Perspectives

2025 Employment Law Shifts Every Employer Should Know: Part 1

The pace of employment law updates across the U.S. is accelerating-and for employers, the risk of falling out of compliance has never been higher. As of mid-2025, sweeping federal changes and hundreds of new or amended state laws are reshaping workplace obligations. From salary thresholds to paid leave expansions and non-compete bans, there’s a lot to track.

Here’s a look at several major updates employers should act on now:

The “One Big Beautiful Bill”: Tax Breaks for Hourly Workers

Starting retroactively in 2025, qualifying tipped and hourly workers can deduct certain earnings:

• Tip deductions: Up to $25,000 annually in “qualified tips” (voluntary, non-negotiable, and paid by the customer).
• Overtime deductions: Up to $12,500 in federally mandated overtime wages beyond a standard 40-hour week.

Why it matters: Employers could see tax refunds for 2025. Employers should communicate these changes and prepare for increased payroll-related questions.

The DOL’s New Salary Thresholds for Exempt Employees

If you classify employees as exempt from overtime, pay attention:

• July 1, 2025: Minimum salary= $844/week or $43,888/year.
• January 1, 2026: Minimum salary jumps to $1,128/week or $58,656/year

Why it matters: Misclassification can lead to lawsuits. Now is the time to audit exempt employees and adjust compensation or reclassify roles if needed.

AI and Discrimination Laws

States like California and New Jersey have passed laws banning discriminatory use of AI tools in hiring and HR decisions.

• AI systems that analyze facial expressions or speech may violate anti-bias laws.
• Employers are liable even if they didn’t create the AI tool.

Action tip: If you use automated hiring or decision-making systems, review them immediately for bias.

Paid Leave Expansion Across the U.S.

States like Minnesota, Colorado, Maine, and Delaware are rolling out generous paid leave programs:

• Minnesota’s Paid Family and Medical Leave starts January 1, 2026, offering up to 20 weeks of combined leave.
• Colorado will provide an extra 12 weeks for NICU-related parental leave.
• Delaware’s leave benefits begin in 2026 with up to 80% wage replacement.

What to do: Budget for these changes and update your policies and payroll systems to stay compliant.

Non-Compete Agreements Under Attack

More states are banning or restricting non-competes, especially for healthcare workers:

Arkansas, Indiana, Maryland, Pennsylvania, Montana, Texas and others are banning non-competes for physicians and licensed medical professionals.

Colorado now prohibits certain non-competes for healthcare providers and even restricts what they can communicate to patients post-employment.

Recommendation: Review all non-compete templates and consult legal counsel before issuing new ones.

Stay tuned for Part 2

In Part 2, we’ll look deeper at state-specific sick leave mandates, wage transparency laws, new worker protections (like for whistleblowers and nursing parents), and how employers can stay ahead of these fast-paced developments.