United States: Employment – 2024 Highlights and 2025 Outlook

In 2024, the federal government implemented a number of employee-friendly laws and regulations, some of which have been scaled back or successfully challenged in court. In 2025, we anticipate that the Trump Administration will rescind some of these rules and be less active in enforcing affirmative or new obligations on employers. This article outlines some of the key highlights from 2024 and looks ahead to 2025.

2024: HIGHLIGHTS

Overtime Rule Expanded and Then Cut Back

In 2024, the US Department of Labor updated the “salary test,” which, along with the “duties test,” is used to determine if an employee falls within one of the “bona fide executive, administrative or professional” exemptions to the overtime rules under Fair Labor Standards Act. The salary threshold increased from $35,658 to $43,888 annually effective July, 1, 2024. The salary threshold was set to increase again to $58,656 effective January 1, 2025. However, on November 15, 2024, a federal judge in Texas struck down this rule, finding that the policy went beyond the US Department of Labor’s authority.

Many employers increased the salaries of workers as of July 1, 2024, in order to comply with the new rule so that employees would remain exempt. Those employers are now permitted to roll back those salary increases but doing so can be tricky for employers for reasons such as employee morale. Employers also need to consider state law salary threshold requirements, which exceed those of federal law in some states. The US Department of Labor has the option to appeal the Texas court’s ruling. Such an appeal would be heard by the US Court of Appeals for the Fifth Circuit, which has a decidedly conservative majority of judges. However, even if an appeal is filed now, it is possible that the Department of Labor may not pursue its defense of the rule once President-elect Trump takes office in January 2025.

Federal and State Scrutiny of Non-Competes

In April 2024, the US Federal Trade Commission (FTC) issued its “final rule” prohibiting virtually all employment-based non-compete agreements. The final rule, which was scheduled to take effect in early September 2024, provided for limited exceptions to the ban on non-competes, such as for non-competes in connection with the bona fide sale of a person’s share of a business and certain non-compete agreements with a narrowly defined class of “senior executives” who earned at least $151,164 annually and were in a policymaking position. Following legal challenges filed in several different courts, a federal judge in Texas issued a nationwide injunction in late August that blocked implementation of the final rule. The FTC has appealed the ruling to the US Court of Appeals for the Fifth Circuit, although the appeal may well be abandoned once President-elect Trump takes office. We expect that he will replace current FTC Chairperson Lina Kahn, who spearheaded the FTC’s effort to ban non-competes.

State legislatures were active in the past year evaluating bills prohibiting or otherwise limiting the use of non-compete agreements. During the past year, the governors of three states—Maine, New York, and Rhode Island—vetoed bills that generally would have banned employers from using non-compete agreements with their employees. Yet other states have continued to impose additional restrictions on non-competes, such as imposing minimum salary thresholds so that low-wage workers or other employees earning below a certain threshold cannot be precluded from working for competitors. Proposed restrictions on non-competes in certain industries, such as health care, are becoming more common.

EEOC Guidance on Pregnant Workers Fairness Act

The Pregnant Workers Fairness Act (PWFA) expands on existing US discrimination law by providing protections for pregnant employees and applicants, including requiring an employer to provide accommodations to pregnant employees and applicants. On April 15, 2024, the US Equal Employment Opportunity Commission (EEOC) published final regulations and interpretive guidance implementing the PWFA, which became effective June 18, 2024. According to the EEOC, accommodations can be sought for the temporary inability to perform an essential job function as long as the employee is expected to be able to perform the essential function at a to-be-determined time in the future. This is a difference from the accommodations provided for disabled employees under the Americans with Disabilities Act (ADA); indeed, the ADA generally does not recognize pregnancy as a disability or a condition for which an employee is eligible for a reasonable accommodation. Under the PWFA and its regulations, however, a medical condition that qualifies an employee for an accommodation does not have to be caused “solely, originally, or substantially by pregnancy and childbirth” and can include a whole range of conditions such as lactation, vomiting, abortion, and pre-eclampsia. According to the EEOC’s regulations and interpretive guidance, possible accommodations include changing the position of equipment, devices, or workstations; temporary reassignment; leave for health care appointments; providing reserved parking spaces; and telework.

2025: OUTLOOK

Overturn of Captive Audience Meeting Ban

The National Labor Relations Board (NLRB), the federal agency that oversees and enforces laws related to unions and the rights of workers to join unions, has issued more and more employee-friendly rulings in the past year. For example, in November 2024, the NLRB voted to overturn a 1948 holding permitting employers to hold mandatory “captive audience” meetings in which an employer argues against unionization. This ruling follows on NLRB General Counsel Jennifer Abruzzo’s efforts to limit an employer’s ability to communicate its anti-union beliefs. Ten states, including, most recently, Illinois, have passed laws banning captive audience meetings, and more such laws are expected to pass in 2025. However, on the federal level, President-elect Trump is likely to replace Abruzzo with a more conservative and employer-friendly NLRB general counsel. Further, 2025 may bring challenges to the related state laws based on the argument that this topic is the exclusive realm of federal labor law, which the states do not have authority to regulate, or based on other grounds.

Increase of Immigration “Dawn Raids”

With the new administration, we anticipate that surprise—or “dawn”—raids of companies suspected of employing unauthorized immigrant workers will return early in 2025, as already promised by former acting Immigration and Customs Enforcement director and Trump “border czar” pick Tom Homan. Employers may also see an increase in I-9 audits. Both dawn raids and I-9 audits can be time-consuming and disruptive for employers. Industries that employ a significant share of immigrant labor—such as hospitality, construction, food processing, and manufacturing—are likely targets of dawn raids and I-9 audits. Performing an internal review to ensure that all I-9 forms and supporting documents are in good order is one way for employers to be prepared.

Changes in federal labor policy are common whenever the administration changes and are particularly expected when moving from one political party to the other. President-elect Trump has vowed to shake up the way the federal government operates. How quickly significant changes may occur in 2025 is still unclear, but US employers should be mindful that changes are on the way and should consult with their employment counsel about ways in which to minimize potential disruptions to their business operations.

Back to United States: Employment & Benefits – 2024 Highlights and 2025 Outlook