Overview & Key Takeaways: 2025 Top Regulatory Issues

Overview & Key Takeaways | 2025 Top Regulatory Issues: What Your Business Needs to Know

Webinar Overview

This Paychex webinar, moderated by Gene Marks, focused on the top regulatory issues businesses will face in 2025. Key topics included:

• Tax considerations
• New legislation
• Employment laws
• Family and paid leave
• Retirement plans
• The use of AI in employment decisions

Stephen Dombroski, a compliance expert, provided updates on the Corporate Transparency Act and beneficial ownership information reporting, changes to annual tax limits, and the expiration of certain tax provisions. 

Tammy Tyler, manager of Employment Law compliance at Paychex, discussed state-specific paid family leave programs, wage and hour developments such as the Overtime Rule, and pay transparency laws. 

Zachary Keep, manager of retirement compliance at Paychex, reviewed retirement updates related to Secure 2.0, state-mandated requirements, 401(k) plan advantages, and regulations that could impact the use of AI in business. 

The webinar emphasized the importance of staying informed about regulatory changes, consulting with legal and financial advisors, and leveraging resources to ensure compliance and optimize business operations. Participants were encouraged to engage with Paychex professionals for tailored business solutions

Speakers

• Gene Marks, Host, Small-business owner and columnist, Host, Paychex THRIVE and Week in Review podcasts
• Zachary Keep, Manager, Compliance Risk, Paychex
• Tammy Tyler, Manager, Compliance Risk, Paychex
• Stephen Dombroski, Senior Manager, Compliance Risk, Paychex, Inc.

Key Takeaways

1. 2025 Regulatory Issues: The webinar covers key regulatory issues for 2025, including tax policy and tax considerations, potential legislation, employment legislation, family leave, paid leave, retirement, and AI.

2. Corporate Transparency Act: Businesses should stay informed about the Corporate Transparency Act and Beneficial Owner Information (BOI) reporting due to ongoing court cases.

3. Annual Tax Changes: Changes to annual tax limits for 2025 include Social Security wage base limits, 401(k) contribution limits, and mileage rates, with potential changes to the corporate income tax rate and 1099-K reporting thresholds.

4. State Paid Family Leave: Nine states have fully implemented state-run paid family leave programs, with four more in the process, offering varying wage replacement and job protection provisions. 

5. Overtime Rule Changes: Employers should be aware of state-specific salary thresholds and job duties due to the vacating of the 2024 overtime rule and reversion to the 2019 OT Rule and pay transparency laws.

6. AI and Privacy: The federal government has mostly been silent, with more than 100 bills introduced and none acted upon. States are taking the lead, with California and Colorado being the most aggressive in exploring regulation, and California setting the pace regarding privacy protection.

7. Retirement: 2025 brings with it new mandated retirement programs from states such as New York, as well as a federal provision under SECURE Act 2.0 to mandate that new plans include auto-enrollment for participants.

8. Regulatory Navigation Tips: Employers should consult with legal counsel and financial teams to navigate regulatory changes, leverage competitive benefits, and stay informed about AI and privacy regulations.

Key Quote

2025 is going to be a wild year because there is a lot of uncertainty and a lot of things are going to be happening. And that is why we want to pay close attention to the topics that we are going to be covering right now. — Gene Marks, Host

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Key Tax and Employment Law Updates for 2025: What Businesses Need to Know

Staying current with evolving tax and employment laws is essential for businesses aiming to maintain compliance and streamline operations. As 2025 approaches, significant regulatory updates are poised to impact various sectors. Key areas of focus include changes in tax policies and updates in employment laws, both of which are critical for effective strategic planning and risk management.

Recent years have seen notable shifts in employment regulations, such as the adoption of pay transparency laws and revisions to worker classification standards. Currently, 11 states and Washington D.C. have enacted pay transparency laws, with Illinois and Minnesota being the latest additions. Massachusetts, New Jersey, and Vermont are expected to implement similar laws soon. These regulations aim to enhance recruitment and retention by making salary ranges more transparent to employees. Additionally, many employers are proactively adopting pay transparency practices to remain competitive in the job market.

Upcoming Tax and Employment Law Changes for 2025

In 2025, significant changes in tax policy will impact businesses. The expiration of provisions from the Tax Cuts and Jobs Act (TCJA) of 2017 will create a dynamic tax environment. Notably, the Section 199A pass-through deduction, which allows certain business owners to deduct up to 20% of their qualified business income, is set to expire. The phase-out of bonus depreciation on certain investments will also continue, potentially affecting capital expenditure decisions. Companies should monitor legislative developments and collaborate with financial advisors to navigate these changes effectively.

Employment law will also undergo substantial changes. The landscape of paid family leave is evolving, with several states implementing or planning to implement state-run paid family leave programs. These programs vary in terms of coverage, eligibility, and benefits, but all aim to provide wage replacement for employees taking leave for family or medical reasons. Employers must understand the specific requirements in their states and consider how these programs interact with federal leave laws like the Family and Medical Leave Act (FMLA). Offering competitive leave benefits can enhance employee retention and satisfaction.

Wage and hour regulations are also being updated. The 2024 overtime rule, which increased salary thresholds for exempt employees, was vacated, reverting to the 2019 thresholds. Employers must ensure compliance with the previous salary levels and prepare for potential future changes as the Department of Labor's appeal progresses. Additionally, state-specific salary thresholds and job duties may apply, adding complexity. Regular audits of payroll practices are essential to ensure compliance with both federal and state regulations.

Pay transparency laws are gaining traction to address pay discrimination. These laws require employers to disclose salary ranges and compensation details in job postings, promoting fairness and transparency in the hiring process. The requirements vary by jurisdiction, with some states mandating disclosure in both external and internal job postings. Employers should review their job posting practices and ensure they provide the necessary information to comply with these laws. Implementing robust pay equity practices can mitigate the risk of discrimination claims and enhance the company's reputation as an equitable employer.

Employment regulations are also changing regarding the classification of workers as either employees or independent contractors under the Fair Labor Standards Act (FLSA). The U.S. Department of Labor (USDOL) has adopted a new rule using a totality of the circumstances standard, considering six non-exhaustive factors equally. These factors include the opportunity for profit or loss, investments by the worker, the permanence of the relationship, whether the worker is an integral part of the business, and the skill and initiative required for the position. This new rule has faced several legal challenges, and employers must stay informed about ongoing developments and potential changes from the incoming administration.

Title: Navigating Worker Classification and Retirement Plan Changes

Employers must be aware of the various standards set by federal and state agencies for classifying workers. While some standards may be similar, notable differences can impact compliance. Consulting with legal counsel and staying updated on specific requirements of different agencies is crucial to ensure proper worker classification. This need is heightened as the federal government continues to delegate more legislation and rules to the state level. Consequently, businesses must work with experts familiar with state laws and regulations.

Worker classification and pay transparency are not the only areas experiencing changes; retirement plan regulations have also evolved significantly. The SECURE Act of 2019 and the SECURE Act 2.0, passed in 2023, introduced several provisions to improve retirement savings for employees. One major change is the shift to automatic enrollment in 401(k) plans, making it an opt-out rather than an opt-in system. This change is expected to boost employee participation in retirement plans and enhance their future savings. Employers should also be aware of available tax credits for establishing new 401(k) plans and offering matching contributions, which can help offset startup costs and incentivize employer contributions.

2025 will bring significant regulatory changes affecting businesses across various sectors. Staying informed and proactive is key to navigating these shifts effectively. Understanding tax policy shifts, employment law updates, wage and hour regulations, and pay transparency requirements will enable businesses to make informed decisions and ensure compliance. Partnering with trusted advisors and utilizing technology solutions can support businesses in managing these complexities and positioning themselves for success in the evolving regulatory landscape. Additionally, keeping up with developments in employment regulations, worker classification, retirement plans, and AI is crucial for maintaining compliance and competitiveness. Working with legal counsel, HR professionals, and industry experts will help employers navigate these issues and implement best practices to attract and retain top talent. Businesses must remain proactive and adapt to new requirements to ensure long-term success.