Restaurant Overtime Rules for 2026: What Restaurant Operators Need to Know Now

Updated October 2026

Overtime rules have been on a roller coaster lately. The federal government announced higher salary requirements, a court struck them down, and the Department of Labor has since restored the previous federal standards.

For restaurant operators, that leaves a practical question: Who actually qualifies for overtime in 2026, and what do you need to pay them?

If you’re managing GMs, assistant managers, sous chefs, kitchen managers, or shift leads, the answer depends on three things: how much they earn, what they actually do, and which state they work in.

Here’s what you need to know, without getting buried in legal terminology.

What changed with overtime rules in 2026?

First, a quick recap.

In 2024, the U.S. Department of Labor introduced a rule that would have increased the federal minimum salary for many overtime-exempt employees to $58,656 annually in January 2025.

But a federal court struck down that rule on November 15, 2024.

Then, in May 2026, the Department of Labor announced a technical amendment restoring the earlier federal regulations.

The result: the standard federal salary threshold for most executive, administrative, and professional overtime exemptions is $684 per week, or $35,568 per year.

That does not mean every employee making more than $35,568 is exempt. Salary is only part of the test, and many states have significantly higher requirements.

How does restaurant overtime work?

On paper, overtime is simple: Under federal law, most covered, nonexempt employees earn time-and-a-half for hours worked beyond 40 in a workweek.

But as anyone who’s managed restaurant payroll knows, the details can get complicated.

Some states require overtime after a certain number of hours in a single day. Salaried employees aren’t necessarily exempt. And a manager’s job title doesn’t automatically determine whether they’re entitled to overtime.

Add different state salary thresholds, tipped employees, and managers who spend half their shifts working alongside their teams, and suddenly overtime isn’t quite so straightforward.

Let’s break down where the rules get complicated—and what restaurant operators actually need to know.

Overtime salary thresholds by state in 2026

Federal law establishes a baseline. States can require higher salaries or provide additional overtime protections.

Here are four states where restaurant operators should pay particular attention:

2026 Overtime Exemption Salary Thresholds Selected U.S. jurisdictions · Annual minimums

Jurisdiction	Annual salary
Federal baseline	$35,568
Washington	$80,168.40
California	$70,304
New York — NYC, Long Island & Westchester	$66,300
New York — Rest of state	$62,353.20
Colorado	$57,784

Salary alone does not establish an overtime exemption. Applicable duties tests and state-specific rules still apply. New York figures cover executive and administrative exemptions; professional employees follow different rules.

New York’s figures above apply to executive and administrative exemptions; professional employees are subject to different requirements. Other state-specific exemptions and exceptions may apply.

These thresholds are minimum salary requirements, not guarantees that a position qualifies as exempt.

If you operate restaurants in multiple states, review the rules for each location rather than assuming the federal standard applies everywhere.

Something to remember: salary is not enough

A manager’s salary and job title don’t determine overtime eligibility by themselves.

Federal law generally recognizes executive, administrative, and professional exemptions, each with its own requirements.

For example, an executive exemption generally requires that management be the employee’s primary duty, that the employee regularly direct at least two full-time employees or their equivalent, and that they have meaningful hiring or firing authority or recommendations that carry particular weight.

A restaurant GM running staffing, operations, and employee management may meet those requirements.

A shift lead who spends most of the day cooking, serving customers, or covering stations without genuine management responsibilities might not.

Administrative and professional exemptions involve different duties tests, so don’t assume that a sous chef, purchasing manager, or office employee automatically qualifies.

The important question is what the employee actually does—not what their business card says.

How to decide, role by role

Start with a simple list of your management positions: GM, AGM, sous chef, kitchen manager, service manager, and shift lead.

For each role, ask:

Does the salary meet the applicable federal and state thresholds?
Do the employee’s actual responsibilities satisfy an exemption’s duties test?
How many hours does the employee typically work?
Would it cost more to increase their salary or to pay overtime?

Pay attention to employees who split their time between locations or work in more than one state. Their hours and applicable state laws may need to be evaluated carefully.

Three paths for your management team

Option A: Raise pay to maintain an exemption.

If an employee meets the duties requirements but earns slightly below the applicable salary threshold, increasing their compensation may be the simplest choice.

For example, a California GM earning $69,000 would need a salary of at least $70,304 in 2026 to meet the state’s standard salary threshold. The duties test must still be satisfied.

Option B: Reevaluate the role.

Perhaps your sous chef’s responsibilities have evolved into primarily running a station, training cooks, and covering shifts.

That may be a good reason to review the job description and classification. A Lead Line Cook or hourly Shift Supervisor position with additional responsibility pay could be a better fit.

Changing the title alone, however, doesn’t change overtime obligations.

Option C: Convert the position to overtime-eligible.

Sometimes it’s simpler to pay overtime than to maintain an exempt salary.

Becoming overtime-eligible doesn’t have to mean a demotion or a reduction in responsibilities. Just make sure employees understand how their pay, hours, and overtime will work under the new classification.

And remember: being overtime-eligible doesn’t necessarily mean an employee must be hourly. Salaried employees can also be nonexempt and entitled to overtime.

A simple overtime budgeting example

Say you want a sous chef to earn approximately $70,000 annually, including an average of five overtime hours every week.

Assuming a consistent 45-hour workweek, no additional compensation affecting the regular rate, and standard time-and-a-half overtime:

Regular hours: 40
Overtime hours: 5
Weekly compensated hours: 47.5 at the equivalent base rate
Estimated hourly base rate: $28.34
Estimated annual earnings: approximately $70,000

A note on the math: This example is for budgeting purposes. Actual overtime pay depends on hours worked, applicable state laws, and additional compensation such as bonuses or distributed service charges.

Scheduling moves that reduce overtime creep

Controlling overtime doesn’t have to mean leaving the restaurant understaffed.

A few practical changes can make a difference:

Lock two short office blocks into each manager’s schedule for administrative work.
Cross-train senior bartenders, lead cooks, and trusted hosts to handle certain manager-on-duty responsibilities.
Set realistic closing deadlines and move nonessential paperwork to the next shift.
Complete inventory, interviews, and labor planning before the dinner rush whenever possible.

Remember that overtime generally must be paid when employees actually work it, even if it wasn’t approved in advance. You can enforce scheduling and approval policies, but you cannot simply refuse to pay for work already performed.

Don’t forget tipped employees

Servers and bartenders are also generally entitled to overtime when they work more than 40 hours in a week, assuming they are covered, nonexempt employees.

If your restaurant takes a tip credit, overtime calculations need special attention.

Under federal law, the overtime calculation must be based on the full applicable minimum wage or regular rate – not simply the lower cash wage paid to a tipped employee. The tip credit generally cannot be increased for overtime hours.

State laws may impose higher wage requirements or prohibit tip credits altogether.

Mandatory service charges distributed to employees can also affect their regular rate of pay.

Restaurant examples worth considering

General Manager: A GM working 50 hours weekly may be an appropriate candidate for exempt status if the salary and duties tests are satisfied. Compare any required salary increase against projected overtime costs.

Sous Chef: An overtime-eligible role may make more sense when hours fluctuate substantially between busy banquet periods and slower seasons.

Service or Bar Manager: Consider whether the position genuinely involves exempt management duties or is mainly focused on working service and supervising individual shifts.

Shift Lead: An hourly keyholder premium can recognize additional responsibilities without assuming the role is exempt from overtime.

The right approach depends on what employees actually do and how much time they work.

Restaurant overtime checklist for 2026

Before your next schedule or payroll review:

Confirm federal, state, and applicable local overtime requirements.
Check current salary thresholds for every exempt employee.
Review actual job duties, not just titles or job descriptions.
Verify that all nonexempt hours are accurately recorded and paid.
Include applicable bonuses and service charges in overtime calculations.
Check tipped employee overtime calculations and tip-credit rules.
Compare salary increases with projected overtime costs.
Train managers to prevent off-the-clock work.
Communicate classification and compensation changes in writing.
Schedule another review when 2027 state wage and salary changes take effect.

The bottom line

The federal overtime salary threshold may be back where it was before the attempted 2024 increase, but restaurant operators shouldn’t assume nothing has changed.

States continue updating their requirements, and the difference between federal and state salary thresholds can be substantial.

Review your management positions, understand what your employees actually do, and run the payroll math before making classification decisions.

A little attention now can prevent expensive surprises later.

This article provides general information, not legal advice. For employee-specific classification decisions, consult an employment attorney or qualified wage-and-hour professional familiar with your state’s requirements.

Official resources

About the author

Jakup Martini

Jakup is a skilled mixologist, cook and writer. Of course by "skilled" we mean enthusiastic and by "mixologist" we mean: he drinks. Sometimes when he drinks he also writes blogs for Poached...