Compliance Corner: HR 2025 Wrap Up
Monday December 15th, 2025
Estimated time to read: 5 minutes, 15 seconds
As we close out 2025, we can look back and see that many HR developments and legislation made an oversized impact on the year. Some of the main changes include the One Big Beautiful Bill Act (OBBBA), immigration issues leading to the increased need for organized I-9 compliance, the growing use of artificial intelligence (AI) in the workplace, emphasis on wellness in the workplace, and new, innovative trends for talent development.
In this Compliance Corner, we’ll provide some insights into how to handle the year’s top updates. We will also highlight trends and insights as we head into the new year and focus on best practices for keeping your organization competitive and compliant.
One Big Beautiful Bill Act
One of the most confusing developments affecting employers this year is the One Big Beautiful Bill Act (OBBBA), also known as H.R. 1. The OBBBA was signed into law on July 4, 2025. This is a reconciliation bill that permanently extends most of the 2017 Tax Cuts and Jobs Act provisions while introducing new, mostly temporary, tax deductions and major spending and policy changes. The bill is effective for 2025-2028 and is retroactive to January 1, 2025.
Key provisions affecting businesses include:
- Business tax provision changes involving car loan interest, COVID-related employee retention credits and a permanent 100% bonus depreciation
- Employer-provided child care credit increases
- Employees can now deduct tips from their annual taxes, and can also deduct the portion of overtime that exceeds their regular rate of pay from their annual taxes
- Paid Family and Medical Leave credit
- Increased immigration-related charges and fees
- Increased fines and penalties for employers relating to immigration violations
- Increased annual contribution limits to dependent care flexible spending plans (FSAs)
- Expansions to high-deductible health plans (HDHPs) and health savings accounts (HSA)
What This Means for You: Each organization is affected differently, but you may now need to separately track overtime premiums and tip pay. There could be new W-2 reporting requirements concerning overtime and tipping. Now is the time to consider providing paid leave beyond the mandated state requirements, since there are tax credits available for these types of benefits.
It’s now more attractive to offer childcare credit to employees, as this allowance has increased from $150,000 to $500,000. Benefit options are now more flexible and helpful to employees, as employers and employees will have more approved uses for their pre-tax health dollars. Changes in immigration and customs enforcement could result in an increase of Form I-9 audits and unexpected inspections of organizations.
What You Can Do: For many of these provisions, the IRS website is a wonderful resource. You may also want to consult with your accountant, attorney or your HR Services contact. Consider changing the benefits that you offer employees, based on new tax advantages or disadvantages. It’s recommended to review payroll systems for tip reporting, and update benefit plan documents for health savings accounts (HSAs) and flexible savings accounts (FSAs). Be sure to communicate any payroll or benefit changes to your employees before 2026.
I-9 Compliance
The new administration has brought the issue of undocumented workers to the forefront in the United States. The unprecedented ICE raids have caught many organizations off-guard. With this heightened focus, it is very important for employers to remain diligent in having all I-9 documentation in compliance.
The United States Citizenship and Immigration Services (USCIS) requires all U.S. employers to properly complete the Form I-9 to verify the identity and employment authorization for everyone hired into the workplace. Upon acceptance of a job offer or on his/her first day of employment, all employees are required to complete section one of the I-9 Form and present valid documents. As an employer, you are responsible for examining and verifying the authenticity of documents and then signing off on the second portion of the Form, within three business days from the time of hire.
Additionally, the Department of Homeland Security (DHS) has created an alternative examination process through the online E-Verify system. Here, documents can be viewed by a qualified employer representative through a live video call. E-Verify is a web-based system that many employers are required to register for. Employers who choose the E-Verify option must still electronically review and attest employee identity and authorization on the I-9 Form, as required by law.
What This Means for You: As an employer, it is crucial that you properly complete and maintain accurate I-9s for all active employees within your business. These records should be retained for three years after the date of hire or one year following the date of termination, whichever is later. We’ve seen an uptick in audits in 2025. Should you face an audit, you may risk hefty fines if proper identity, work authorization documents or necessary signatures are missing from your I-9 Forms.
What You Can Do: Familiarizing yourself with I-9 best practices is essential for your organization. If you hire foreign nationals with work authorization documents, student visas or specialized work visas, ensure you understand how to effectively examine the required paperwork. You can reference the USCIS website for more in-depth details. Working with your isolved HR Services team to conduct internal audits in order to avoid common errors, is a good way to kick off the new year.
AI in HR
This year, we’ve seen a major rise in the use of artificial intelligence (AI) technology in HR. Professionals who work within HR are very busy, bombarded daily with a variety of tasks and challenges. Sourcing top talent and hiring quickly, sifting through a mountain of paperwork during benefits enrollment and navigating tax and direct deposit forms with new hires are just a few of the areas where we see AI easing the burden. The power of AI can provide efficiencies in assisting with streamlining internal HR best practices. However, the power of AI needs to be harnessed carefully and with forethought.
What This Means for You: AI presents HR departments with a unique opportunity: to become more streamlined and strategic. AI-powered human capital management (HCM) technology allows HR teams to offload time-intensive administrative work and take up more strategic projects that drive bigger business value.
What You Can Do: AI should be embraced to enhance efficiency—but the process of implementing AI requires strategic thinking. Organizations should thoroughly vet vendors that use AI and ensure a dedication to responsibility and transparency. Organizations should also clearly communicate their AI plans with employees, to allay any fears that a workforce is in danger of being replaced. As with any powerful tool, AI must be used responsibly to avoid potential bias in hiring and promotion decisions and to stay compliant with applicable regulations.
Emphasis on Wellness in the Workplace
Increasingly, organizations are prioritizing wellness in the workplace. Wellness programs in the workplace offer a win-win, because not only do they benefit the employee and their needs, but they also lead to reduced employee absenteeism, lower healthcare costs and increased productivity and engagement. Tangible benefits include boosted employee morale, better retention and a more positive company culture.
Many organizations have expanded their wellness offerings to include:
- Connecting employees to needed health and well-being resources
- Offering flexible work options
- Implementing an employee assistance program (EAP) or counseling services
- Providing a financial wellness course, tuition assistance, or earned wage access (on-demand pay)
- Allowing accommodations in the workplace for medical issues
What This Means for You: It may be in your organization’s best interest to explore which wellness benefits would be the most beneficial and motivating to your employee base. Each organization has employees with varying needs. It is crucial to look at which benefits will be most impactful to the greatest number of employees. Getting to know what is meaningful and needed from your employee base is very helpful when implementing wellness benefits.
What You Can Do: Listen to your employees and determine which benefits would be most meaningful to them. Many of these benefits are free or have very low costs associated with them and are simple to implement. Up-and-coming wellness benefits include wellness programs (with incentives for health insurance discounts), workplace flexibility (to offer a great work-life balance) and the use of ergonomics (providing workstations designed to minimize physical strain).
There may be some tax benefits worth delving into from the OBBBA that may also benefit employees. Consider paid family leave tax credits and the enhancement of dependent care flexible spending accounts when developing your wellness-based benefit offerings.
Talent Development
The concept of developing talent evolved substantially in 2025. Businesses increasingly steered away from the more traditional, stand-alone annual performance review process toward more frequent interactions between leaders and managers. Your people are your greatest asset, and should be a source of investment. isolved’s 2024-2025 Voice of the Workforce report found that 30% of employees say that investing in professional development is the top way organizations can improve the employee experience (EX). Talent development is the key to ensuring these employees remain fulfilled within the workplace and are committed to your company’s success.
What This Means for You: Even in uncertain economic circumstances, employees are keeping their options open. According to the same report, 72% of employees plan on exploring job opportunities in the next year. Employers need to demonstrate an interest in employees’ career aspirations and talent development to reduce turnover and boost performance.
What You Can Do: As you move into 2026, implementing a learning management system (LMS) offers a simple way for employees to hone their skills and level up their performance. Alternative ways to nurture your internal talent and provide continuous learning paths include encouraging your managers to engage in quarterly check-ins with direct reports. Offering more frequent connections fosters better relationships and more open communication overall, thus enhancing EX. Invest in a few self-directed training initiatives and remember that engagement does not always have to be an elaborate, all-consuming task. Making your people feel valued, seen and heard is sometimes the key to loyalty and self-motivation.
Looking Forward to 2026
As we roll into 2026, we can reflect on the changes that took place in 2025 and prepare ourselves for new trends and legislation that may develop. While no one can predict the future of pending legislation or outcomes, you can commit to remaining well-versed in a variety of HR trends and compliance matters that may impact your workforce and industry. Remaining informed of expanding leave laws, new tax incentives and requirements, developing approaches to streamlining human resources workflows, and new ideas within the talent development area will ensure that you are staying competitive as an employer of choice. Staying informed will always be a competitive advantage.
Disclaimer. The information provided herein is for general informational purposes only and is not intended to be legal, investment or tax advice. It is not a substitute for professional legal, investment or tax advice, and you should not rely on it as such. No attorney-client or accountant-client relationship or any other kind of relationship is formed by any use of this information. The effective date of various provisions, amendments, and regulatory guidance may impact eligibility. The accuracy, completeness, correctness or adequacy of the information is not guaranteed, and isolved assumes no responsibility or liability for any errors or omissions in the content. You should consult with an attorney, investment professional or tax professional for advice regarding your specific situation.