As we head into 2025, the legal landscape for employers is evolving rapidly. From landmark court rulings to sweeping state-level legislative changes, businesses across the country will need to adapt to new challenges in compliance, workplace policies, and employee rights. Understanding these changes is critical for avoiding costly legal pitfalls and staying ahead of regulatory trends. 

In this blog, we will examine key legal developments, including the impact of recent Supreme Court decisions, evolving state laws, and shifts in federal regulations that could have a profound impact on your workforce management strategies in 2025. Whether you’re managing a small business or a large corporation, staying informed about these developments is essential for ensuring compliance and minimizing legal risk. 

1. The Impact of Chevron Deference Overturned: What This Means for Employers 

What Is Chevron Deference? 

For decades, the U.S. Supreme Court’s Chevron doctrine gave significant deference to federal agencies in interpreting laws within their regulatory jurisdiction. Under this principle, courts generally allowed agencies like the Department of Labor (DOL) to make rules regarding workplace regulations unless those rules were plainly unconstitutional. This “Chevron deference” led to a broad, often flexible interpretation of regulations like wage and hour rules, employee classifications, and workplace safety standards. 

What Has Changed? 

In recent years, however, the Supreme Court has started to limit the application of Chevron deference. This shift, exemplified by several cases in 2023 and 2024, means that courts are now more likely to scrutinize agency rules and regulations closely, rather than automatically deferring to them. 

What It Means for Employers: 

This change could have significant consequences for employers. With reduced deference to agencies like the DOL, businesses may face a more stringent court review of agency rules related to overtime regulations, wage laws, and other employment-related mandates. Additionally, this shift may lead to more legal challenges to newly proposed regulations, as courts may take a harder look at the scope and impact of agency rulemaking. 

What Employers Should Expect Going Forward: 

• Closer Scrutiny of Agency Rules: Employers will need to pay more attention to new regulatory proposals and their legal foundations. 

• Increased Litigation Risk: As courts take a more active role in evaluating the legality of agency rules, employers should prepare for more lawsuits or challenges that could affect workplace practices. 

2. Key Court Case: Exempt Employees and the Duties Test 

E.M.D. Sales v. Carrera: A Landmark Case 

One of the most anticipated court cases for 2025 involves the classification of exempt employees under the Fair Labor Standards Act (FLSA). The E.M.D. Sales v. Carrera case will determine the standard for how much of an employee’s daily duties need to align with their exempt status under the FLSA. Specifically, the case challenges the extent to which an employee must meet the “primary duties” test to qualify as exempt from overtime. 

What Employers Should Know: 

This case could redefine how businesses determine who qualifies for exempt status, particularly concerning managerial, professional, and administrative employees. The FLSA provides that employees in exempt roles do not receive overtime pay, but they must meet specific criteria related to job responsibilities. If the Supreme Court narrows the definition of exempt duties, many employees currently classified as exempt could potentially be entitled to overtime pay. 

Practical Implications for Employers: 

• Reclassification Risk: Employers may need to re-evaluate exempt employee classifications and update their payroll systems if the ruling changes the “primary duties” test. 

• More Complex Classifications: The ruling may add complexity to how businesses assess the duties of their employees, especially in hybrid or evolving job roles. 

3. Medical Marijuana and Drug Testing: Legal Implications for Employers 

The Case of Medical Marijuana and DOT Regulations 

As medical marijuana laws continue to expand, employers are grappling with how to address drug testing requirements for employees who use marijuana for medical purposes. One key case involves a truck driver who sued a CBD manufacturer after failing a drug test for marijuana, despite the product containing only trace amounts of THC. 

What Employers Should Know: 

With more states legalizing marijuana for medical or recreational use, employers face growing tension between state-level legalization and federal drug testing mandates, particularly in industries regulated by federal agencies like the Department of Transportation (DOT). While federal law still classifies marijuana as an illegal substance, state laws offer varying protections for medical marijuana users. 

What Employers Should Do: 

• Review Drug Testing Policies: Employers should ensure their drug testing policies are compliant with federal regulations while accounting for state-specific marijuana laws. This may include clarifying whether or not employees who use marijuana for medical purposes can be penalized for failing a drug test. 

• Industry-Specific Guidelines: Employers in federally regulated industries, like transportation, may face stricter rules and should stay updated on both state and federal guidance. 

4. Federal Trade Commission (FTC) Non-Compete Ban Overturned 

What Happened with the FTC’s Non-Compete Ban? 

In 2024, the Federal Trade Commission (FTC) proposed a nationwide ban on non-compete agreements, arguing that such contracts stifle innovation and harm workers. However, in a surprising turn, a federal court struck down the proposed bana federal court struck down the proposed ban, leaving the enforcement of non-compete agreements largely to state laws. 

What Employers Need to Know: 

While the FTC’s ban on non-compete agreements was overturned, many states still have their own laws regulating or outright banning non-competes. This patchwork of state laws means that employers who operate across multiple jurisdictions must stay vigilant about local requirements and restrictions. 

How to Navigate State-Specific Non-Compete Laws: 

• State-Specific Compliance: Employers should familiarize themselves with the non-compete laws in each state where they operate. Some states, like California, have long restricted non-compete agreements, while others enforce strict guidelines on when and how they can be applied. 

• Review Contracts Regularly: It’s essential to periodically review existing non-compete agreements to ensure they comply with state laws and are enforceable in the jurisdictions where they are applied. 

5. State Law Trends: What Employers Need to Watch 

Mandatory Sick Leave Expands 

In 2025, several states—including Alaska, Missouri, and Nebraska—are expanding mandatory paid sick leave laws. Other states like Michigan are increasing the number of eligible employees who can benefit from paid sick leave. 

What Employers Should Know: 

Employers with operations in multiple states need to stay informed about the varying sick leave requirements, as they may need to provide paid leave to employees who were previously ineligible under state-specific laws. 

Paid Family and Medical Leave Expands 

Starting in 2025, 16 states will have state-run paid family and medical leave programs, with more states expected to join in the coming years. 

What Employers Should Do: 

Employers must update their leave policies to ensure compliance with these expanding paid leave programs. This includes staying updated on the specific requirements of each state’s program and ensuring employees are aware of their rights. 

Pay Transparency Laws: Growing Momentum 

States like Massachusetts, Illinois, and Minnesota are expanding pay transparency laws, requiring employers to disclose salary ranges in job postings and make certain compensation information accessible to employees. 

What Employers Need to Do: 

Employers in these states should review their hiring and compensation practices to ensure compliance with new pay transparency requirements. This may involve adjusting job postings, salary reviews, and internal reporting practices. 

Changes to Child Labor Laws 

Some states are loosening child labor laws, while others are tightening restrictions. For example, Indiana has loosened restrictions for workers under 18, making it easier for them to take on certain job roles. 

What Employers Should Know: 

Employers who hire minors must stay informed about their state’s evolving child labor laws to ensure compliance with age-related work restrictions and safety regulations. 

Conclusion: Preparing for Legal Changes in 2025 

As we look ahead to 2025, employers must stay proactive in navigating the changing legal landscape. With new Supreme Court rulings, evolving state laws, and federal regulatory shifts, businesses need to stay informed about the implications of these changes on their workplace policies and compliance efforts. Proactive preparation—whether it involves revising job classifications, updating drug testing policies, or aligning with state-specific leave requirements—will help employers mitigate risk and avoid costly legal consequences. 

At MP, our team is wired for HR. We are ready to work closely with you to assess your compliance with new and upcoming legal changes. By staying ahead of the curve, employers can minimize risks and ensure they are ready for the legal challenges 2025 may bring. 

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