The employment law landscape shifts rapidly, making it difficult for employers to keep up. From the sweeping “One Big Beautiful Bill Act” that’s introducing major compliance requirements to clarification for the salary threshold for exempt employees under the Fair Labor Standards Act (FLSA), the impact will be felt nationwide. In fact, the vast majority of states have enacted their own updates, which means multi-state employers must navigate a patchwork of new rules and regulations.

This blog highlights the key takeaways from our 50 State Employment Law Update webinar, as well as answers to some of the questions received during the live webinar, so you can stay informed and ahead of the curve.

One Big Beautiful Bill Act

The proposed One Big Beautiful Bill Act introduces a wide range of employer-focused tax credits and benefits expansions, including updates to tip deductions, paid family leave, childcare credits, health savings accounts and dependent care flexible savings accounts.

You Asked: Under the One Big Beautiful Bill, when do the tax deductions for “qualified overtime” and “qualified tips” start?

Employees’ tax deductions for “qualified overtime” and “qualified tips” are temporary and will last from 2025 through 2028.

You Asked: Under the One Big Beautiful Bill, do employers need to tax “qualified overtime” or “qualified tips” differently?

According to the Internal Revenue Service (IRS), employers must file information returns with the IRS (or Social Security Administration) and furnish statements to employees that show certain cash tips received and the occupation of the tip recipient as well as the total amount of qualified overtime compensation paid during the year. Employers should monitor IRS guidance for any new reporting requirements related to overtime and tips. At present, standard W-2 reporting applies. We expect to receive further guidance from the IRS on this issue in the near future.

You Asked: If employees are pieceworkers, does an employer need to track those employees’ overtime hours? How will the One Big Beautiful Bill impact pieceworkers?

Employers are responsible for tracking all hours worked (including overtime hours) for pieceworkers if such workers are non-exempt employees under the FLSA. The general rule is that all employees are non-exempt employees unless an employer can classify an employee under an applicable exemption (e.g., executive, administrative, professional, outside sales, etc.). Non-exempt employees are entitled to receive overtime pay at a rate of 1.5x the employees’ regular rate of pay for all hours worked over 40 hours in a workweek. The tax deductions for “qualified overtime” under the One Big Beautiful Bill apply to all overtime required to be paid to an employee under the FLSA.

Therefore, the tax deductions for “qualified overtime” under the One Big Beautiful Bill will apply to pieceworkers who are classified as non-exempt employees and work over 40 hours in a workweek because an employer will be required to pay those pieceworkers overtime under the FLSA.

Read more on what employers need to know about the One Big Beautiful Bill.

Salary Threshold for Exempt Employees

The Department of Labor (DoL) was planning to increase the salary threshold for exempt and highly compensated employees over the next several years. However, these changes were struck down by a federal court.

You Asked: What is the current federal salary threshold for the white-collar exemptions (executive, administrative and professional exemptions) under the FLSA? Did the salary threshold increase in 2024 and in 2025?

The current salary threshold for the white-collar exemptions is $684 per week ($35,568 annually).

On July 1, 2024, the salary threshold for the white-collar exemptions increased to $844 per week ($43,888 annually) and was set to increase again on January 1, 2025, to $1,128 per week ($58,656 annually).

However, in November 2024, a federal district court in Texas struck down the salary threshold increases and reinstated the former salary threshold amount in effect before July 1, 2024. Therefore, the current salary threshold for the white-collar exemptions is $684 per week ($35,568).

Remember, however, that some state and local laws have higher salary threshold requirements than the federal salary threshold under the FLSA. For example, the salary threshold for executive and administrative exempt employees in the state of New York is $1,161.65, but the salary threshold for an executive or administrative exempt employee in New York City is $1,237.50 per week.

Employers must comply with the most “employee-friendly” law. So, if an executive exempt employee works in New York City, an employer must pay the employee $1,237.50 per week in order to satisfy the salary threshold requirement since New York City has the most employee-friendly law compared to the State of New York and the FLSA.

You Asked: Does the salary threshold apply to non-profits?

It depends. The salary threshold of $684 per week ($35,568 annually) is a requirement under the FLSA. The FLSA applies to any employee who is individually engaged in interstate commerce, which means that many non-profit employees will be subject to the FLSA and therefore must satisfy the salary threshold to be classified as exempt. Even if an employee is not subject to the FLSA, a salary threshold test may still apply under state or local law.

This can be a complicated issue, so we recommend obtaining professional HR or legal advice for employee-specific questions.

State Law Updates

Employment law changes swept across at least 38 states, with updates that include expanded paid sick leave, new limits on artificial intelligence (AI) use in hiring, bans on non-compete agreements, minimum wage increases and rules governing earned wage access, among other employer obligations.

You Asked: If an employer has an office in only one state but employs remote employees in several other states, which state employment laws does the employer need to comply with?

Employers must comply with the employment laws in the state where they have physical offices and must comply with the employment laws in states where remote employees work. For example, if an employer has one physical office in Florida and employs one remote employee in Minnesota, the employer needs to comply with Minnesota law and provide the employee with earned sick and safe time and comply with all other employment laws in Minnesota.

You Asked: Are state paid leave laws, including paid sick leave, based on where an employee lives or where the employer is located (e.g., employer has an office in New Hampshire and hires an employee who works remotely in Massachusetts)?

Generally, eligibility for state paid leave and paid sick time laws is based on where an employee physically performs the work. For example, if an employer has only one office in New Hampshire and has a remote employee in Massachusetts, the employer is required to comply with the Massachusetts Paid Family and Medical Leave Insurance Program.

You Asked: In California, if an employee is working more than six hours, can the employee sign a meal waiver and choose not to take a meal break without an employer having to pay a meal penalty to the employee?

Meal waivers for employees who work more than six hours in a workday are not enforceable. Meal waivers are only enforceable if an employee works for six hours or less on a work day. Therefore, a California employer signing a meal waiver with an employee who works more than six hours on a workday would violate California law, and the employer would be subject to paying meal penalties to the employee and likely face other legal consequences.

You Asked: Is Colorado’s ban against non-compete agreements limited only to the medical industry?

No, Colorado’s ban against non-compete agreements is not limited to the medical industry. In general, most non-compete agreements are not enforceable in Colorado unless they meet one of the few exceptions (e.g., certain highly compensated employees and the sale of a business). Colorado amended its non-compete statute in 2025 to prohibit non-compete agreements for all physicians, advanced practice registered nurses, dentists and certified midwives for the protection of a business’s trade secrets.

Before the amendment enacted in 2025, employers could sue physicians for damages for violating their non-compete agreement. The amendment in 2025 eliminated employers’ ability to collect damages for a violation of a non-compete agreement and instead clarified non-compete agreements are not enforceable and expanded its protection to include other health care providers other than just physicians.

You Asked: For purposes of the child labor law in Illinois, who is considered a minor? Does the child labor law apply to interns?

Illinois’s new child labor law defines a “minor” to mean any person who is 15 years old or younger, and the new law generally applies to interns. The child labor law, however, contains a list of exemptions of minors the law does not apply to (e.g., a golf caddy that is at least 13 years old).

Navigating Compliance in 2025 and Beyond

As employers prepare for a busy year of compliance changes, staying proactive on evolving laws and regulations will be key to minimizing risk and supporting employees effectively. For deeper insights and answers to these updates, watch the full 50-State Employment Law Update – What You Must Know for 2025 webinar for the details. Plus, keep an eye out on our event center so you can register for our next 50-state webinar.

_{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.}

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