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Business Owner Resource Center

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Employment Law Changes: Are You Ready?

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Listen to the article: Employment Law Changes Are You Ready?
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Knowing the latest employment law changes is crucial for businesses of all sizes. Failing to comply can result in costly penalties, lawsuits, and reputational damage. To help you stay informed, we’ve got a list of some of the most widespread and impactful changes you need to know about.

Keep in mind that there are more changes than we can fit into a single blog post, so it’s critical that you work with a qualified expert to fully understand the changes you’ll be subject to.

Federal Employment Law Changes

As we enter 2025, several significant federal employment law developments are poised to impact employers, including small business owners across the country. A few from 2024 also deserve to be revisited in the new year. Here's an overview:

EEOC's Enforcement Guidance on Harassment in the Workplace

Issued on April 29, 2024 by the Equal Employment Opportunity Commission (EEOC), this guidance clarifies standards for identifying and addressing workplace harassment based on protected characteristics such as race, color, religion, sex, national origin, disability, genetic information, and age.

  • Effective: 4/29/2024
  • Who’s Affected: All employers and employees under EEOC jurisdiction.
  • What You Need to Do: Adjusting to this law will require assessing and updating your anti-harassment policies to align with the new guidance, and the new year is the perfect time to do so. We recommend a comprehensive training program or refresher to educate employees about behaviors that constitute workplace harassment. Additionally, make sure you’ve established clear channels for reporting harassment.

Final Rule on Employee or Independent Contractor Classification Under the FLSA

Issued by the Department of Labor (DOL), this rule introduces a six-factor "economic realities" test to determine worker classification under the Fair Labor Standards Act (FLSA).

  • Effective: 3/11/2024
  • Who’s Affected: Employers utilizing independent contractors.
  • What You Need to Do: Evaluate your current worker classifications using the new six-factor test. Reclassify workers as employees if they do not meet the criteria for independent contractors. Ensure compliance with FLSA requirements, such as minimum wage, overtime pay, and recordkeeping.

Minimum Wage Increase for Federal Contract Workers Under Executive Order 14026

Executive Order 14026 mandates an annual adjustment to the minimum wage for federal contract workers. Effective January 1, 2025, the hourly minimum wage increases from $17.20 to $17.75.

  • Effective: 1/1/2025
  • Who’s Affected: Employers with federal contracts.
  • What You Need to Do: Update payroll systems to reflect the new minimum wage for applicable workers. Ensure federal contract compliance to avoid penalties.

Potential Changes to Keep an Eye On

Two major rules were blocked or vacated. For now, these will require no action. However, that could change based on legal proceedings:

  • First, the courts blocked the FTC’s rule on non-compete agreements. For now, consult with legal experts to understand the implications of the injunction and review existing non-compete agreements to ensure compliance with state laws. Consider alternative protections for your business, such as confidentiality agreements or non-solicitation clauses.
  • The DOL also proposed a rule to increase the minimum salary for white-collar exemptions. This rule was vacated by a federal court, but it’s worth noting since the DOL may try again in the future.

State-Specific Employment Law Changes

As with most years, there are too many state-specific employment law changes to mention in a single blog post. However, we’ve pinpointed some of the most important that could affect you. 

California

California leads the nation in regulatory changes. If you’re a business owner in California, we strongly recommend working with a compliance expert for a full, in-depth discussion of what changes you may need to make in 2025.

California AB 2434: Health Care Coverage for Small Employers

This legislation mandates that employer associations offering large group health care service plan contracts to small group employer members adhere to new requirements, ensuring consistency and fairness in health care coverage options.

  • Effective: 1/1/2025
  • Who’s Affected: Employer associations and small group employers participating in large group health care plans.
  • What You Need to Do: Review and adjust your health care service plan contracts to comply with the new requirements. Additionally, ensure that health care coverage options offered to small group employer members are consistent and fair.

California AB 2299: Whistleblower Rights Notice Posting

This law requires the California Labor Commissioner to develop a model notice outlining employee rights and responsibilities under existing whistleblower laws. Employers displaying this notice will be deemed compliant with state posting requirements.

  • Effective: 1/1/2025
  • Who’s Affected: All California employers.
  • What You Need to Do: To comply with this new law, you must obtain and prominently display the model whistleblower rights notice in the workplace. Ensure the notice is in a font size larger than 14 points and includes the whistleblower hotline number for the California State Attorney General’s office.

California AB 2123: Paid Family Leave Program Amendment

This amendment eliminates the ability of California employers to require employees to use up to two weeks of accrued vacation leave before accessing state Paid Family Leave (PFL) benefits.

  • Effective: 1/1/2025
  • Who’s Affected: All California employers and employees eligible for Paid Family Leave.
  • What You Need to Do: Update your leave policies to reflect that employees can access PFL benefits without first using accrued vacation leave. Communicate this change to employees and adjust payroll and leave management systems accordingly.

Illinois

Illinois also has several employment law changes for 2025. One of the most significant is around pay transparency:

Illinois HB 3129: Pay Scale and Benefits Disclosure in Job Postings

This amendment to the Illinois Equal Pay Act of 2003 mandates that employers with 15 or more employees include the pay scale and benefits for any job position in their postings.

  • Effective: 1/1/2025
  • Who’s Affected: All Illinois employers with 15 or more employees.
  • What You Need to Do: Ensure all job postings, whether internal or external, include clear information about the position's pay scale and benefits. If you’re utilizing third-party platforms for job advertisements, provide them with the necessary pay scale and benefits information to include in the postings.

Be aware that current and former employees have the right to file complaints with the Illinois Department of Labor if they believe this requirement is not being met.

New York

New York made a major change to prenatal leave for employees:

New York AB A08805C: Paid Prenatal Leave

This legislation mandates that New York employers provide up to 20 hours of paid leave for pregnant employees to attend prenatal medical appointments and procedures.

  • Effective: 1/1/2025
  • Who’s Affected: All New York employers and their pregnant employees.
  • What You Need to Do: Update your leave policies to include provisions for 20 hours of paid prenatal leave. Communicate this new benefit to all employees, ensuring that pregnant employees are aware of their entitlement. Finally, make sure to adjust your payroll systems to accommodate the additional paid leave.

Learn More About Employment Law Changes that Could Affect You with BBSI

Employment law changes for 2025 are extensive and varied, and the updates we've discussed here are just a fraction of the developments employers need to know. Staying compliant requires vigilance, and there are even more laws and regulations beyond those covered in this blog that could impact your business.

If you’re feeling uncertain about how these changes affect your company or need tailored guidance, BBSI is here to help

Contact us today to ensure you're fully informed and prepared for the evolving employment law landscape.

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