Mid‑2025 Employment Law Update: The Trends Shaping Today’s Workforce

As we reach the midpoint of 2025, the employment law landscape is rapidly evolving. From sweeping changes at the federal level to bold moves by individual states, employers face an increasingly complex web of legal obligations. Staying informed and proactive has never been more critical to ensuring compliance, minimizing risk, and supporting a positive workplace culture.

Below, we break down the most significant trends shaping employment law this year and provide actionable insights for employers looking to stay ahead.

Shifting Priorities in Equal Employment Opportunity

Diversity, Equity, and Inclusion (DEI)

In January 2025, President Donald Trump issued an executive order targeting what he termed “illegal” DEI practices. This move directed federal agencies to scrutinize private-sector DEI policies that potentially violate civil rights laws. Following suit, the EEOC and DOJ released joint guidance outlining scenarios that could constitute discriminatory DEI practices—such as using protected traits as a basis for hiring or creating exclusive employee groups.

Employers should carefully review DEI initiatives to ensure they align with federal protections and do not inadvertently discriminate against any group. Updating hiring procedures, training programs, and internal groups can help mitigate legal risks while fostering an inclusive but compliant workplace.

Reverse Discrimination Claims

A landmark Supreme Court decision in June 2025 unified the standard for discrimination claims, including those brought by majority group members (e.g., white, male, or heterosexual employees). The ruling clarifies that all discrimination cases under Title VII are held to the same evidentiary standard, potentially opening the door to more reverse discrimination claims. Employers should remain vigilant in treating all employees equitably and documenting employment decisions.

Sexual Orientation and Gender Identity

The legal landscape around gender identity and sexual orientation protections continues to shift. While the Biden-era executive order prohibiting such discrimination has been revoked, the Supreme Court’s 2020 decision in Bostock v. Clayton County still stands, meaning discrimination based on sexual orientation and gender identity remains prohibited under federal law. Additionally, many states maintain their own protections. Employers should stay compliant with both federal and state requirements to avoid costly disputes.

Developments in Worker Classification and Wage Rules

Independent Contractor Status

The Department of Labor (DOL) introduced a final rule in 2024 reverting to a multifactor test for distinguishing employees from independent contractors under the Fair Labor Standards Act (FLSA). While legal challenges continue, the DOL’s recent guidance emphasizes the economic realities of the relationship rather than rigid criteria. Employers should carefully analyze worker roles and remain prepared for further changes.

The Tipped Worker Landscape

In 2024, the DOL officially rescinded the 80/20/30 Rule, which had limited the amount of non-tipped work that tipped employees could perform. Now, employers can pay a tipped wage for duties related to tipped occupations without strict time limits. However, employers must ensure that tipped employees are not performing entirely separate, non-tipped roles without proper compensation.

Evolving Employment Verification Requirements

Employers must now use the revised Form I-9, dated January 20, 2025, with updates to certain terminology and privacy notices. Changes also affect E-Verify procedures, especially in aligning terminology used across systems. Employers should ensure these updated forms are integrated into their hiring practices before the compliance deadlines to avoid penalties.

Rising State-Level Trends

Minimum Wage Increases

A strong push toward higher state minimum wages continues. By 2025, over 20 states have enacted or scheduled increases, with many targeting $15 per hour or more. Employers must regularly review pay rates in all jurisdictions where they operate to remain compliant and avoid potential penalties.

Noncompete Restrictions

Several states have moved to restrict or ban noncompete agreements, particularly for lower-wage workers or in certain professions. Employers should review existing agreements and consider alternatives, such as confidentiality clauses, to protect business interests without violating new legal standards.

Captive Audience Laws

Thirteen states now prohibit employers from mandating attendance at meetings centered on political or religious topics. Employers should revisit policies on workplace communications to respect employee rights and avoid potential conflicts.

Pay Transparency

A wave of new pay transparency laws continues to spread. These laws often require employers to include salary ranges in job postings and disclose compensation information to candidates and current employees. Even employers without operations in these states may be affected when hiring remote workers. Transparency not only supports compliance but can also enhance employer brand and foster trust.

Earned Wage Access

Earned wage access programs—allowing employees to access a portion of earned wages before payday—are gaining traction as a financial wellness tool. While not mandatory, offering such benefits can improve employee satisfaction and retention. Employers should remain aware of varying state regulations governing these programs.

Paid Family and Medical Leave

Paid family and medical leave laws continue to expand at the state level, offering employees wage replacement during periods of serious illness or caregiving. New programs have launched in several states this year, with more on the horizon. Employers should update leave policies and consider the potential benefits of offering paid leave even in states where it is not required, as a means to attract and retain talent.

Looking Ahead: Building a Resilient Compliance Strategy

The second half of 2025 promises continued regulatory changes and growing complexity in compliance obligations. Employers who proactively adapt will be better positioned to navigate risks and cultivate supportive, compliant workplaces.

Thrive PEO: Your Partner in Compliance and Beyond

At Thrive PEO, we empower organizations to stay ahead of evolving employment laws while focusing on what matters most—growing their businesses and caring for their people. Our dedicated team provides expert guidance, seamless HR solutions, and peace of mind in an increasingly complex regulatory environment. Partner with Thrive PEO to simplify compliance and build a thriving, future-ready workplace.

Ready to thrive? Contact us today at: (918) 794-2200.

Thrive PEO is a full-service Professional Employer Organization (PEO); and provides a customized suite of human resource solutions designed to help SMBs: lower employee benefit costs, increase productivity and profitability, and reduce employer liabilities and business risks. Services cover the entire employee lifecycle, and include: payroll and tax administration, employee benefits and related administration, HR and compliance, workers’ compensation insurance, retirement plans and more – all delivered via market-leading HRIS technology.