Understanding 2026 Overtime Laws: Practical Guidance for Employers

Understanding overtime thresholds and exemption regulations is essential for employers to stay compliant in 2026. These rules determine who qualifies for overtime pay and which employees can be classified as exempt.

This guide explains daily overtime rules, upcoming salary threshold increases, and practical steps for employers.

What Employers Should Know About Overtime and Exemptions

Overtime Thresholds

Overtime thresholds define the number of hours an employee must work before receiving overtime pay. Most states use a 40-hour weekly standard, but some states also require daily overtime.

Exemption Regulations

Exempt employees do not receive overtime pay, but only if they meet both of the following:

1. Duties Test – The employee performs executive, administrative, or professional duties.
2. Salary Threshold – The employee earns at least the minimum salary required for exemption in their state.

Failing to meet either requirement means the employee must be paid overtime.

States With Daily Overtime Rules in 2026

Certain states require overtime pay based on hours worked in a single day, in addition to weekly overtime:

• California (CA): Overtime after 8 hours/day, double time after 12 hours/day. Special rules apply for the 7th consecutive workday.
• Alaska (AK): Overtime after 8 hours/day or 40 hours/week.
• Colorado (CO): Overtime applies after 12 hours/day.
• Nevada (NV): Overtime after 8 hours/day.

Employer takeaway: In these states, tracking daily hours is just as important as weekly totals. Payroll systems must be configured to handle daily overtime calculations.

States With Confirmed Exemption Salary Increases for 2026

Some states have officially announced increases to the salary thresholds for exempt employees, effective Jan 1, 2026:

• Washington (WA): Weekly threshold will rise to $1,541.70 ($80,172/year).
• New York (NY):
• NYC/Long Island/Westchester: $1,275/week ($66,300/year)
• Rest of the state: $1,199.10/week ($62,353/year)

Employer takeaway: Salaried employees earning below these thresholds cannot be classified as exempt. Employers must either raise salaries, adjust duties, or reclassify employees as non-exempt.

Key Steps for Employers to Stay Compliant in 2026

1. Review employee classifications – Ensure all exempt employees meet the duties test and updated salary thresholds.
2. Track daily hours – For CA, AK, CO, NV employees, monitor hours worked each day.
3. Update payroll systems – Configure software to calculate overtime according to daily and weekly rules.
4. Train HR and managers – Ensure everyone understands the changes to avoid misclassification.
5. Plan ahead – Implement changes before Jan 1, 2026 to avoid back-pay and penalties.

Highlights:

In 2026, employers must pay close attention to both daily overtime and exemption salary thresholds. Key points:

• Daily overtime states: CA, AK, CO, NV
• Exemption salary increases: WA, NY
• Employees must meet both the duties test and salary threshold to be exempt.
• Proper classification, accurate time tracking, and payroll updates are critical to compliance.

Essential Points: Start reviewing classifications, salaries, and payroll processes now to ensure smooth compliance with 2026 overtime and exemption regulations.

FAQ: Overtime Thresholds & Exemption Regulations in 2026

Q1: What are overtime thresholds in 2026?
A: Overtime thresholds define when employees must receive overtime pay. Most states use a 40-hour weekly rule, but some require daily overtime for hours worked in a single day. Tracking daily hours is essential in CA, AK, CO, and NV.

Q2: What does it mean for an employee to be exempt?
A: Exempt employees do not receive overtime pay if they meet both the duties test (executive, administrative, or professional responsibilities) and the state’s minimum salary threshold. Employees who don’t meet both requirements must be paid overtime.

Q3: Which states have daily overtime rules in 2026?
A: California, Alaska, Colorado, and Nevada require overtime pay based on daily hours worked, in addition to weekly totals. Employers must monitor daily hours to remain compliant.

Q4: Which states are increasing exempt employee salary thresholds in 2026?
A: Washington and New York have confirmed increases:

• Washington: $1,541.70/week ($80,172/year)
• New York: $1,275/week in NYC/Long Island/Westchester; $1,199.10/week elsewhere

Q5: How should employers prepare for 2026 overtime and exemption changes?
A: Employers should:

1. Review exempt employee classifications and salaries against new thresholds.
2. Track daily hours for employees in CA, AK, CO, and NV.
3. Update payroll systems to calculate overtime correctly.
4. Train HR and management teams to ensure compliance.

Q6: What happens if an employee falls below the new 2026 salary threshold?
A: Employees who earn below the threshold cannot be classified as exempt. Employers must either increase salaries, adjust job duties to qualify for exemption, or reclassify them as non-exempt and pay overtime.

Q7: Do federal and state overtime rules differ?
A: Yes. When a state sets stricter rules (daily overtime or higher salary thresholds), the state rules take precedence. Employers must follow the higher standard to remain compliant.