As we enter 2025, US work legislation changes are set to reshape employment conditions for both local and foreign professionals. These updates matter to expats aiming to launch or continue their careers in the United States and businesses based outside the US looking to hire American employees or expand stateside.

This article highlights the major US employment law updates 2025 in wage rates, tax considerations, leave policies, and remote work. We’ll also explore how an Employer of Record (EOR) service can ease your transition and keep your operations in line with new rules—whether you’re an international company expanding your business in the US or an expat settling into a new chapter in this country.

Key legislative changes in 2025

Below are the most significant updates to US employee rights for 2025, based on federal announcements and state-level policy trends. While some regulations remain the same, these shifts could greatly affect both employees and employers.

Minimum wage adjustments

Although the federal minimum wage hasn’t seen a major rise in recent years, 2025 legislation could introduce a modest increase, particularly for federally contracted workers or in certain states adopting higher thresholds. Many states and cities already mandate wages above the federal level, so staying aware of local mandates is crucial.

Federal vs. State rates: Check the U.S. Department of Labor (DOL) for the national rate and your state labor department for more specific guidelines.

According to Paycom’s state-by-state minimum wage guide, many states now set hourly pay above the federal minimum of $7.25 to match rising living costs. For instance, California and Washington both mandate wages above $15 per hour, while some states—like Alabama or Louisiana—have no specific state minimum and therefore stick to the federal level. A few locations link adjustments to cost-of-living increases, allowing wages to climb automatically with inflation each year. This varied landscape means employers must stay updated on both state and local rules to ensure full compliance.

Potential indexing: Some states tie annual increases to inflation, so 2025 may bring new index-based raises.

Tax regulations and updates

The US tax environment can be complicated, involving both federal and state-level obligations. For US work legislation changes 2025, certain tax credits, standard deductions, and thresholds may shift in line with inflation or new federal budget provisions.

• Federal income tax: The Internal Revenue Service (IRS) regularly adjusts brackets for inflation, influencing payroll withholding amounts.
• State and local taxes: Some states might introduce or change surtaxes, altering the total tax burden for employees.
• Business tax policies: Non-US firms operating a US branch could see updated corporate income tax rules or new incentives at the state level.

Leave policies

While the United States lacks a unified federal paid family leave system, 2025 may bring changes as certain states consider creating or expanding existing programs. Some regions already offer significant benefits, with states like Washington and Massachusetts providing up to 12 weeks of paid family or medical leave, funded by mandatory payroll contributions.

In Washington alone, over 170,000 claims were approved within the first year of its Paid Family and Medical Leave rollout. At the federal level, FMLA (Family and Medical Leave Act) improvements could be on the table, potentially introducing minor updates to eligibility criteria or length of leave.

However, these adjustments aren’t guaranteed, so it’s prudent to keep an eye on evolving legislation and official FMLA guidelines for the latest details.

Employee misclassification and gig economy rules

Ongoing discussions about the gig economy suggest that 2025 might intensify monitoring of who qualifies as an employee rather than a freelancer. Both federal agencies and individual states could adopt clearer rules, possibly mirroring or surpassing California’s AB5, which shifted the criteria for self-employment in a major way.

The US Department of Labor (DOL) has hinted that the Wage and Hour Division may release updated guidelines, making it more difficult for companies to label workers as contractors if their daily tasks resemble traditional employment.

Firms that disregard these changes or continue using outdated classification practices risk facing both financial repercussions—such as back payments—and legal consequences.

In a notable precedent, rideshare companies in California were subject to multi-million-dollar penalties soon after AB5 took effect, reflecting the heightened scrutiny that gig-focused businesses can anticipate nationwide.

Remote and hybrid work provisions

Remote and hybrid work have become more prevalent, and 2025 may see new guidelines or best practices for these arrangements. While federal mandates are limited, certain states or agencies might introduce frameworks around overtime rules, home-office expenses, or required rest periods.

• State-specific labor laws: Remote employees often fall under the jurisdiction of the state where they perform their duties, making compliance checks crucial.
• Health and safety obligations: Employers might be encouraged to ensure ergonomic standards for home offices, though no universal federal law currently mandates it.

Implications for employees and expats

For employees and expats relocating to the USA

Professionals aiming to work in the US should pay close attention to any state-specific minimum wage or leave rules, especially if they plan to live in high-cost cities.

Visa endorsements may not directly hinge on these changes, but your employment contract or salary threshold could be impacted if new wage floors apply to your sector or location. Accurate tax withholding is also essential; a mismatch can lead to underpayment or a surprise bill come tax season.

For employers

If you’re a company expanding or hiring in the United States you should consider several factors.

Compliance risks are a critical concern, as missing even minor changes to payroll, worker classification, or leave provisions can lead to fines from the Department of Labor. Adapting HR policies is also essential because regulations vary widely between states, requiring your HR department to remain informed about the most relevant rules. Additionally, strategic hiring plays a significant role, as budgeting for higher employee costs becomes necessary if new minimum wage or overtime thresholds apply.

Employer of Record (EOR) services as a solution

An Employer of Record (EOR) essentially becomes your local HR partner, handling tasks like payroll, benefits, and legal compliance on your behalf. This arrangement allows businesses and expats alike to avoid setting up separate entities in a new country or navigating a complex web of legal obligations alone. With an EOR’s support, you can focus on building a successful venture or settling into your new role, confident that employment matters are in expert hands.

For companies

• Payroll management: A US-based Employer of Record (EOR) handles payroll setup and withholdings, ensuring all tax obligations align with 2025 federal and state adjustments.
• Legal compliance: By staying current on worker classification laws, overtime regulations, and benefits standards, the EOR keeps your business clear of costly penalties.
• Onboarding and contract updates: An EOR provides compliant employment agreements incorporating new leave entitlements and remote work provisions, so your HR team doesn’t have to juggle every legal detail.

For employees and expats relocating to the USA

• Simplified payroll: Instead of navigating a patchwork of federal and state tax rules independently, the EOR organizes regular pay runs and correct deductions.
• Clarity on classification and benefits: With ongoing changes around gig work and worker rights, the EOR ensures you’re appropriately categorized and receive the benefits you’re entitled to.
• Support for new rules and policies: Whether it’s updated leave policies or additional rights for remote work, an EOR clarifies how these changes apply to your role, letting you focus on settling in rather than decoding legal fine print.

Looking ahead: preparing for 2025

Staying current on US work legislation changes 2025 is crucial for anyone working, hiring, or relocating to the United States. From payroll tax adjustments to potential expansions in paid leave, these new rules can significantly affect your operations or your day-to-day working life.

Partnering with an EOR remains a practical solution for managing evolving requirements. If you have questions about US employment law updates 2025 or need guidance on expat employment rules or compliance, consider how EOR services can offer hands-on support. You’ll be better equipped to succeed in the dynamic US employment landscape by addressing these changes proactively.

If you’re curious about US employment law updates 2025 or need help meeting the latest requirements, get in touch to learn how Employer of Record services can support your business expansion or personal relocation plans.

This article provides general information and should not be considered legal advice. Please consult with a qualified professional for specific guidance on US employment law.