One of the biggest risks for employers operating in multiple states is keeping pace with a patchwork of rules that can shift quickly and differ by location. This makes it essential to continuously monitor federal and state developments, verify guidance against primary sources, and adjust policies and pay practices promptly. A change that applies in one jurisdiction may not apply or may apply differently in another.

For example, in 2024, employers across the country prepared for a major shift in overtime rules. The U.S. Department of Labor announced a significant increase to the minimum salary required for employees to qualify as exempt from overtime, raising it from $684 per week to $844, with another increase planned for 2025. Organizations responded quickly. Salaries were adjusted, employees were reclassified, and compensation strategies were reworked in anticipation of higher compliance requirements. For a brief period beginning in July 2024, the new $844 weekly threshold took effect, reinforcing the expectation that a long-term change was underway.

Then, in November 2024, everything changed.

A federal court struck down the rule nationwide, eliminating both the July increase and the planned 2025 adjustment. The decision effectively reset the landscape, returning the salary threshold to its prior level of $684 per week. Today, that original figure remains the governing federal standard and in Michigan, it is firmly in place. According to the Michigan Department of Labor and Economic Opportunity, the state continues to follow the federal Fair Labor Standards Act (FLSA), meaning the minimum salary for most overtime-exempt employees is $684 per week ($35,568 annually).

The broader national story reveals a more complex reality. While Michigan and many states reverted to the $684 federal baseline, others have taken a different path. As noted by ADP’s 2026 guidance, several states maintain higher, state-specific salary thresholds that exceed federal requirements, and more increases are continuing at the state level. States such as California, New York, Washington, Colorado, and Maine have built independent frameworks often tying exemption thresholds to minimum wage or indexing them over time. This creates a patchwork compliance environment for employers. In practice, exemption status is no longer determined solely by role and duties, but also by location.

HR leaders should consider the following steps to help maintain compliance and reduce risk:

• Review all exempt employee classifications to ensure they continue to meet both the salary and duties tests.
•  Identify employees working in states with overtime exemption thresholds that exceed federal requirements.
•  Verify the work location of remote employees, as state wage and hour laws are generally based on where the employee performs the work.
• Audit salary adjustments or reclassifications made in anticipation of the 2024 federal overtime rule to determine whether further action is needed.
• Monitor state-level wage and hour developments, especially in states that tie exemption thresholds to minimum wage increases or annual indexing.
• Coordinate with payroll, legal counsel, and HRIS teams to ensure salary threshold changes are implemented accurately and on time.
• Evaluate the budgetary impact of future salary threshold increases and incorporate potential changes into compensation planning.
• Review job descriptions regularly to ensure they accurately reflect employees' duties and support exempt status classifications.
• Train managers on overtime rules and the potential impact of employee relocations, remote work arrangements, and job duty changes.
• Establish a process for ongoing compliance reviews rather than relying solely on periodic federal updates.

Organizations that regularly review classifications, monitor legislative developments, and evaluate compensation practices across jurisdictions will be better positioned to manage risk and adapt to future changes. In today's regulatory environment, staying compliant requires not only understanding the rules, but also recognizing that those rules may vary depending on where employees work. 

Sources: sbshrs.adpinfo.com; michigan.gov/leo