Intro to Federal and Multi-State Labor Laws

On July 4, 2025, Congress passed the One Big Beautiful Bill, which cancelled all Employee Retention Tax Credits (ERTC) for claims for Q3 and Q4 of 2021 filed after January 31, 2024. This change means that any claims submitted after that date–including those filed through Justworks–will no longer be processed, and businesses will not receive credit for those two quarters.

On July 24, 2025, the U.S. Department of Labor reinstated its Payroll Audit Independent Determination (PAID) program, originally launched in April 2018 and discontinued in January 2021. The revived program offers a voluntary self-audit option for employers covered by FLSA and FMLA. This allows them to proactively identify and report compliance issues to the DOL, rectify their practices, and offer suitable resolutions outside of litigation. To be eligible, employers cannot have ongoing investigations or legal actions, and require disclosure of prior complaints. Employers exploring PAID audits should connect with legal counsel to discuss options.

The Department of Labor has announced it will no longer enforce the 2024 Biden-era independent contractor rule under the FLSA. Instead, it will apply older guidance, including Fact Sheet #13 and Opinion Letter FLSA2019-6, while it considers replacing the rule. This shift follows ongoing back-and-forth over independent contractor standards across administrations.

Employers should review current classification practices and stay alert to state and local law differences.

The Fifth Circuit recently clarified the application of the Fair Labor Standards Act's (FLSA) highly compensated employee (HCE) overtime exemption, holding that an employee earning at least the regulatory threshold (currently $107,432 per year) qualifies as exempt if they customarily and regularly perform even a single duty associated with the executive, administrative, or professional exemptions. Currently, this clarification only applies to the Fifth Circuit (Texas, Mississippi, and Louisiana), but may have persuasive implications for other Federal Districts.

This summer, many jurisdictions will update minimum wage and salary thresholds affecting overtime exemptions and other minimum pay requirements. Most minimum pay requirements get updated on or around January 1, or on or around July 1. 

Employers should review the pay requirement updates linked below and make adjustments to their employee compensation details and classifications as needed.

The Equal Employment Opportunity Commission (EEOC) has recently released guidance clarifying what diversity, equity, and inclusion (DEI) programs may be considered illegal in the workplace. Aligning with previous executive orders, the guidance emphasizes that using race, sex, or other protected characteristics as a deciding factor in employment decisions is discriminatory. Training and mentoring programs must be open to all, and employee resource groups should be inclusive to avoid potential legal issues.

Employers should review the EEOC's new technical assistance documents to understand their interpretations and enforcement priorities and make adjustments as needed.