Employers face a dynamic and complex environment in the upcoming year. With a new federal administration and economic, political, and societal shifts, the legal landscape for labor and employment continues to evolve.
Here are five key trends to watch.
Cultural Flashpoints Persist
Issues arising from polarizing political and cultural issues continue to impact workplaces. Political expression at work is likely to continue following a divisive election and the transition to a new presidential administration.
Divergent employee viewpoints on topics such as immigration and reproductive rights may persist. The focus on religious rights by the incoming administration will also likely lead to more requests for religious accommodation.
These potentially lead to challenges around off-duty conduct and social media expression by employees, which can impact workplace harmony and reputational risk. The pushback against corporate diversity, equity, and inclusion initiatives is expected to gain momentum, with regulatory changes curbing DEI efforts expected.
AI Market Matures
Businesses using artificial intelligence for employment decisions will navigate a maturing and consolidating AI market in 2025. While federal policy may promote AI development, state lawmakers will likely increase regulatory efforts. For example, California legislators will continue to push an aggressive AI regulatory agenda, while Colorado and Illinois will implement employment-specific AI laws.
Other states will push for greater transparency and testing of AI systems, creating a complex compliance landscape. This will spur increased litigation, particularly in hiring and recruitment, as government agencies and private plaintiffs focus on AI-driven processes.
Agencies Redirect Priorities
With courts confirming at the start of Biden's term that removal of the National Labor Relations Board general counsel upon a change in administration was lawful, we expect that President-elect Donald Trump will follow suit by removing NLRB general counsel Jennifer Abruzzo.
Because the general counsel has near-plenary authority over the NLRB's investigatory and prosecutorial functions, a new GC could immediately transform the direction of the agency regardless of the Democratic or Republican composition of the five-member board—which is yet to be determined.
Personnel and policy changes at other agencies, including the Equal Employment Opportunity Commission, could significantly change the efficacy and policy direction. Rulemaking may also be affected, such as the Department of Labor's new rules on salary levels for overtime exemption, which a federal court struck down this November.
Businesses may need to revisit classification decisions already made, and plaintiffs' lawyers may seize on these changes to file litigation.
State Regulatory Patchwork
Despite a Republican-controlled Congress, states and municipalities are expected to remain active in workplace regulation. One example is legislation related to pay equity and transparency, with at least four states having laws taking effect in 2025 that require pay ranges to be disclosed in job postings.
Such laws have been the basis of class action litigation in other states that have set such requirements, such as Washington state's Equal Pay and Opportunities Act. Employers must stay vigilant in complying with varying state regulations in pay equity, transparency, and beyond.
Wage-Hour Litigation
In 2024, employers experienced the plaintiff's bar pursuing novel overtime pay claims for which precedent, legislative and regulatory guidance, as well as sub-regulatory action have left open a debate around legal liability. Securing a final answer to the debate would be costly and difficult.
Employers also saw a surge in challenges made to how courts should interpret and apply the Fair Labor Standards Act, its regulations, and state law analogues. Some of these attacks have suggested that long-standing jurisprudence is wrong.
With the Trump administration's focus—already evident in cabinet selections and general proclamations—on deregulation, we anticipate that both plaintiff- and defense-side wage-hour firms will be making creative arguments about why to revisit statutory and regulatory canons of interpretation, why statutes can be read in different ways, and why agency guidance on all of this may be disregarded.
This could lead to perceived wins for employers or employees, and it will certainly make disruption seem the norm.
Originally published by Bloomberg Law, 18 December 2024
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