With President-elect Donald Trump set to assume office on January 20, 2025, U.S. businesses are preparing for potential shifts in federal policies and regulations, including employment laws, that could impact various aspects of operations and compliance.
While the administration cannot implement changes until after inauguration, its stated priorities signal potential regulatory updates that could impact employers across the United States. Understanding these anticipated changes is critical for compliance and effective workforce planning.
Anticipated 2025 Changes to the Fair Labor Standards Act (FLSA) in the U.S.
If you employ workers in the U.S., the FLSA establishes essential guidelines for managing wages, overtime, and employee classifications, ensuring that employees are fairly compensated, particularly for overtime work. Under the new administration, the FLSA is expected to undergo key revisions, with significant focus on overtime eligibility and minimum wage regulations.
Overtime Rules
A recent federal court ruling in Texas has put the Biden administration’s proposed increase to the salary threshold for exempt employees on hold. The 2024 Rule, which aimed to raise the threshold to $58,656 annually as of January 1, 2025, was vacated by the court, keeping the existing 2019 threshold of $35,568 in place.
Employers must continue complying with the 2019 FLSA regulations, which remain the current law, ensuring that exempt employee classifications align with this salary threshold and duties tests.While this decision halts the immediate implementation of the 2024 Rule, further legal action or regulatory developments could change this status.
The new administration is expected to maintain or potentially simplify the threshold requirements, possibly proposing new regulations to formalize a more employer-friendly framework.
Independent Contractors in the U.S.
Employee classification laws in North America have undergone significant changes over the past several years, and further shifts are anticipated under a second Trump administration in the U.S.. Early in 2024, the Department of Labor (DOL) replaced the Trump-era independent contractor rule, which emphasized the control test, with a new framework.
For reference, the control test evaluates whether a worker operates independently or is subject to significant direction and control by the employer. The new framework introduced by the DOL focuses instead on whether a worker is economically dependent on the employer (and thus an employee) or in business for themselves (thus an independent contractor) by examining a non-exhaustive list of six factors.
It is likely that the new administration will seek to simplify the classification process. This could involve revisiting the control test, reducing barriers for businesses relying on gig and contract labor. However, with evolving standards and legal challenges, this remains a complex area.
Accordingly, employers are strongly advised to seek guidance to ensure their worker classifications comply with the latest regulations and avoid potential liabilities as the legal landscape continues to shift.
Minimum Wage: While broad federal increases to $15.00 per hour may not be pursued, industry-specific adjustments are anticipated, particularly affecting lower-wage sectors like retail, hospitality, and food service, where wages are traditionally lower.
Compliance: Enforcement of wage-and-hour laws could shift toward a lighter, more business-friendly approach, similar to trends during the previous Trump administration. This may involve fewer audits, investigations, and penalties from agencies like the Department of Labor (DOL), aligning with an overall emphasis on deregulation. However, employers should not become complacent; accurate timekeeping, proper classification of employees, and adherence to overtime rules will remain critical to avoiding costly penalties.
New U.S. Immigration Policies
Immigration reform is expected to take center stage, with the incoming administration emphasizing stricter oversight of employment-based visa programs.
H-1B and Employment Visas
The H-1B visa program is likely to undergo significant reforms, including stricter definitions of "specialty occupations," enhanced oversight of employer-employee relationships, and increased wage requirements.
These changes, coupled with greater scrutiny of employer sponsorships, could make it more challenging for businesses to hire skilled foreign workers, particularly in technology, healthcare, and engineering sectors. Employers may also encounter higher rates of Requests for Evidence (RFEs) and petition denials, adding complexity and costs to the hiring process.
Additionally, potential changes to the lottery system favoring higher-paid roles may disadvantage entry-level positions. Businesses should proactively review job descriptions, evaluate salaries, and file petitions early to adapt to these evolving requirements.
Optional Practical Training (OPT)
Proposed restrictions may reduce OPT authorization for international students and increase penalties for visa status violations, limiting opportunities for graduates transitioning to H-1B roles. Employers should prepare for stricter audits and compliance enforcement.
Dependent Visas
Dependent visas, such as H-4 visas for spouses of H-1B holders, may also be restricted. These changes could impact the mobility of international employees and their families.
E-Verify
The use of E-Verify, an electronic employment eligibility verification system, is likely to become mandatory for all employers. This would require businesses to verify the work authorization of every new hire, increasing administrative burdens.
Employers should consider alternative recruitment strategies, such as building domestic talent pipelines or exploring remote work options, to mitigate potential challenges.
Anticipated Changes to Key Regulatory Bodies
In addition to the changes outlined above, employers should also prepare for potential adjustments to other key regulatory bodies based on actions taken during the previous Trump administration and proposals outlined during the campaign. The National Labor Relations Board (NLRB) may see shifts in its approach to union-related activities and employer rights, while the Equal Employment Opportunity Commission (EEOC) could introduce updates to discrimination and workplace equity enforcement.
Similarly, the Occupational Safety and Health Administration (OSHA) may adjust workplace safety standards and compliance requirements. Employers are encouraged to monitor these developments closely and evaluate their policies to ensure they remain compliant with evolving regulations.
Preparing for the Future
Proactively adapting to anticipated policy changes will position your business for long-term compliance and stability. Our team will continue to provide insights and support as these regulatory changes develop. By preparing now, your business can minimize disruption and maintain compliance in an evolving legal landscape.
Reprinted with permission from the January 6th, 2025 issue of law.com. © 2025 ALM Media Properties, LLC. Further duplication without permission is prohibited. All rights reserved.