Employment Regulatory Recap: 2025

As 2026 approaches, many employers have been familiarizing themselves with new laws addressing everything from protected leaves to required employee notices and benefits offerings. Employers should also be aware of regulatory updates, which further clarify or add to their obligations under the law and can carry penalties for noncompliance. While some regulations simply codify enacted legislation into the state’s administrative code, federal, state, and even local agencies are authorized to make significant changes to employment-related rules. As the year concludes, there are regulatory updates, both final and pending, on which employers should educate themselves for 2025 and beyond. 

Note that this recap provides a summary of notable generally applicable labor and employment regulations that were enacted or proposed in 2025, and is not meant to be all-inclusive. Employers with questions about specific regulations or their obligations under a new regulation should consult with counsel.

Federal

Federal government agencies have broad powers to reshape or entirely rescind regulations, which can shift employer obligations nationwide, sometimes with little notice. Since January 2025, the Trump administration has molded the federal regulatory landscape to its legislative and policy priorities, with a particular focus on active deregulation. The president and administration officials have made it a policy goal to see fewer regulations at the federal level and directed, under Executive Order 14192 (Jan. 31, 2025), that for every one regulation promulgated, ten regulations be cut.

Immigration

On October 30, 2025, the Department of Homeland Security published an interim final rule ending the automatic extension of Employment Authorization Documents (EADs) for noncitizens who filed timely EAD renewal applications. Prior to this rule, noncitizen applicants would receive an automatic extension of up to 540 days from their EAD expiration date, allowing them to continue to work while their application was processed. In issuing this interim final rule, DHS immediately ended the practice of granting these automatic renewals, which had been in place since January 2017, and applicants that file on or after October 30, 2025, will not receive an automatic extension. 

Proposed: Qualified Tips for the “No Tax on Tips” Provisions of the One Big Beautiful Bill Act

As H.R.1, the “One Big Beautiful Bill Act” was signed into law in July 2025, one of its key provisions was a tax deduction for “qualified tips,” applicable only to individuals working in occupations that customarily received tips on or before December 31, 2024.¹ The law itself does not define which occupations qualify for this tax deduction. In September 2025, the Department of the Treasury proposed regulations identifying which occupations are considered to have customarily received tips on or before this date, including recognizable occupations like servers, bartenders, taxi drivers, rideshare drivers, and food delivery drivers, as well as lesser-known occupation categories, like bellhops and casino dealers. 

In addition, the proposed rule provides definitions of “qualified tips” for purposes of this above-the-line deduction. On October 23, 2025, a public hearing was held on the proposed rulemaking, and industry groups and other interested organizations made their concerns known for the rules as they are currently written. 

Proposed: Companionship Exemption

On July 2, 2025, the Department of Labor proposed a rule that would revert back to a 1975 rule that exempted domestic employees that provided “companionship services” from coverage under the Fair Labor Standard Act’s minimum wage and overtime requirements. The Department contends that the definition of “companion services” is too narrow, and third-party employers are prevented from claiming exemptions. Further, the Department asserts that the use of companionship services is discouraged as the Act’s interpretation is read now, therefore making the services more expensive. The public comment period ended on September 2, 2025, and the Department is currently still reviewing comment submissions. 

Proposed: Heat Standard

Most of the previous administration’s proposed occupational health and safety rules will either linger in regulatory limbo or will be rescinded. However, the current administration has continued the rulemaking process for the Occupational Health and Safety Agency’s (OSHA) Health Injury and Illness Prevention in Outdoor and Indoor Work Settings Standard, initially proposed on August 30, 2024 under the Biden administration. The proposed rule would require all employers to create a heat safety plan to assess heat hazards in the workplace, require that cool or shaded areas be available for rest breaks, and provide training to employees and supervisory workers on the safety standard. OSHA held an informal public hearing from June 16th through July 2, 2025, and the post-hearing comment period recently ended on October 30, 2025. The agency received thousands of comments from the public and will now review the comments for concerns and feedback. More information related to the standard and the process can be found here. 

State

One area of law in which regulations play an outsized role at the state level is in the implementation of certain leave laws. As a growing number of states enact laws allowing employees to take paid sick, family caretaking, or medical leave, many of the laws permit specific details required for their implementation to be put forward through regulations. In 2025, as new paid leave programs were rolled out, regulations were critical to compliant administration of these laws. For example, Alaska’s Department of Labor & Workforce Development issued rules clarifying how employers must count employees for purposes of business size, how employers may permissibly frontload sick leave to employees at the start of a benefit year, and what constitutes an employee’s “regular rate of pay” during sick leave, among other provisions. In anticipation of Minnesota’s paid leave law going into effect on January 1, 2026, the state issued final regulations which specified notice requirements for beginning, extending, and returning from leave. Notably, Delaware issued regulations on December 1, 2025, clarifying that an “application year” for the state’s new paid family and medical leave program must be measured from the date that an employee first takes any leave under the program. These regulations, issued only a month before the program was set to take effect, required employers using other 12-month periods as application years to update their policies. Looking ahead, Maryland has reissued proposed rules to implement the Maryland Family and Medical Leave Program. Employer and employee contributions are set to begin on January 1, 2027, though this date may be delayed by the state to no later than January 3, 2028. The proposed regulations would clarify coverage and contribution requirements under the program, revise dispute resolution processes, and establish the state governmental division tasked with administering the program. 

Beyond leave administration, state agencies were busy in 2025 updating other requirements for employers. In September, California’s Privacy Protection Agency issued long-awaited regulations addressing liability for employers using artificial intelligence-based tools and related automated decision-making technologies, and the state’s Civil Rights Department finalized regulations prohibiting employers from using automated tools that screen applicants or employees based on a protected class. 

Iowa issued numerous regulations in the past year, redefining certain aspects of minimum wage coverage and tip income determination, as well as record retention requirements and wage violation investigation procedures. Moreover, Rhode Island updated its wage and hour rules, removing employers’ ability to petition for a waiver from the state’s holiday and Sunday premium pay obligations and redefines “retail business” to clarify how overtime rules apply.

Looking ahead, other regulations proposed at the state level could create additional burdens for employers in the new year. Colorado has proposed rules that would redefine certain prohibited occupations for minor employees, as well as further restrict the subminimum wage for minors. Proposed regulations in New Mexico would require employers in the state to implement heat illness and injury prevention measures at worksites. Louisiana has proposed a rule requiring workplace safety plan corrections or revisions to a workplace safety plan to be submitted within 30 days of an initial safety audit, among other rules that have yet to be adopted.

Local

Local regulations, while less prevalent than those at the federal and state levels, nevertheless can create additional burdens for employers. Notably, New York City’s Department of Consumer and Worker Protection adopted rules in July 2025 to incorporate the state’s prenatal personal leave without this provision first having passed the city council, and in doing so, created local requirements more stringent than those at the state level. For example, these citywide rules allow employers to require documentation of an employee’s use of prenatal leave and require reasonable notice for certain absences, as well as create a substantial reporting requirement for employees’ prenatal leave balance at each pay period. In response, the New York City Council eventually adopted Ordinance 0780-2024 on October 25, 2025, to incorporate the requirements promulgated by New York City regulation. 

New York City frequently adopts administrative regulations implementing its various employment-related ordinances, but it is not the only local jurisdiction that is active. Many cities with more complex employment-related ordinances tend to enact regulations to clarify compliance obligations. For example, Los Angeles recently amended its rules implementing the city’s Freelance Worker Protections Ordinance, and St. Paul, Minnesota adopted amended rules that implement the city’s wage theft, minimum wage, and paid sick leave ordinances. 

Industry employers, especially those employing app-based workers, should also be cognizant of regulatory rulemaking on the local level. For example, New York City issued a final rule to increase pay rates and how utilization rates are calculated, although this rule is being challenged. Further, Seattle adopted final rules to clarify coverage calculations to determine eligibility for deactivation rights under the App-Based Worker Deactivation Ordinance. 

Conclusion

Why all the regulatory activity? Oftentimes, the local jurisdictions or state agencies are able to act much faster than their slower state legislative counterparts. Therefore, we have to keep a close eye on local jurisdictions and regulatory agencies that are able to issue high-impact and restrictive regulations on a much faster timeline than the state or federal government. 

The regulations issued throughout 2025 applied to a wide range of jurisdictions and subject matters. Employers should consider seeking assistance of counsel in staying up to date with regulatory changes and their associated compliance requirements.