Remember all the work your organization did during the second half of 2024 to prepare for the Department of Labor’s overtime rule changes? Many banks were forced to review employee classifications (exempt versus non-exempt), raise salaries, revise policies or convert employees to hourly status in anticipation of a significant expansion of overtime eligibility. Those changes became much more complicated when a federal court struck down the rule before it took effect.
On May 14, 2026, the U.S. Department of Labor’s Wage and Hour Division formally restored the 2019 salary thresholds used for the Fair Labor Standards Act’s white-collar overtime exemptions. The salary threshold for the executive, administrative and professional exemptions is once again $684 per week ($35,568 annually). The highly compensated employee threshold is $107,432.
The change is largely procedural. After a federal court in Texas vacated the 2024 overtime rule in late 2024, the Department ultimately abandoned its appeal and resumed enforcement of the 2019 thresholds. The May 2026 amendment simply updated the federal regulations to reflect that reality.
Indiana employers generally have flexibility in deciding what to do next.
For many employers, the announcement did not change day-to-day operations. But for banks and other financial institutions subject to regulatory control, the practical impact may be greater than the headlines suggest. Many institutions proactively made changes to compensation and classification to prepare for the now-defunct rule. Assistant branch managers, personal bankers, loan processors and junior credit or compliance analysts were reclassified, given raises to clear the higher threshold or converted to hourly status with formal overtime tracking.
Those changes did not disappear when the rule was vacated. They remain reflected in payroll systems, organizational charts, job descriptions and employee expectations, quietly outliving the regulation that prompted them.
This leaves many financial institutions in an unusual position. Indiana does not impose a state overtime salary threshold higher than the federal requirement, unlike states such as California, New York, Washington and Colorado. As a result, Indiana employers generally have flexibility in deciding what to do next.
Banks and financial institutions may keep the changes they made, reverse them or adopt a hybrid approach. None of those decisions, standing alone, creates a compliance issue. The real challenge is determining which approach best serves the institution’s operational and workforce needs.
For some banks, maintaining higher salaries or existing classifications may make good business ration, support employee retention for competitive roles or reflect expanded job responsibilities that developed alongside the reclassification.
For others, the increased payroll costs were justified solely by a regulation that no longer exists. However, salary increases are often easier to implement than reverse. Even when legally permissible, reducing salaries can create employee-relations challenges that many institutions would prefer to avoid. As a result, some banks may decide to maintain compensation changes while reevaluating whether existing classifications make sense.
That reevaluation should not focus exclusively on salary. Salary has never been the only requirement for exempt status. Employees must also satisfy the applicable duties test, and those standards remain unchanged. Banks and financial institutions are especially susceptible to what is often referred to as “title inflation.” Employees may carry titles such as assistant manager, officer or coordinator even though their day-to-day responsibilities do not satisfy an exemption’s duties requirements. One benefit of a thorough review process is that it forces an institution to take a fresh look at those distinctions. The rollback does not eliminate the need for that analysis.
There is also a broader lesson for compliance and HR professionals that goes beyond staffing decisions. The 2024 rule included an automatic increase to the salary threshold every three years. The rule’s disappearance removes that built-in mechanism and any certainty it provided along with it. The number is not frozen at $35,568 forever, and it is a mistake for organizations to treat it as permanent. Overtime regulations have shifted multiple times in recent years due to changing administrations and court decisions, and future changes remain likely.
For that reason, banks should view this development less as the end of a compliance issue and more as a reminder that wage-and-hour requirements can change quickly. Institutions that build flexibility into their classification and compensation practices will be better positioned to respond when the next change arrives.
While this recent development does not require immediate action, it does warrant a deliberate review. Banks and financial institutions that reclassified positions in anticipation of the 2024 rule should revisit those decisions, confirm that current classifications remain supported by actual job duties, and make a conscious decision about whether to maintain or modify existing structures.
Any reclassification should be accompanied by clear written communication to affected employees and documented business reasons supporting the decision. If questions arise, or if significant changes are being considered, institutions should consult legal counsel before implementing them.
Information in this article is provided for general information purposes only and does not constitute legal advice or an opinion of any kind. You should consult with legal counsel for advice on your institution’s specific legal issues.
