

The U.S. Department of Labor restored the older, lower federal salary threshold for exempt employees — but California’s higher number is the one that governs here.

MeasureDOL / FLSA

Effective2026 (DOL restored prior levels)

Applies toMulti-state and California employers

Read3 min

At a glance

The federal exempt-salary threshold reverted to $684/week ($35,568/year); highly-compensated employees to $107,432.
California’s exempt threshold ($70,304) is far higher and controls for California employees.
When federal and state rules differ, the more protective one wins — here, California’s.
Do not lower any California salary based on the federal rollback.

At the federal level, the salary an employee must earn to be exempt from overtime went back down. The Department of Labor restored the pre-2024 thresholds: $684 a week — about $35,568 a year — for the standard exemption, and $107,432 for the highly-compensated category.

For a California employer, the practical answer is short: this federal change should not lower anyone’s pay. California sets its own, higher exempt threshold, and when two rules overlap, the one more protective of the employee applies.

Two thresholds, one rule of thumb: in California, the employee-friendlier number always wins.

What changed

Only the federal floor moved, and it moved down. California’s $70,304 threshold sits well above the restored federal $35,568, so for California employees the state number is the binding one.

Who’s affected

Multi-state employers most of all. If you have staff in California and elsewhere, you now have two different exempt thresholds to apply — the higher California figure in California, the federal figure where no higher state rule exists.

What to do now

Confirm no one applied the lower federal number to a California employee. For multi-state teams, map each employee to the correct threshold for their work location. When in doubt in California, use the state figure.

How The HR Meeting helps

We keep multi-state classification straight — applying the right threshold per location so a federal change somewhere else doesn’t create a California misclassification here.

Sources & official text

This article is general information for California employers, not legal advice. Rules change and application depends on your facts — confirm against the official text or ask us before acting.