Navigating Employment Law: Key Areas HR Must Monitor in 2025

Have you ever felt like you’ve just gotten a grasp on employment law, only to have the earth shift below your feet?

Well, hold on to your seats–2025 is bringing a whole new wave of changes (and challenges) to the American workplace, and they’re not just minor tweaks. 

No matter if you’re an HR pro, a startup founder, or in charge of a small business, staying updated on these legal shifts is no longer optional. To put it bluntly, you can’t afford to hit “set it and forget it.” 

Therefore, let’s explore the key changes HR teams need to be aware of, from remote work regulations to the use of artificial intelligence (AI) in hiring. But don’t worry; we have some tips to help you stay compliant without driving yourself nuts or breaking the bank.

Remote Work, Hybrid Schedules, and Location-Based Compliance

With more employees working remotely (or in hybrid setups), the question of “where” they work is becoming a huge legal factor. 

It’s true.

Your remote workers could be subject to varied state labor laws depending on where they’re physically located, which means overtime rules, paid leave, and break policies can be different from one state to the next. 

Consider these best practices:
‍

• State-Specific Labor Laws: Confirm you’re up to date with the regulations of each state in which your team members work. 
• Remote Work Policies: Be clear about expectations. Take the time to define work hours, break policies, and any location-based compliance measures. 
• Tracking Work Locations: It’s also key to track where your employees actually work–not just where you assume they are. You might be in for some surprises–frankly, those surprises are the worst kind.
   

This might sound like a lot, but don’t stress–taking the time to create clear policies can save you from legal headaches in the future.

AI in Hiring: Cool Tech… With Some Complicated Rules

Artificial intelligence tools are completely transforming the hiring process–and are revolutionizing everything from resume screening to the introduction of video interviews. 

However, while AI tech is pioneering and ahead of the curve, the legal risks associated with it are a real threat. 

Why? Because AI systems can unintentionally inject bias or discrimination into HR procedures if they are not properly managed. A lack of transparency in how these tools make decisions can also get you into hot water. 

So, what do you need to be aware of?
 

• Recently Implemented Regulations: For instance, New York City Local Law 144 imposes strict guidelines on automated hiring tools used by employers and employment agencies for job candidates or current employees (up for promotion) residing in NYC.
  
  
• New Regulations on the Horizon: While there aren’t any federal laws about AI in hiring processes (yet), the Algorithmic Accountability Act has been proposed. This would require certain types of businesses to conduct impact assessments of any AI platforms used in recruitment or hiring processes. It would also demand a report be provided to the Federal Trade Commission (FTC).
  
  
• HR Best Practices: It’s always a good policy to be upfront about using AI in recruiting or hiring at your business. Disclose this to candidates in the application process and make sure you get their consent. And, of course, remember that human oversight is still needed. AI can be a great assistant, but it should never take the humanity out of hiring. Realize that you’re a human who is hiring a human–treat job candidates with the respect they deserve.

‍

Pay Transparency Laws Keep Spreading

Posting salary ranges on job openings isn’t just a “nice-to-have” thing anymore–it’s becoming the law in more places across the U.S. In 2025, multiple states require this information upfront, including Hawaii, Illinois, Vermont, California, Massachusetts, Washington, and many others. Some cities, including New York City, have also enacted salary transparency laws. 

Realize, though, that this isn’t just about recruiting. Pay transparency laws also affect:
 

• Equity Audits: Are your compensation practices fair and consistent?
• Promotions: Are internal pay scales aligned with what’s posted publicly?
• Internal Communication: Are managers prepared to talk about salary openly and legally?
  ‍

A Good Tip: Don’t wait for legislation to hit your city or state–and don’t expect this trend to slow down anytime soon. Be proactive about reviewing your compensation structure now. Make it a point to clean up inconsistencies and confirm that your HR team understands messaging. Ultimately, getting ahead of the game is easier than trying to play catch-up under pressure.

Employee Classification: W-2 vs. 1099 and the Gig Economy Gray Area

Do you think you can call someone a freelancer and skip the payroll taxes? Not so fast. The independent contractor test is changing–again–and both the IRS and the 

Department of Labor are sharpening their focus on misclassification. 

It doesn’t matter if you’re running a startup or scaling a growing team, you must classify workers correctly. If you don’t, your business could face steep penalties, be required to provide back pay, and find yourself in court. For employees, you’re responsible for payroll taxes and year‑end wage statements Form W‑2—and you can generate a W‑2 instantly to streamline preparation and reduce errors.

Here’s what you should keep in mind:
 

• Audit your roles: Are these workers truly independent contractors or employees?
• Look at control and structure: Who sets the hours? Who provides the tools?
• Document everything: The scope of work, contracts, payment terms, and communication are central here.
   

Pro Tip: Even if you’re hiring a freelance writer or graphic designer for a gig project, document it clearly. The line between W-2 and 1099 isn’t just blurry–it’s under the microscope in 2025.

Business Structure and Liability: Why LLCs (Still) Matter

HR compliance isn’t just a checklist or about ticking boxes–it’s about protecting yourself and your business from liability. 

If you’re a small business owner or company founder, forming a legal entity like a Limited Liability Company (LLC) can be a good move. 

Why? Because if an HR issue ever escalates into a lawsuit, a properly formed LLC helps confirm it’s the business–not you personally–on the line. 

Requirements to form an LLC vary by state, so do your homework. Google “requirements to form an LLC in California” or “how do I start an LLC in Michigan,” for instance. Or, to be sure you’re following the rules, hire an attorney or business consultant for expert guidance. You’ll typically need a unique business name, Articles of Organization, and an Employer Identification Number (EIN) from the IRS.

‍

DEI Commitments: From Values to Commitments

Diversity, equity, and inclusion (DEI) can’t just live in your mission statement anymore–especially if you’re in a regulated industry or a public company. More states (and investors) are directly correlating DEI efforts to legal and reporting standards, including board diversity laws and ESG disclosures. 

However, tread carefully in today’s political climate, the Trump administration has made its feelings known about “woke” companies and organizations that place emphasis on DEI policies. While many job candidates value DEI–and want to work for organizations that center their culture on these pillars–if your company receives grants or federal dollars, you could find those funds at risk. 

If you’re in doubt about how to implement DEI at your company, consult an employment attorney. When done right, DEI can boost culture and meet legal standards. Just be smart about how you communicate it.

Compliance is a Moving Target

Staying compliant in 2025 isn’t about running defense. Instead, it’s about staying curious, not just cautious. The rules are changing, and HR teams, business owners, and leaders need more than a handbook that dates back to the 2010s. 

Just know that you don’t need to panic, but you must have a plan. That means implementing regular audits, updating training practices, and engaging in a legal review once a year. 

And if you find that it’s too much to handle solo, then make sure you enlist the help of an employment law attorney or outsource to an HR consultant. Staying ahead of the curve is much more beneficial than trying to catch up once laws have already been put in place.

Stay Ahead of Employment Law Changes—Without the Compliance Headaches

At MultiplyMii, we help businesses navigate the ever-evolving HR and compliance landscape—without the stress.

From managing remote teams and ensuring proper worker classification to staying up to date with AI hiring practices and pay transparency laws, our experienced team can support you every step of the way.

Backed by top Filipino talent, we handle everything from recruitment and onboarding to payroll and labor law compliance—so you can focus on what matters most: growing your business.

Ready to stay compliant in 2025 and beyond?

Book a call with our team today.