As 2025 winds down, employers are closing out a year marked by sweeping legal shifts, intensified federal scrutiny, and a steady stream of state and local developments. To help your organization prepare for what’s ahead, we’ve transformed 2025’s key employment law takeaways into a Top 10 Countdown.
(1) Raising the Bar:Prepare for Minimum Wage and Exemption Threshold Increases
Federal
- Minimum wage: $7.25 per hour
- Exemption threshold: $684 per week ($35,568 per year)
New York City, Long Island, and Westchester County
- Minimum wage: $17.00 per hour
- Exemption threshold: $1,275.50 per week ($66,300/year)
Rest of New York
- Minimum wage: $16.00 per hour
- Exemption threshold: $1,199.10 per week ($62,353.20/year)
New Jersey
- Minimum wage: $15.92 per hour
- Exemption threshold: Follows the federal threshold, but employers must still satisfy the state-specific duties requirements.
California
- Minimum wage: $16.90 per hour
- Exemption threshold: $70,304 per year
*Wage increases may differ based on locality and industry.
(2) Break Time Ballad: Update Leave, Sick-Time, and PTO Policies
Expanded sick and safe leave requirements continue to roll out. Employers should confirm that policies and systems match local mandates.
New York State
- Paid Prenatal Leave: Effective as of January 2025, employers were required to provide 20 hours of paid prenatal leave per year as a stand-alone leave benefit for health care services related to an employee’s pregnancy. For details, see HERE.
New York City
- Paid Prenatal Leave: Effective as of July 2025, amendments to the city’s Earned Safe and Sick Time Act (ESSTA) incorporated the state’s paid prenatal leave requirements and imposed additional obligations, including posting and policy requirements, additional paid leave, and expanded reasons for leave.
- Expanded ESSTA Requirements: Effective February 22, 2026, amendments to the ESSTA incorporate additional qualifying reasons for leave, introduce new leave entitlements, and transfer schedule change obligations from the city’s Temporary Schedule Change Act to the ESSTA. For details, see HERE.
California
- Violence Victim Leave: Effective as of January 2025, AB2499 expands existing workplace protections for victims of violence by broadening eligibility and qualifying reasons for leave, allowing employees to use paid time off during leave, and expanding eligibility for reasonable accommodations. For details, see HERE.
- Expanded Violence Victim Leave: Effective January 1, 2026, AB406 expands protections for victims of violence by allowing employees to use leave under the state’s paid and unpaid leave laws if they, or a family member, are a victim of certain crimes and are attending judicial proceedings related to the crime. For details, see HERE.
- COVID Right-of-Recall: AB858 extends COVID right-of-recall provisions until January 1, 2027. For details, see HERE.
(3) Coast-to-Coast Compliance Jam: Prepare for Heightened Multi-State Pay Law Complexity
Pay data reporting, wage and hour notice requirements, scheduling laws, and safe-leave mandates remain active. Multi-state employers should review jurisdictional differences to maintain compliance.
New York City
- Pay Data Reporting: A pair of newly enacted bills will soon require certain employers to file annual pay data reports, which will be used for citywide pay equity studies. For details, see HERE.
New Jersey
- Pay Transparency Law: Effective as of June 2025, New Jersey’s pay transparency law requires covered employers to disclose in each job posting or transfer opportunity the wage or salary range, and a general description of benefits and other compensation; and to reasonably notify certain employees of promotional opportunities. For details, see HERE.
- Proposed Pay Transparency Regulations: In September 2025, the Department of Labor and Workforce Development (NJDOL) issued proposed regulations to clarify employer coverage, revise disclosure requirements, define “reasonable efforts” for internal postings, and assign liability for third-party postings. The comment period ended in November.
California
- Equal Pay Act updates: SB642 updates the Equal Pay Act to revise the definition of “pay scale”; expand the definition of “wages” and “wage rates”; extend the time to file a pay equity claim; and increase the time period for which an employee may recover lost wages. For details, see HERE.
- Pay Data Reporting updates:SB464 requires employers to store demographic payroll data separately from employees’ personnel records. Effective January 1, 2027, the number of job categories for reporting will increase from 10 to 23. For details, see HERE.
*For our a nationwide roundup of state and local pay transparency laws, see HERE.
(4) Boundaries Unplugged: Monitor Non-Compete and Restrictive Covenant Developments
With the FTC’s final non-compete rule appeal dropped, employers should reevaluate restrictive covenant agreements.
Federal
- In September 2025, the Federal Trade Commission announced it would no longer pursue broad rulemaking authority regarding non-compete agreements but would continue pursuing enforcement action against employers using overly broad agreements on a case-by-case basis. For details, see HERE.
New York
- Pending in the legislature, S4641 would prohibit employers from entering into non-compete agreements with workers earning less than $500,000 annually, and certain health-related professionals. For details, see HERE.
New Jersey
- Pending in the legislature, S4385/A5708 would prohibit employers from seeking, requiring, demanding, or accepting a non-compete clause from any worker who is not a “senior executive” earning at least $151,164 annually. For details, see HERE.
*For a roundup of nationwide restrictive covenant updates, see HERE.
(5) Contractor Classification Remix: Prepare for Shifting Contractor and Independent Contractor Classification Rules
As U.S. Department of Labor (DOL) and Federal Trade Commission (FTC) enforcement priorities evolve, employers should review gig, temp, and contractor relationships to mitigate potential misclassification exposure.
Federal
- In May 2025, the DOL announced it will no longer apply the complex 2024 Biden-era “totality of the circumstances” independent contractor classification rule and will instead revert to the less stringent six-factor “economic realities” test, which emphasizes two core factors: (1) the nature and degree of the employer’s control; and (2) the worker’s opportunity for profit and loss. For details, see HERE.
New Jersey
- In May 2025, the New Jersey Department of Labor and Workforce Development (NJDOL) proposed new rules to codify its interpretation of the state’s ABC test. While the prongs remain the same, the proposed rules provide detailed guidelines to evaluate each prong, including factors used by the New Jersey Supreme Court. For details, see HERE.
(6) Staying in Tune: Tracking Labor Relations Developments
Labor relations enforcement continues to evolve at both the federal and state levels, with agencies recalibrating priorities and states expanding their role in traditionally federal terrain. Recent developments reflect a mix of rollbacks, expansions of authority, and heightened restrictions on employer communications—requiring employers to stay in tune with shifting jurisdictional boundaries and compliance expectations in 2026.
Federal
- In February 2025, National Labor Relations Board (NLRB) issued a memo rescinding several prior memos, including GC 23-02 on electronic monitoring; GC 23-05 on severance agreements; GC 23-08 and GC 25-01 on non-compete agreements and “stay-or-pay” provisions; and GC 21-06 and GC 21-07 addressing remedies to be sought. For details, see HERE.
New York
- S8034A—currently blocked by a preliminary injunction—expands the authority of New York’s Public Employment Relations Board by allowing it to step in if the NLRB does not successfully assert jurisdiction. For details, see HERE.
New Jersey
- Effective as of December 2, 2025, A4429 amends the state’s “captive audience” law by broadening prohibitions on meeting topics and clarifying exemptions under the law. For details, see HERE.
California
- AB288 expands the authority of California’s Public Employment Relations Board by allowing it to hear certain unfair labor practice cases in the private sector, and take actions historically falling under the jurisdiction of the NLRB. For details, see HERE.
(7) Bot Check Boogie: Audit AI and Automated Hiring Tools
As the adoption of generative and automated decision-making tools accelerates, employers should implement clear, comprehensive AI policies that set expectations for safe, compliant, and responsible use for employees as well as job applicants. Additionally, several states are advancing new regulations governing automated decision-making tools. Employers using AI should evaluate transparency, notice, consent, and bias-testing requirements.
Federal
- Issued December 11, 2025, an EO entitled Ensuring a National Policy Framework for Artificial Intelligence seeks to establish a uniform national standard for artificial intelligence (AI) regulation by preempting state-level AI laws and regulations, and directs federal agencies to restrict funding to states with “onerous” AI laws.
New York
- Pending in the legislature, S185A would restrict the use of electronic monitoring or automated employment decision tools by prohibiting primary reliance on the tools to make employment decisions; requiring pre-use notice to affected individuals; mandating annual impact assessments; and granting employees access to data used to make employment decisions. For details, see HERE.
- Pending in the legislature, A768 would prevent the use of AI algorithms to discriminate against protected classes by requiring independent bias audits, implementation of a risk management policy and program, and notice to affected individuals regarding the use of the tools.
New Jersey
- In January 2025, New Jersey’s Division on Civil Rights issued guidance clarifying that the New Jersey Law Against Discrimination (LAD) applies to algorithmic discrimination (AD) in the same way it applies to other discriminatory conduct, and that covered entities engaging in AD—even if unintentionally—may be held liable for violating the LAD. For details, see HERE.
California
- Effective as of October 2025, the California Civil Rights Council’s AI regulations clarify the application of the Fair Employment and Housing Act’s (FEHA) anti-discrimination laws to the use of AI and automated-decisions systems (ADS) in employment decisions, and prohibit the use of ADS or selection criteria in a manner that discriminates against or adversely impacts applicants or employees based on FEHA-protected categories. For details, see HERE.
(8) Workplace Harmony Track: Reassess Harassment, Discrimination, Accommodation, and Investigation Policies
With increased litigation around DEI initiatives, discipline, and accommodations, employers should reinforce documentation practices across hiring, promotion, compensation, and termination decisions. Updates to religious-accommodation standards, gender-identity protections, and complaint procedures warrant a full policy and training review to ensure alignment with current law.
Federal
- Religious Accommodations: The OPM issued a memo to federal employers providing “guidance concerning the roles of leave and workforce flexibilities . . . as religious accommodations and the responsibilities of supervisors in facilitating these arrangements.”For details, see July 16 entry HERE.
- Religious Expression: The OPM issued a memo to federal agencies providing guidance on the right to religious expression in the workplace, and emphasizing that agencies must allow employees “to engage in private religious expression in work areas to the same extent that they may engage in nonreligious private expression.” For details, see July 28 entry HERE.
- Religious Liberty: The DOJ released an advisory memo on religious liberty protections for federal employees under Title VII, stating that “situational telework can and should be used as a form of religious accommodation.” For details, see September 18 entry HERE.
- State of Texas and The Heritage Foundation v. EEOC, et al.: U.S. District Judge Matthew J. Kacsmaryk issued an order vacating portions of the EEOC’s April 2024 Enforcement Guidance on Harassment in the Workplace related to LGBTQ+ protections. For details, see May 15 entry HERE.
Employers should continue following state and local laws that prohibit discrimination based on sexual orientation and gender identity, including the California Fair Employment and Housing Act, New Jersey Law Against Discrimination, New York State Human Rights Law, and New York City Human Rights Law. These and other trends and tips in the world of investigations are examined each month in our new periodical, Investigations Insights.
(9) DEI Deep Cut: Review and Revise DEI Programs—the Year’s Biggest Compliance Story
Heightened scrutiny of corporate DEI efforts requires employers to evaluate all DEI, mentorship, promotion, hiring, recruiting, and performance management programs to ensure compliance with federal, state and local law.
Administrative Action
- EO14151: Directs the federal government to terminate DEI programs, offices, policies, mandates, and related grants or contracts across federal agencies.
- EO14168: Rejects the concept of “gender ideology,” declares that only two sexes exist (male and female), and directs federal agencies to interpret and enforce laws accordingly.
- EO14173: Directs federal agencies to take “appropriate measures” to end “illegal discrimination and preferences, including DEI” in the private sector.
- EO14281: Seeks to eliminate the validity of disparate impact liability under Title VII and other federal laws.
Agency Guidance
- EEOC: What To Do If You Experience Discrimination Related to DEI at Work clarifies when DEI policies and practices may be unlawful under Title VII. For details, see HERE.
- EEOC: What You Should Know About DEI-Related Discrimination at Work describes the application of Title VII to DEI initiatives. For details, see HERE.
- EEOC: Discrimination Against American Workers Is Against The Law emphasizes that Title VII protects all individuals—including Americans—from national origin-based discrimination. For details, see HERE.
- U.S. Department of Justice: Guidance for Recipients of Federal Funding Regarding Unlawful Discrimination outlines “unlawful discriminatory policies and practices” that could “result in revocation of grant funding” and “best practices” to avoid “unlawful discrimination.” For details, see July 29 entry HERE.
Judicial Decisions
- National Association of Diversity Officers in Higher Education, et al. v. Trump: The Fourth Circuit stayed an earlier preliminary injunction, allowing the government to once again enforce key components of EOs 14151 and 14173. For details, see HERE.
- Ames v. Ohio Department of Youth Services: The U.S. Supreme Court eliminated the “background circumstances” rule, holding that “Title VII does not impose . . . a heightened standard on majority-group plaintiffs.” For details, see June 5 entry HERE.
- Trump, et al. v. CASA, Inc., et al.: The U.S. Supreme Court held that federal district courts likely do not have the authority to issue nationwide injunctions to block EOs. For details, see June 27 entry HERE.
- Chicago Women in Trades v. Trump: U.S. District Judge Matthew F. Kennelly upheld an earlier nationwide preliminary injunction barring the DOL from enforcing EO14173’s certification provision. For details, see October 30 entry HERE.
States
- New York: Pending in the legislature and passed by both houses, S3398 codifies disparate impact liability under the New York State Human Rights Law. For details, see HERE.
- New Jersey: New Jersey’s Division on Civil Rights adopted rules that codify disparate impact liability under the NJLAD. The rules codify existing case law, provide examples of practices and policies that could violate NJLAD, and explain how disparate impact liability applies to the use of AI and other automated decision-making tools.
*For year-end highlights of Parts I to VIII of our timelines documenting attacks on DEI initiatives in the private sector, see HERE.
(10) Employer Rhapsody
With major changes dropping in the year ahead, reach out to NFC’s team to ensure your organization is ready to rock 2026! NFC’s practice groups offer a full lineup of services, including:
- Counseling: Drafts and reviews policies, practices, and agreements and provides ongoing advisory support throughout the year
- Litigation Defense: Defends employers against employment claims in federal and state courts, as well as in agency proceedings and in audits.
- Training & Development: Offers dynamic, attorney-led, interactive trainings designed to build better workplaces. See NFC’s training options.
- Workplace Investigations: Provides highly trained investigators to conduct workplace investigations; assists clients in building internal investigation groups; and provides advice and counsel to clints conducting internal investigations.
- Restrictive Covenants: Represents employers in litigation and counseling involving restrictive covenants and the protection of confidential information and trade secrets.
- DEI Legal Strategies: Conducts DEI legal risk audits and executive training focused on mitigating legal risk and developing effective, compliant initiatives to promote inclusion in the workplace.
If you have any questions related to the guidance or its impact on your organization, please reach out to the NFC Attorney with whom you typically work or call us at 973.665.9100 or 619.292.0515.