As we kick off 2025, the landscape of employment law in the US is set to undergo significant changes. Employers will need to stay alert to these developments to ensure compliance, avoid legal pitfalls, and maintain their competitive edge in attracting and retaining top talent. From pay transparency initiatives to shifting non-compete agreement regulations, these changes will have wide-reaching implications across industries. To provide deeper insight, we sought insight from Kerri Arman, VP, Head of Talent at Richemont, about how her organisation is staying ahead of emerging labor law changes, and her perspectives have helped to shape this feature.
Key changes in labor law for 2025
Pay transparency laws
It looks like one of the most significant changes employers will face in this year is the expansion of pay transparency laws. These laws will require employers to disclose compensation ranges in job postings and, in some cases, report on pay disparities across gender, race, and ethnicity. While some states, such as California and New York, already have laws relating to pay transparency in place, many other states are expected to introduce similar regulations in 2025.
The purpose of these laws is to address pay equity and ensure that workers are compensated fairly for their work. For employers, this presents both challenges and opportunities. Companies will need to ensure they have accurate compensation data and are prepared to explain any pay disparities. This will likely involve conducting internal pay audits and implementing systems for tracking pay history and promoting pay equity.
Industry leaders acknowledge that pay transparency will impact talent attraction strategies. Many organisations are already taking steps to ensure compliance, including updating policies and enhancing internal communications around pay structures. Employers will need to ensure their HR teams are well-equipped to handle the complexities of these new regulations. Transparency is not just about legal compliance—it also influences how companies are perceived by potential employees. Ensuring that pay structures are fair and equitable can serve as a strong differentiator in today’s competitive job market.
Non-compete agreements
Non-compete agreements are another area where the rules are going to change in 2025. Historically, non-compete agreements have been a tool for employers to protect their intellectual property and prevent employees from taking sensitive company information to competitors. However, these agreements have come under scrutiny for limiting employees’ job mobility as well as suppressing wages.
In response, several states, including California, Oregon, and Illinois, have already enacted laws that place restrictions on non-compete agreements, particularly for low-wage workers and employees with fewer than a certain number of years at a company. In 2025, other states are expected to introduce similar restrictions, and there’s a growing push for federal legislation on the matter.
Many HR professionals anticipate that limiting non-compete agreements will have a significant impact on hiring and retention strategies. Employers will need to reassess existing agreements, ensure compliance with state-specific laws, and explore alternative ways to protect proprietary information, such as non-disclosure agreements (NDAs) and confidentiality clauses. Legal guidance and a proactive review of current contracts will be essential in navigating these changes.
Paid family and medical leave
Another major shift in labor law for 2025 involves paid family and medical leave (PFML) in the US. While several states, including New Jersey, New York, and California, have already implemented paid family leave programs, 2025 will see an expansion of these programs across more states and potentially at the federal level.
This change will require employers to provide paid leave for employees dealing with their own medical conditions, family caregiving, or the birth or adoption of a child. Many companies are already grappling with the financial and operational implications of offering paid family leave, and this will become even more critical in 2025 as more states roll out these programs in line with these shifts. Employers will need to assess their existing leave policies and adjust to meet the new requirements.
Having clear policies in place and communicating those policies effectively to employees to maintain transparency will be key for employers to ensure smooth implementation and avoid any legal risks.
Worker classification and gig economy regulations
Gig economy continues to grow in the US, and with it, the legal complexities around worker classification. This year, employers will see continued pressure to define whether gig workers, contractors, or freelancers should be classified as employees with rights to benefits, including healthcare, paid leave, and retirement plans.
Several states have already introduced new rules on worker classification, particularly California with its AB5 law, which aims to tighten the criteria for classifying workers as independent contractors. Similar laws are expected to spread into other states in later this year.
For employers, this means re-evaluating their relationships with gig workers and contractors. Companies will need to determine whether current contractors should be reclassified as employees, which could lead to an increase in costs related to benefits and tax obligations. Employers will need to work closely with their legal teams to ensure that they remain compliant with these evolving laws.
How can employers prepare for change?
Preparing for these labor law changes will require a multi-faceted approach, if your organisation isn’t already in the midst of transformation. Here are a few steps employers can take:
Internal audits and policy updates
Employers need to conduct internal audits of their current policies and practices, particularly around pay equity, non-compete agreements, and paid leave. This will help identify areas that need adjustment to comply with emerging laws. Updating employee handbooks, contracts, and compensation structures will be crucial.
Legal and HR expertise
Employers must ensure their HR and legal teams stay up to date with the latest labour laws. Access to expert tools, such as an HR Expert tool, and having a dedicated Employee Relations (ER) manager are valuable resources for maintaining compliance. Increasing collaboration with legal teams and advisory services can also help businesses stay ahead of regulatory changes.
Communication and training
Employers also need to focus on clear communication with their employees about any policy changes. This includes cascading information about new labor law requirements to all levels of the organization and maintaining consistent communication, conducting training for managers, and ensuring employees understand their rights under the new regulations.
Invest in technology and tools
As labor laws become more complex, HR technology and tools will play an increasingly important role in managing compliance. Implementing software that tracks employee classifications, pay history, and leave usage can simplify the process and reduce the risk of errors.
Looking ahead
As we move further into 2025 will require employers to stay proactive in adapting their policies and practices. Beyond compliance, these changes present an opportunity to build a more transparent, equitable, and supportive workplace. Strengthening internal processes, investing in the right tools, and maintaining clear communication with employees will be essential in navigating the shifting regulatory landscape. Employers that take a forward-thinking approach – aligning legal requirements with a strong employee value proposition – will be best positioned to attract and retain top talent in an increasingly competitive market.
