If there was one defining compliance theme in 2025, it was this:

Federal deregulation didn’t reduce employer obligations—it shifted them to the states.

As federal agencies narrowed or adjusted enforcement priorities, states moved aggressively to fill the gaps. The result was a surge of new and expanded employment laws that varied not just by state, but increasingly by county and city. For HR teams, compliance became less about knowing the law and more about knowing which law applies where.

This is the state law surge that defined HR compliance in 2025—and why employers can no longer rely on a one-size-fits-all approach.

• Part 1: The 2025 HR Compliance Debrief: The Big Shifts Employers Can’t Ignore
• Part 2: ACA + 2025 Federal Updates: What Employers Must Do Now to Avoid Penalties
• Part 3: State Law Surge in 2025: Pay Transparency, Leave, Privacy, and the Patchwork Problem

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Federal Deregulation Didn’t Mean Fewer Rules

Throughout 2025, federal agencies signaled deregulatory intent in certain areas. But rather than simplifying compliance, this shift created space for states to regulate more aggressively.

Employers saw:

• Expanded state wage and hour rules
• Rapid growth in pay transparency laws
• New and expanded leave mandates
• Increased regulation around privacy, biometrics, and AI
• State-level bans or restrictions on non-competes

For multi-state employers, the risk wasn’t ignoring the law—it was assuming uniformity where none existed.

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Pay Transparency: The Fastest-Growing Compliance Risk

Pay transparency laws expanded significantly in 2025, with more states requiring:

• Salary ranges in job postings
• Disclosure of pay scales upon request or at hire
• Documentation supporting compensation decisions

Even employers not legally required to comply often found themselves impacted by:

• Remote job postings visible in covered states
• Internal equity questions once ranges were disclosed
• Increased scrutiny of job descriptions and leveling

Key risk: Inconsistent pay practices across locations can create exposure even when intent is good.

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Wage, Salary Thresholds, and Local Ordinances

2025 also brought:

• New minimum wage increases across multiple states
• Updated exempt salary thresholds in select jurisdictions
• Industry-specific wage rules
• County- and city-level ordinances layered on top of state law

This created a compliance environment where:

• Exempt status could vary by location
• Pay rates had to be tracked at a granular level
• A single payroll setup no longer worked for all employees

For employers operating in multiple states—or expanding into new ones—wage and hour audits became essential, not optional.

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Leave Laws: Expanding, Overlapping, and Easy to Miss

State leave laws continued to expand in 2025, including:

• Paid sick leave
• Paid family and medical leave
• Bereavement and caregiver leave
• Job-protected unpaid leave programs

Many of these laws differ in:

• Eligibility thresholds
• Accrual methods
• Documentation requirements
• Interaction with the federal FMLA

Common issue: Employers offer leave—but not always in a way that aligns with state-specific rules.

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Privacy, Biometrics, and AI: A New Compliance Frontier

Several states expanded or introduced laws regulating:

• Employee data privacy
• Use of biometric information
• AI and automated decision-making in employment

These laws often apply regardless of company size and can impact:

• Timekeeping systems
• Access controls
• Recruiting technology
• Employee monitoring tools

Unlike traditional HR laws, privacy violations can trigger penalties without employee complaints, increasing exposure for employers who are unaware of how their systems function.

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Non-Competes and Restrictive Covenants: States Step In

While federal action on non-competes stalled, states continued to act.

In 2025, employers faced:

• New bans or limitations on non-compete agreements
• Increased scrutiny of severance and restrictive covenants
• Requirements to update or void existing agreements

Key takeaway: Agreements that were enforceable last year may not be enforceable now—depending on the state.

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The Patchwork Problem: Why Multi-State Compliance Is So Hard

The real challenge of 2025 wasn’t any single law. It was the volume and variation.

Employers struggled with:

• Tracking changes across jurisdictions
• Updating policies consistently
• Training managers on location-specific rules
• Auditing compliance proactively instead of reactively

Without a structured approach, compliance quickly became fragmented.

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A Simple Framework for Multi-State Compliance

Employers that managed risk effectively in 2025 focused on four core areas:

1. Tracking

• Monitor state and local legislative changes
• Identify which laws apply based on employee location—not headquarters

2. Policy Updates

• Maintain core policies with state-specific addenda
• Avoid overpromising benefits that exceed legal requirements

3. Manager Training

• Train managers on how to apply policies, not just what they say
• Reinforce when to escalate issues to HR

4. Audit Cadence

• Schedule regular wage, leave, and classification audits
• Review job postings, pay ranges, and agreements annually—or more often if expanding

This framework doesn’t eliminate complexity—but it makes it manageable.

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Final Thought: State Laws Are Now the Front Line of HR Compliance

In 2025, HR compliance became local, layered, and fast-moving.

Employers who treat state law compliance as an afterthought will continue to play catch-up. Those who build repeatable systems, partner with experts, and audit proactively will stay ahead.

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Ready to simplify the patchwork?

Download MP’s 2025 HR Compliance Year-End Checklist to identify risk areas—or schedule a multi-state compliance review with our team to ensure your policies, pay practices, and processes align with where your employees actually work.

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