As we move closer to 2025, employers face an increasingly complex and dynamic legal environment. New laws, updated regulations, and changing government priorities are creating a landscape that requires employers to stay vigilant and adaptable. From wage and hour laws to healthcare compliance and workplace accommodations, staying ahead of these changes is more crucial than ever. 

In this first part of a four-part series, we’ll explore several key legal shifts that HR professionals and employers should be prepared for in 2025. With significant updates to overtime regulations, Affordable Care Act (ACA) compliance, and workplace accommodations, now is the time to assess your organization’s policies, processes, and overall compliance strategies. 

Why 2025 is a Critical Year for HR Compliance 

The year 2025 marks a critical juncture for employers due to a series of significant legal developments that will directly impact HR compliance. As we near this pivotal year, various changes at both the federal and state levels will require HR professionals to adjust and rethink their strategies. These changes not only reflect evolving political landscapes but also shifts in societal norms and workforce expectations. 

For instance, major changes to the Fair Labor Standards Act (FLSA) overtime rules that were proposed in 2024 have already been overturned in court, and ACA enforcement is growing more stringent. Employers must also be prepared for shifting attitudes and regulations regarding remote work and disability accommodations. These and other evolving trends demand proactive planning to avoid costly penalties and ensure compliance with the law. 

In this blog, we’ll dive into three key areas that employers should prioritize: the overturned 2024 overtime rule, ACA compliance and audits, and the legal implications of return-to-office mandates. 

1. The 2024 Overtime Rule Overturned: What Does It Mean for Employers? 

What Was the 2024 Overtime Rule? 

In 2024, the U.S. Department of Labor (DOL) proposed significant changes to the overtime rules under the Fair Labor Standards Act (FLSA). The proposed changes would have raised the salary threshold for exempt employees—those who are not entitled to overtime pay—from $684 per week to $1,059 per week by 2024. Additionally, the rule sought to increase the salary threshold for highly compensated employees (HCEs) from $107,432 annually to $143,988. 

These changes would have impacted millions of workers, potentially reclassifying many employees from exempt to non-exempt status, thus requiring employers to pay overtime for those working more than 40 hours a week. 

The Court’s Ruling and Its Impact 

However, a Texas federal court issued a ruling in 2024 that overturned the new overtime rule. The court found that the DOL had overstepped its authority in raising the salary thresholds so dramatically. As a result, the increases scheduled for July 2024 and January 2025 have been rolled back, leaving the salary thresholds under FLSA at $684 per week for most employees and $107,432 for HCEs. 

Current FLSA Salary Thresholds 

As of now, the FLSA salary threshold remains as follows: 

• $684 per week (or $35,568 annually) for most exempt employees. 

• $107,432 annually for highly compensated employees. 

Employers who had been preparing for these increases need to adjust their budgets and staffing plans accordingly, and those who had already reclassified employees as non-exempt based on the new rule may need to reverse those decisions. 

Compliance Tips for Employers 

Even though the 2024 changes have been overturned, employers still need to comply with the existing salary and duties tests under the FLSA. Here are some tips for staying compliant: 

• Review employee classifications: Ensure that your exempt employees meet both the salary and duties tests. Merely being salaried does not make an employee exempt from overtime. 

• Watch for future changes: While the 2024 rule was struck down, future proposals to increase the salary threshold may resurface. Stay updated on any new developments or changes. 

• Avoid common mistakes: One of the most common errors is misclassifying employees as exempt based solely on their salary, ignoring the job duties they perform. Be sure that your employees’ roles meet the FLSA’s specific exemption criteria. 

2. ACA Enforcement Is On the Rise: Are You Prepared for an IRS Audit? 

The Surge in ACA Audits 

Since the Affordable Care Act (ACA) was implemented, compliance audits have steadily increased, particularly in recent years. In 2023 and 2024, the IRS ramped up audits, especially focusing on employer filings for the 2020 and 2021 tax years. These audits are part of a broader push to ensure that employers are adhering to ACA requirements, including the Employer Shared Responsibility Payment (ESRP) mandate. 

Certain industries—such as healthcare, hospitality, and those with large part-time workforces—are particularly at risk of being audited due to their higher likelihood of non-compliance. With penalties for failure to offer affordable and minimum essential coverage to full-time employees reaching $2,700 per employee, the financial implications of an ACA audit can be severe. 

What to Do If You Get an ACA Letter 

If your company receives an IRS audit letter regarding ACA compliance, it’s important to act quickly. The first step is to carefully review the notice to determine which aspect of the ACA is being questioned. Often, the issue centers on the employer’s reporting requirements under Form 1094-C and Form 1095-C. If the IRS believes your filings are incomplete or inaccurate, they may propose penalties. 

Proactive Strategies for Ensuring ACA Compliance 

To avoid the risks of an audit, take proactive steps: 

• Review your filings: Ensure that all 1094-C and 1095-C forms are filed accurately and on time. 

• Track employee status: Make sure you correctly identify full-time employees and offer them affordable health coverage, as defined by the ACA. 

• Implement regular audits: Conduct internal audits to ensure compliance with ACA requirements. Identifying discrepancies early on can help prevent costly penalties. 

3. The Return to Office Mandate: Legal Implications for Employers 

Companies Bringing Employees Back to the Office 

In 2025, many employers will be grappling with the legal and logistical challenges of bringing employees back to the office. Notable companies like Amazon have implemented strict return-to-office mandates, requiring employees to physically report to their offices at least three days a week. This shift back to physical offices, while welcomed by some, presents challenges for both employers and employees. 

EEOC and Remote Work Accommodations 

Employers must also consider the legal implications of remote work, especially in light of the Americans with Disabilities Act (ADA). The Equal Employment Opportunity Commission (EEOC) has ruled that remote work can be a reasonable accommodation under the ADA for employees with disabilities, but this decision requires a case-by-case analysis. If an employee requests to work remotely as an accommodation, employers must carefully assess whether it would impose an undue hardship on the business. 

Legal Considerations for Remote Work Requests 

• Consistency is key: When evaluating remote work requests, ensure that you apply consistent standards across all employees. 

• Accommodation process: Follow the ADA’s interactive process to assess whether a remote work request is reasonable, considering the employee’s specific needs and the nature of their job. 

Conclusion: Getting Ready for 2025—What Employers Should Do Now 

As we approach 2025, HR professionals and employers must remain vigilant in adapting to a changing legal environment. The key areas discussed—overtime regulations, ACA audits, and return-to-office mandates—are just a few examples of the challenges ahead. To ensure compliance, employers should conduct thorough audits, revisit their policies, and consult with legal and HR advisors regularly. 

Proactive planning is essential to mitigate risks and avoid costly penalties. Start preparing now, and you’ll be well-positioned to navigate the evolving legal landscape in 2025. 

To ensure your business remains compliant in the face of these changes, contact a trusted member of MP’s team today. Preparing for the challenges of 2025 starts now, and we are ready to advise, guide, and implement leading technologies to ensure you maintain compliance without sacrificing efficiency.  , which will help you understand the latest updates and changes for ACA compliance. 

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