Labor & Employment Law Daily Wrap Up, EXPERT INSIGHTS—Key Employment Law Issues Employers Need to Watch in 2025, (Jan 17, 2025)

By S. McKinley Gray, III of Ward and Smith, P.A.

As the United States enters a new administration, changes in workplace regulations and enforcement priorities are on the horizon.

For employers, this means staying prepared for potential shifts in federal policies, heightened oversight, and new legislative initiatives. Whether you're navigating changes in wage laws, addressing pay transparency, or adapting to evolving labor relations, staying ahead is essential.

Partnering with a human resources attorney or a labor and employment law firm is more critical than ever to successfully manage these challenges. Below, we outline the key employment law issues employers should prioritize in 2025.

Overtime Pay

With the change in administration, workplace policies are expected to shift to reflect new leadership priorities. In November 2024, we reported on a federal judge in Texas striking down the U.S. Department of Labor’s (DOL) rule that significantly raised the minimum salary thresholds for executive, administrative, and professional employees.

The rule proposed two increases: the first, effective July 1, 2024, raised the threshold from $684 per week ($35,568 annually) to $844 per week ($43,888 annually). The second increase, scheduled for January 1, 2025, would have raised the threshold to $1,128 per week ($58,656 annually).

The court’s ruling vacated the entire rule, including the July 1 increase.

While the 2024 rule is unlikely to be revived, the Trump Administration could support a moderate increase above the current $684 weekly threshold.

This potential shift in overtime pay regulations is just one example of how workplace policies may evolve under the new administration. Another key area to watch is the classification of independent contractors, which has long been a focus of labor and employment law.

Independent Contractors

The 2021 Rule, issued under President Trump’s first term, simplified worker classification by emphasizing two primary factors: the degree of control over work and the worker's opportunity for profit or loss. If these core factors didn't provide a clear classification, additional considerations—such as the skill required, the permanence of the relationship, and whether the work was integral to the employer’s production—were applied. This pro-employer framework allowed businesses greater flexibility in classifying workers as independent contractors.

We previously detailed the 2024 rule, which reinstates the long-established economic reality test used by the DOL and courts. This test evaluates six factors:

1. The worker’s opportunity for profit or loss based on managerial skill

2. Investments made by both the worker and the employer

3. The permanence of the work relationship

4. The nature and degree of control exercised

5. The extent to which the work is integral to the employer’s business

6. The worker's skill and initiative

This shift reflects a return to a more traditional, worker-focused standard. Employers should monitor developments as policy priorities evolve under the new administration.

Non-Competes Ban

Another significant area of concern for employers is the regulation of non-compete agreements, which could see substantial changes under the new administration.

In October, we wrote on the Federal Trade Commission's appeal of a Texas District Court ruling that blocked its proposed nationwide ban on non-compete agreements. If implemented, the rule would:

1. Prohibit employers from creating or enforcing non-competes with all workers, including employees, independent contractors, volunteers, and others providing services.

2. Invalidate most existing non-competes, except for those involving senior executives.

3. Require employers to notify current and former workers (excluding senior executives) that their non-competes are no longer enforceable.

Now, with the rule likely stalled, appeals are being reviewed by the Fifth and Eleventh Circuits. In the meantime, employers should ensure their restrictive covenants align with evolving state laws in all jurisdictions where they operate.

Union Restrictions, Maybe?

While non-compete agreements remain in legal limbo, another area likely to face scrutiny under the new administration is union-related activities, as shifts in leadership at the National Labor Relations Board (NLRB) could significantly impact labor relations and worker protections.

President-elect Trump has a history of opposing unions, with his previous appointees to the National Labor Relations Board (NLRB) favoring employers. He has also publicly criticized the Protecting the Right to Organize Act (PRO Act). While the next General Counsel of the NLRB has not been named, recent decisions, including the February 2024 Home Depot USA, Inc. v. Morales case that we covered, could face reconsideration.

In that case, the NLRB ruled Home Depot violated the National Labor Relations Act (NLRA) by “constructively” terminating Antonio Morales. Morales refused to remove the initials “BLM” from his company-issued apron, which he used to express support for the Black Lives Matter movement.

The Board found that his actions qualified as protected concerted activity under Section 7 of the NLRA due to the context of his statement.

The Home Depot decision serves as a reminder to private employers about the limits of lawful workplace policies. Employers cannot prohibit employees from making public statements about workplace conditions, even through written expressions on company-provided apparel. This case highlights the importance of carefully reviewing dress codes and related personnel policies to ensure compliance with the NLRA.

As union-related policies face potential changes, another area likely to experience shifts under the new administration is Diversity, Equity, and Inclusion (DEI) initiatives, particularly in light of recent court rulings and evolving federal priorities.

More Rollback of DEI Initiatives

Last year, several major U.S. companies scaled back or eliminated their Diversity, Equity, and Inclusion (DEI) programs following the U.S. Supreme Court’s ruling that race-based considerations in college admissions are unconstitutional. Under President Trump, we could see the revival of a previous executive order that restricted federal contractors from implementing certain DEI initiatives. Additionally, the administration may roll back other executive orders designed to advance equal employment opportunities.

However, DEI initiatives, if implemented properly, still are important and should be considered a valuable tool to foster an inclusive workplace environment.

Staying Ahead of Employment Law Changes

As workplace regulations continue to evolve under the new administration, employers must remain proactive to ensure compliance and mitigate risks. Regularly reviewing and updating policies—such as wage and hour classifications, non-compete agreements, DEI initiatives, and workplace conduct guidelines—is essential to staying aligned with federal and state laws.

Employers should also monitor legal developments, especially in areas like worker classification, union-related activities, and restrictive covenants, and adapt accordingly. Implementing robust training programs for managers and human resources personnel can further help maintain compliance and address emerging legal requirements.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

S. McKinley Gray, III

Ward and Smith, P.A.

751 Corporate Center Drive

Suite 300

Raleigh, NC 27607

United States

Tel.: +1 919 277.9100

E-mail: LVHudson@wardandsmith.com

URL: www.wardandsmith.com/

© Mondaq Ltd., 2025 - Tel. +44 (0)20 8544 8300 - http://www.mondaq.com

Attorneys: S. McKinley Gray, III (Ward and Smith).

ExpertInsights: WageHour Overtime Exemptions EmployeeStatus ContractClaims Discrimination RaceDiscrimination SexDiscrimination DisabilityDiscrimination