2025 Overtime Salary Thresholds: Your Simple Guide (Federal & State)

Are you a small business owner or a salaried employee trying to make sense of the 2025 overtime rules? You're not alone. With federal changes being blocked by courts and state laws constantly evolving, it's easy to get confused.

This guide cuts through the noise. We'll give you clear, actionable information on the current federal and state salary thresholds for overtime exemption, so you can ensure you're compliant and making informed decisions.

Key Takeaways for 2025

• Federal Rule Unchanged: The proposed federal increases for 2024 and 2025 were blocked by a federal court. The current federal minimum salary for overtime exemption remains at $684 per week ($35,568 per year), a level set back in 2019.
• State Laws Are Key: Many states have set their own, much higher salary thresholds for 2025. This includes states like California ($68,640/year), New York (up to $1,237.50/week), and Washington (up to $1,499.40/week).
• The Golden Rule: You must always follow the law that is more protective for the employee. If your state’s salary threshold is higher than the federal one, you must use the state’s number.
• Salary Isn't Everything: Meeting the salary threshold is just the first step. The employee’s job responsibilities must also pass the "duties tests" for executive, administrative, or professional (EAP) roles.

What is the Federal Overtime Rule for 2025?

Under the Fair Labor Standards Act (FLSA), for an employee to be "exempt" from overtime pay, they must meet specific criteria. Here’s the current federal standard:

1. Salary Basis Test: The employee must be paid a predetermined, fixed salary that is not subject to reduction because of variations in the quality or quantity of the work performed.
2. Salary Level Test: This salary must be at least $684 per week ($35,568 per year).
3. Duties Test: The employee's primary job duties must involve executive, administrative, or professional tasks as defined by the Department of Labor (DOL).

A separate rule exists for Highly Compensated Employees (HCEs). They can be considered exempt if they earn a total annual compensation of $107,432 or more, receive at least $684 per week on a salary basis, and satisfy a more minimal duties test.

What Happened to the Big Federal Increases? You may have heard about planned federal increases to $844/week in July 2024 and $1,128/week in January 2025. However, a federal court in Texas struck down this rule in November 2024. As a result, the $684/week threshold from 2019 remains in effect until further notice.

2025 State-by-State Overtime Salary Thresholds

This is where it gets critical for most businesses. Many states mandate higher salary levels for exemption than the federal government. If you operate in one of these states, you must follow the state rule.

Here are the 2025 thresholds for several key states, all effective January 1, 2025:

State/Region	Weekly Threshold	Annual Threshold	More Information
California (statewide)	$1,320.00	$68,640	CA DIR News Release
New York (NYC, Long Island, Westchester)	$1,237.50	$64,350	NY DOL FAQ
New York (Rest of State)	$1,161.65	$60,405.80	NY DOL FAQ
Washington (51+ employees)	$1,499.40	$77,968.80	WA L&I Schedule
Washington (≤50 employees)	$1,332.80	$69,305.60	WA L&I Schedule
Colorado (statewide)	$1,086.25	$56,485	CO 2025 PAY CALC Order

If your state isn't listed, search "[Your State] Department of Labor overtime rules" to find the most current information.

How to Determine if an Employee is Exempt: A 3-Step Guide

Use this simple decision-making process to classify your employees correctly.

• Step 1: Check the Salary vs. Your State's Threshold If your employee's weekly salary is less than your state's minimum threshold, they are non-exempt and eligible for overtime. It doesn't matter what their job title or duties are. * Example (California): The CA threshold is $68,640/year ($1,320/week). An employee earning $65,000/year ($1,250/week) is non-exempt.

• Step 2: Check the Salary vs. The Federal Threshold If your state has no specific threshold (or one lower than the federal level), compare the salary to the federal minimum of $684 per week. If it's lower, the employee is non-exempt.

• Step 3: If Salary Meets the Bar, Check the Duties If an employee’s salary is above the required threshold, you must then confirm their primary job duties meet the criteria for an executive, administrative, or professional exemption. If their duties don't align, they are non-exempt.

What about remote workers? Generally, you should apply the overtime laws of the state where the employee performs their work, not where the company is headquartered.

Common Mistakes and How to Avoid Them

Misclassifying an employee can lead to significant penalties, including back pay for overtime. Here are common traps to avoid:

• Illegal Salary Deductions: Docking an exempt employee's pay for partial-day absences or for issues with work quality/quantity can violate the "salary basis" test and make them non-exempt.
• Ignoring Job Duties: Don't assume a high salary automatically makes someone exempt. The duties test is just as important.
• Forgetting Remote Employees' State Laws: A Texas-based company with a remote employee in Colorado must follow Colorado's higher salary threshold for that employee.
• Computer Professional Confusion: Some states have special hourly rates for exempt computer professionals. In 2025, Washington requires $58.31/hour, and Colorado requires $34.07/hour (unless they meet the standard EAP salary).

Quick FAQ: 2025 Overtime Rules

1. So the new federal rules for 2024/2025 are not in effect? Correct. They were blocked by a federal court. The federal minimum salary for exemption remains $684/week.

2. My state’s threshold is higher than the federal one. Which do I follow? You must always follow the higher, more employee-protective rule. In this case, your state’s threshold applies.

3. Does the federal salary minimum include bonuses? Yes, employers can use nondiscretionary bonuses and incentive payments (including commissions) to satisfy up to 10% of the federal standard salary level.

4. What is California's 2025 overtime salary threshold? $68,640 per year, effective January 1, 2025. This is calculated as two times the state minimum wage.

5. What about New York's 2025 thresholds? Effective January 1, 2025, it's $1,237.50/week for NYC, Long Island, and Westchester, and $1,161.65/week for the rest of the state.

6. What are the biggest mistakes that can void an employee's exempt status? The two most common are paying them less than the required state or federal salary threshold and making improper deductions from their salary, which violates the "salary basis" rule.

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Final Thoughts

Staying compliant with overtime laws requires vigilance, especially as state rules become more complex. Always check both federal and your specific state regulations, and remember that both the salary level and job duties must be met for an employee to be properly classified as exempt. When in doubt, consulting with HR or legal counsel is always a wise investment.

Disclaimer: This article provides general information and does not constitute legal advice. Please consult with a qualified professional for advice on your specific situation.