This year, legislators in New York and New Jersey and federal government agencies were busy enacting new legislation and issuing guidance affecting the employer-employee relationship. Employers are facing new and expanded obligations in many key areas, such as recruiting and hiring, compensation and classification of workers, anti-harassment and accommodation obligations, break and leave policies, and regulation of the use of artificial intelligence. Follow our top ten “to dos” to help your company stay off the naughty list this holiday season and ensure compliance in the new year.
1.) Ensure wages meet new thresholds.
Employers should review employee compensation to ensure that it meets new minimum wage requirements. The minimum wage will increase in New York and New Jersey effective January 1, 2025, as follows:
New Jersey
| Current Minimum Wage | Minimum Wage as of 1/1/2025 | |
| Most non-exempt employees | $15.13 | $15.49 |
| Seasonal & small employers | $13.73 | $14.53 |
| Agricultural workers | $12.81 | $13.40 |
| Direct care staff at long-term care facilities | $18.13 | $18.49 |
| Tipped workers | $5.26 | $5.62 |
New York
New York City, Long Island, & Westchester County
| Current Minimum Wage | Minimum Wage as of 1/1/2025 | |
| Minimum wage | $16.00 | $16.50 |
| Tipped food service workers (e.g., servers, bartenders, bussers, runners) | $10.65 | $11.00 |
| Service employees (i.e., employees, other than food service workers, who receive tips – like coat check attendants) | $13.35 | $13.75 |
| Home health aides | $18.55 | $19.10 |
Rest of New York State
| Current Minimum Wage | Minimum Wage as of 1/1/2025 | |
| Minimum wage | $15.00 | $15.50 |
| Tipped food service workers (e.g., servers, bartenders, bussers, runners) | $10.05 | $10.35 |
| Service employees (i.e., employees, other than food service workers, who receive tips – like coat check attendants) | $12.50 | $12.90 |
| Home health aides | $17.55 | $19.10 |
Employers also should review salary levels of exempt employees to ensure that they meet the current standards. As previously reported HERE, the Department of Labor (“DOL”)’s Final Rule increasing the salary threshold for Executive, Administrative, & Professional (“EAP”) exemptions from minimum wage and overtime under the Fair Labor Standards Act (“FLSA”) and the salary threshold for highly compensated employees was struck down by a Texas federal court. The Final Rule would have increased the salary thresholds for the exemptions on July 1, 2024, and again on January 1, 2025, but the court found that the DOL exceeded its rulemaking authority and vacated the Final Rule nationwide. After the court’s decision, salary thresholds reverted back to the levels set in 2019: the EAP exemption threshold is $684 per week (or $35,568 annually) and the highly compensated employee is $107,432 annually.
Importantly, the Texas court’s ruling does not affect state or local salary thresholds, such as those in New York and New York City, which are higher than the FLSA thresholds. On January 1, 2025, New York’s minimum salary threshold for the EAP exemption from overtime pay will increase to $1,237.50 per week or $64,350 per year for employees in New York City, Long Island, and Westchester and $1,161.65 per week or $60,405.80 per year for the rest of the state.
2.) Evaluate whether your company is properly classifying and contracting with independent contractors.
Employers may need to reconsider whether workers are properly classified as independent contractors in light of the DOL’s Final Rule which took effect on March 11, 2024. As discussed in our eAlert HERE, the Final Rule rescinded the Trump Administration’s 2021 rule – which considered only two “core factors” — and returned to the more stringent “economic realities test” under which six factors are evaluated in light of the totality of the circumstances: (1) opportunity for profit or loss depending on managerial skill; (2) investments by the worker and the potential employer; (3) the degree of permanence of the work relationship; (4) the nature and degree of control; (5) the extent to which the work performed is an integral part of the potential employer’s business; and (6) skill and initiative. Under the Final Rule, economic dependence is the “ultimate inquiry”; a worker is an independent contractor if, as a matter of economic reality, the worker is in business for themselves rather than economically dependent on the employer.
This Final Rule may be rescinded in the new year after Trump returns to the White House. Nevertheless, until further notice, employers should ensure they are applying the new six-factor test when classifying new workers, evaluate and audit current work relationships to ensure workers are properly classified under the new rule, and review contracts and policies relating to independent contractors for any necessary revisions.
For New York employers, the Freelance Isn’t Free Act, which went into effect on August 28, 2024, requires written contracts and wage protections to freelance workers who are hired as independent contractors to provide services equal to or greater than $800 for work within the preceding 120 days. As discussed in more detail HERE, the written contract must contain certain requirements, including the date by which the hiring party must pay the freelance worker and an anti-retaliation provision.
3.) Review recruiting and hiring practices to ensure compliance with new obligations.
Employers intending to hire in 2025 should be mindful of the national trends impacting both pay transparency and background checks. Both of these trends have found footing locally with new laws impacting New Jersey and New York employers.
In New Jersey, the Wage Transparency Act will go into effect on June 1, 2025. Under this law, discussed more fully HERE, New Jersey employers with ten or more employees must disclose: (1) the hourly wage or salary, or a range of the hourly wage or salary; and (2) a general description of benefits and other compensation programs for which the employee would be eligible for each internally or externally advertised posting for a new job or transfer opportunity. In addition, employers must make “reasonable efforts” to notify current employees in the affected department of advertised promotion opportunities. In light of this legislation, employers should identify the hourly wage or salary and a description of benefits and other compensation for any open positions, ensure the recruiting department and human resources are aware of the statute’s requirements in filling open positions and in promoting employees, and consider conducting a pay equity audit (preferably with involvement of legal counsel) to ensure the company’s pay practices are in compliance with all applicable laws.
For New York employers, the Clean Slate Act went into effect on November 16, 2024. As highlighted in our eAlert HERE, this legislation automatically seals most misdemeanor and felony convictions except sex offenses, sexually violent offenses, and non-drug related Class A felonies after a specified amount of time. Once the records are sealed, the information will not be available in background checks. Certain exemptions apply, including childcare, eldercare, and disability care workers. The legislation also requires an employer conducting a background check to provide a copy of the criminal history report and Article 23-A of the New York Correction Law to the individual and advise that they may seek correction of any incorrect information contained in the record.
In November, New York Governor Kathy Hochul signed into law Senate Bill 940 which amends the New York State Human Rights Law to make it an unlawful discriminatory practice for an employer to require an individual to provide a copy of their criminal history record that they personally obtained from the Division of Criminal Justice Services.
Employers should ensure their hiring and recruiting practices concerning background checks and criminal history comply with these laws.
4.) Understand new federal guidance on artificial intelligence in the workplace and implement best practices.
In our modern world, companies and employees are increasingly using artificial intelligence (“AI”) in the workplace, including in hiring and recruiting, customer service, and content production. In recognition of the risks inherent in the use of AI, the federal DOL has published guidance and best practices for the use of AI in the workplace. Some examples, discussed in more detail HERE and HERE, include the DOL Wage & Hour Division’s Field Assistance Bulletin entitled Artificial Intelligence and Automated Systems in the Workplace Under the Fair Labor Standards Act and Other Federal Labor Standards, which discusses compliance risks caused by using AI under the FLSA, Family Medical Leave Act (“FMLA”), Providing Urgent Maternal Protections for Nursing Mothers Act, and the Employee Polygraph Protection Act of 1988, guidance for federal contractors called Artificial Intelligence and Equal Employment Opportunity for Federal Contractors, and Artificial Intelligence and Worker Well-Being: Principles for Developers and Employers, which contains eight principles employers should consider throughout the AI lifecycle.
In September 2024, the DOL, via the Partnership on Employment & Accessible Technology, issued its AI & Inclusive Hiring Framework, which sets forth best practices for employers in the following ten focus areas:
- Identify legal requirements in employment & accessibility for using AI recruiting and hiring tools;
- Establish roles for employees managing the tools, responsibilities, and training;
- Inventory information about the tools including their intended use, benefits, and risks;
- Work with responsible AI vendors to avoid algorithmic bias and develop policies and procedures prior to working with vendors;
- Assess the potential positive and negative impacts of AI recruiting tools;
- Provide accommodations to job applicants;
- Notify job applicants that AI will be used and use explainable AI to inform applicants how the tools function;
- Ensure effective human oversight;
- Manage and appropriately respond to incidents; and
- Regularly monitor the tools.
Locally, there is pending legislation in both New York and New Jersey concerning the use of AI. In New York, Assembly Bill 9314 would prohibit employers from using automated employment decision tools (“AEDT”) to screen job applicants unless certain steps are taken in connection with ensuring the tools do not have a disparate impact. In New Jersey, two bills were introduced in New Jersey in 2024: Assembly Bill 3854 would prohibit the sale of AEDTs unless certain bias audit procedures are in place and Assembly Bill 3911 governs the use of AI-enabled video interviews during the hiring process. These bills are discussed in more detail HERE. We will continue to monitor this and other pending legislation.
Employers should consider working with counsel to create a company-wide AI policy outlining the risks, acceptable and unacceptable uses, and the consequences of misusing the technology and train employees on how to appropriately use AI.
5.) Consult with counsel prior to entering or attempting to enforce non-competition agreements.
Employers intending to enter or enforce non-competition agreements should be aware that while certain states have restrictions on these agreements, the federal landscape is evolving due to federal courts overturning the Federal Trade Commission’s (“FTC”) Final Rule banning most non-competition agreements nationwide.
As we have previously reported (HERE, HERE, HERE, HERE, and HERE), the FTC’s Final Rule was supposed to go into effect on August 21, 2024, however, legal challenges in several different federal courts led ultimately to the Eastern District of Texas’ August 20 ruling overturning the Final Rule with nationwide effect. The FTC has filed notices of appeal in that case, as well as a Florida case that similarly enjoined the FTC from enforcing the Final Rule against specific entities; those appeals are still pending.
Notwithstanding the stay of the Final Rule, the General Counsel of the National Labor Relations Board (“NLRB”) has taken the position that non-competition and so-called “stay-or-pay” arrangements are unlawful because they chill employees from exercising their rights under Section 7 of the National Labor Relations Act and undermine the bargaining power of employees in labor disputes. As we reported HERE, the General Counsel issued a Memorandum on October 7, 2024, indicating that the NLRB intends to seek “make-whole” relief for employees impacted by unlawful agreements.
This is an evolving area of the law requiring employers to exercise caution in implementing and enforcing non-competition agreements. Although the FTC’s ban is on hold for now, the NLRB’s position restricts the potential enforceability of such agreements. Additionally, employers should be aware of state or local legislation that may be even more restrictive. NFC is happy to assist your business in navigating the legislation in your jurisdiction.
6.) Verify that your company is properly complying with the Pregnant Workers Fairness Act.
The Equal Employment Opportunity Commission (“EEOC”)’s Final Rule and guidance implementing the Pregnant Workers Fairness Act (“PWFA”) went into effect on June 18, 2024. As we reported HERE, the PWFA requires private and public sector employers with fifteen or more employees to provide reasonable accommodations to qualified employees who are experiencing known limitations relating to or arising out of pregnancy, childbirth, or related medical conditions. The Final Rule and guidance updated certain definitions in the PWFA, including what is a “covered employer,” a “qualified employee,” “known limitations,” and “undue hardship.” In addition, the Final Rule contains a non-exhaustive list of pregnancy, childbirth, or related conditions that may be covered under the PWFA; notably, these conditions do not have to meet the Americans with Disabilities Act’s more stringent definition of disability and can be modest, minor, and/or episodic. Moreover, the Final Rule lists four modifications – additional restroom breaks, permitting employees to carry or keep water near, permitting sitting or standing as needed, and additional breaks to eat and drink – that will in virtually all cases be considered reasonable accommodations not imposing an undue hardship.
The fiscal year 2024 was the first full year that the EEOC enforced the PWFA, and during this year, it received thousands of charges of discrimination that included PWFA claims. Additionally, the EEOC used its law enforcement authority to file five PWFA lawsuits and enter a consent decree and several conciliation agreements to resolve PWFA charges at significant cost to the companies. Employers should ensure they are properly accommodating pregnant employees to avoid the EEOC’s attention.
7.) Be mindful of the expanded anti-discrimination and harassment obligations.
This year the Supreme Court of the United States adopted an expanded view of the level of harm an employee must show to establish that they have been discriminated against. As discussed more fully HERE, in Muldrow v. City of St. Louis, 601 U.S. 346 (2024), the Court held that to succeed on a Title VII discrimination claim, the individual does not have to show they suffered significant harm or material disadvantage; rather, the individual must show that the employment action caused some harm with respect to an identifiable term or condition of employment. While that decision focused on a job transfer, Justice Kavanaugh’s concurrence suggested broader application to any employment action where an employee can show “some additional harm – whether in money, time, satisfaction, schedule, convenience, commuting costs or time, prestige, status, career prospects, interest level, perks, professional relationships, networking opportunities, effects on family obligations or the like.” Lower courts have begun to apply the Muldrow standard to other types of employment actions, such as the denial of a request for accommodation.
On April 29, 2024, the EEOC released new guidance on harassment in the workplace – the first time guidance was released in 25 years! This guidance – discussed in more detail HERE and HERE – became effective immediately upon release and updated and broadened descriptions of harassment based on sex, race, color, and religion. In addition, the guidance discussed harassment based on stereotypes and intraclass, intersectional, and associational harassment. Further, the guidance includes information on virtual work and social media – two areas that were nonexistent the last time the EEOC released harassment guidance. Employers should familiarize themselves with this new guidance as it contains helpful examples that may be useful in revising anti-harassment policies.
New Jersey employers should be mindful that the Division of Civil Rights (“DCR”) clarified in its May 14, 2024 guidance, that the protections of the New Jersey Law Against Discrimination (“NJLAD”) apply to all employees regardless of whether they physically work in the state or work remotely out-of-state. NJLAD’s protections, however, do not necessarily extend to New Jersey employees who work for out-of-state employers; these employees must establish a nexus between their employer and New Jersey for the statute to apply. For more information, see our eAlert HERE.
All employers should review and revise their handbooks, policies and practices to ensure their anti-discrimination protocols are up to date.
8.) Review template non-disclosure, non-disparagement, and confidentiality clauses.
Employers should consider auditing their template non-disclosure, non-disparagement, and confidentiality clauses in employment-related agreements to ensure they are compliant with the current status of the law. For example, as we reported HERE, the New Jersey Supreme Court held in Savage v. Township of Neptune, 257 N.J. 204 (2024), that any provision in an employment contract or settlement agreement that has the effect of concealing details relating to claims of discrimination, retaliation, and harassment is unenforceable and against public policy. Thus, New Jersey employers should carve out claims relating to discrimination, retaliation, and harassment in all employment and separation agreements.
9.) Update employee handbooks and other workplace policies.
The end of the year is always a good time to review the current status of employee handbooks and other policies in light of recent changes in the law, such as those listed in this eAlert. We provided a summary of key changes impacting workplace policies in our November 5, 2024 eAlert HERE. In addition, employers may wish to consider their company’s position on the use of AI in the workplace.
For New York employers, handbooks and policies may need to be adjusted based on the implementation of the State Budget, which contained key employment law changes including paid nursing breaks and prenatal leave. More specifically, as of June 19, 2024, employers must provide employees with paid 30-minute breaks to express breast milk and allow employees to use other existing paid break time or meal time for any time needed in excess of 30 minutes, each time the employee has to express breast milk for up to three years following the birth of a child. And, beginning January 1, 2025, all private employers must provide 20 hours of paid prenatal leave (“PPL”), discussed in greater detail HERE, to employees receiving prenatal healthcare services. In addition, the State Budget set July 31, 2025, as the sunset date of the COVID-19 Paid Sick Leave Act; employers will no longer have to provide additional job-protected leave for employees subject to a mandatory quarantine or isolation order due to COVID-19. For more information on the employment law changes in the State Budget, see our eAlert HERE.
New Jersey employers also have potential policy changes to make. On February 20, 2024, the DCR issued new guidance on New Jersey’s Family Leave Act (“NJFLA”), which clarifies, among other things, who is an eligible employee, how employers should calculate the 1,000 hours eligibility requirement and the 24 month period, what types of leave are covered by the statute, what constitutes care, whether FMLA leave counts against NJFLA entitlement, and whether employers may require employees to use accrued paid leave during NJFLA leave. Employers should review their family leave policies in light of this new guidance, discussed in greater detail HERE. In addition, in New Jersey, employers should ensure that their dress code policies are gender-neutral in light of recent statements by the Director of the DCR (discussed more fully HERE) that it is unlawful for businesses open to the public to maintain gender-specific dress codes. And, New Jersey employers with more than 25 employees had to either register for Retire Ready NJ, a state-run retirement savings program for private sector employees who work for employers without qualified retirement savings plans, or certify that they are exempt from this program. For more information, see our eAlert HERE.
Employers in all jurisdictions should review and revise their handbooks and policies to ensure they are up to date for 2025 and train personnel on the new policies. Do not hesitate to reach out to NFC if you would like assistance updating your handbook in the new year.
10.) Update physical and electronic postings and send required notices.
Employers should also take year-end as an opportunity to ensure that they have the most current federal, state, and local postings available and are providing these postings to employees in all required manners. For example, as of July 1, 2024, employers in New York City must provide a copy of the new multilingual “Know Your Rights at Work” poster to all current employees and new hires, conspicuously display the poster in the workplace, and make it available on the company’s intranet or mobile applicable. See our prior eAlert HERE for more information on this posting requirement and the civil penalty associated with failing to comply.
BONUS: Finally, make the holiday season merry & bright by scheduling training now.
Our to-do list would not be complete without a reminder to schedule trainings, especially for supervisors and managers, on any updated company policies and new laws that will directly affect your business. Even when training is not required, it is recommended as an important tool to educate employees and avoid, manage, and mitigate risk in the workplace. In addition, a comprehensive training program will go a long way toward supporting an employer’s defense that it took reasonable steps to prevent and remedy discrimination or harassment in the face of litigation raising such claims. NFC has a wide offering of current trainings that we can bring to your organization.
Happy Holidays from your NFC Team!
If you have any questions relating to this e-Alert or need help getting your workplace ready for 2025, please reach out to the NFC Attorney with whom you typically work or call us at 973.665.9100.
