What TR Pros Can Expect with Regulations and Compliance in 2025

From artificial intelligence to noncompete agreements, 2025 appears to be an active year from a compliance standpoint for employers. Additionally, a second Donald Trump Presidential administration may unwind many Biden-era rules and policies, and a Republican-controlled Congress is well-positioned to implement those changes.

Legal experts predict employers will continue to see significant and immediate changes regarding overtime (OT) pay; independent contractor classifications; diversity, equity and inclusion (DEI) initiatives; noncompete agreements; and the use of artificial intelligence (AI).

This article breaks down what total rewards (TR) professionals should watch for in those areas.

Numerous Minimum Wage Increases, But No New OT Rule

As of Jan. 1, a total of 21 states, as well as dozens of U.S. cities and countries, have raised their minimum wage rates.

The federal minimum wage remains at $7.25 an hour, where it’s been since 2009. Also unchanged for now are the federal salary thresholds for overtime compensation. The new salary levels introduced last year by the Department of Labor (DOL) were blocked by a federal judge in Texas on Nov. 15. Given the current administration, a revival is unlikely.

Employers should make sure they are in compliance with the minimum wage laws of all states (and, as applicable, municipalities) where they have employees — a growing concern with the rise of remote and hybrid work arrangements.

Pay Transparency Initiatives Gather Steam

Eleven states, plus the District of Columbia, currently have some form of pay transparency law in effect, including new Illinois and Minnesota laws that went into effect on Jan. 1. Three additional states will join the list later this year: New Jersey (June 1), Vermont (July 1) and Massachusetts (Oct. 29, with wage reports due earlier in the year).

Lulu Seikaly, the senior employment counsel at Payscale, noted that a broad federal initiative is unlikely under the current administration. However, “even if pay transparency legislation slows or fails, the workforce will continue to demand pay transparency,” she said. “Employers that provide clear communication around compensation will secure a competitive advantage in talent acquisition and retention.”

Access a bonus Workspan Daily Plus+ article on this subject: 

5 Things TR Pros Can Do to Mitigate Pay Transparency Risks

FTC’s Noncompete Rule Is Blocked

In April 2024, the Federal Trade Commission (FTC) issued a final rule banning noncompete agreements, but it swiftly encountered multiple court challenges that blocked implementation. The FTC filed appeals before a changing of the guard under President Trump, but suffice to say the appeals status is tenuous at best. As with pay transparency initiatives, employers should watch for activity at the state level because revival of the federal law is doubtful.

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The Status of Noncompetes in a New U.S. Political Landscape

Pushback Against DEI Initiatives

In his first week, President Trump ordered federal entities to dismantle DEI internal programs, policies, offices and roles, signaling a pullback on such efforts.

“We will likely see continued challenges to laws aimed at promoting diversity, equity and inclusion,” said Kimberly Cheeseman, co-head of litigation and disputes at law firm Norton Rose Fulbright. This includes executive orders targeting “illegal” DEI in both federal government and the private sector.

It’s not yet clear what constitutes an illegal DEI program, however. Brian Levine, a partner at Merit Analytics Group, said that “processes to ensure fairness — that there is no bias against any group and, that where there is bias, it is addressed — do not conflict with the executive order and should continue, as they serve to ensure organizations can close any such gaps and continue to access the best talent.”

Kristi Nelson Foy, a shareholder at the Ogletree Deakins law firm, said employers should “expect pushback against anything DEI-related,” with a probable rollback of the rights extended to the LGBTQ+ community during the Biden administration.

Access a related Workspan Daily article on this subject:

U.S. Departments and Agencies Initiate Tasks to Internally Rescind DEI

The Rise of AI

Regulation of AI usage by employers is increasing, and employers may want to monitor their inputs and outputs from such emerging technologies to avoid potential liabilities. Because outputs can be inaccurate or biased, human intervention remains necessary, said Monica Martin, the senior director of integrated and global solutions and a total rewards leader at WTW.

More than 400 AI-related bills were introduced across 41 states in 2024, according to the National Law Review, and more legislation is on the horizon.

A new Illinois law will go into effect Jan. 1, 2026, prohibiting AI-driven bias against employees and applicants and will also require notice when AI is used for employment-related decisions. Colorado also has a law on the books (effective Feb. 1, 2026) protecting consumers — which includes employees and job applicants — from the risks involved in algorithmic decision-making.

In addition, a 2024 California attempt to ban any use of automated decision tools resulting in algorithmic discrimination failed, but the state legislator behind the bill said she will reintroduce it this year.

How Can Employers Prepare for Changes?

Due to the immediacy of many of these potential changes, it’s important for HR and TR professionals to get out (and stay) ahead of them, said Kevin Roberts, a partner at the Barnes & Thornburg law firm. He advised employers developing an action plan to:

Stay current on potential and imminent changes, perhaps by subscribing to legal updates and alerts.
Analyze the changes at both the state and federal level.
Prioritize the shifts that are most likely and/or significant for a particular organization.
Preemptively review and update policies, such as wage/hour classifications, noncompete agreements, DEI initiatives and workplace conduct guidelines.

Cheeseman at Norton Rose Fulbright recommended employers stay in close contact with labor and employment attorneys for guidance.

Ogletree Deakins’ Foy said it’s safe to assume that many of the policies and priorities from Trump’s first term will remain important in his second term. Accordingly, she said, employers should “dust off their handbooks from the first Trump presidency as they will likely be making similar changes.”

Editor’s Note: Additional Content

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