This is part of a series of articles by Wright Lindsey Jennings’ labor and employment team examining key trends for employers and the workplace in 2025, authored by attorney Stuart Jackson. The series was featured in Arkansas Business.
Hang on to your hats — a lot is going to take place in the next couple of years in the employment world after the transition from the Biden administration to the Trump administration.
Department of Labor Wage and Hour Issues
Two immediate wage and hour issues come to mind for 2025 — first, the status of the 2024 Department of Labor (DOL) salary rule that raised the minimum salary for the white-collar exemptions to $844 per week ($43,888 annually) effective July 1, 2024, and $1,128 per week ($58,656 annually) effective Jan. 1, 2025; and second, the Department of Labor’s rule on who is and who is not an independent contractor.
The first issue — the 2024 DOL rule raising the white-collar exemptions’ minimum salary amounts under the Fair Labor Standards Act (FLSA) — is a huge mess.
Almost immediately after the 2024 rule was issued, it was challenged in federal courts in Texas and Washington, D.C. While some limited injunctive relief was issued during the summer, nothing stopped the implementation of the rule on a nationwide basis. So, employers either raised the minimum salaries of the white-collar exempt jobs or reclassified those jobs as non-exempt/eligible for overtime, and started planning for the Jan. 1, 2025 raise in salary.
Shoot forward to Nov. 15 when a federal judge in Texas struck the 2024 DOL rule in its entirety, taking out both salary increases. There’s been no word from the D.C. court, although summary judgment motions have been filed by both sides as of mid-December.
What I see potentially happening is the Trump Administration not appealing the Texas ruling, allowing the 2024 DOL salary rule to die unless something unexpected happens in the DC court. The question for employers then becomes what to do with those exempt employees who received salary increases in July 2024. My take: reverting back to the lower salary level would be problematic for a variety of legal reasons, as well as non-legal reasons, such as worker morale.
Another change we anticipate is a new rule from the DOL on who is and who is not an independent contractor (for purposes of minimum wage and overtime) under the FLSA.
Just before Trump left office, the DOL issued a rule on independent contractors that focused on two things: the nature and degree of control by the business over the work and the worker’s opportunity for loss and profit. Secondary factors included the amount of skill required for the work and the degree and permanence of the working relationship between the business and the worker. The overall effect of the rule made it a bit easier to classify someone (especially a “gig” worker) as an independent contractor in the eyes of the DOL under the FLSA. But the Biden administration rescinded the rule.
Look for the second Trump administration DOL to dust off that rule and reintroduce it, but (please) don’t see this as open season to reclassify your current or future employees as independent contractors. While courts might look to DOL rules for guidance, courts make the final call on who is or is not an independent contractor under the FLSA. And you still have to worry about how the IRS and other government agencies interpret their own independent contractor rules.
The final things we might see from the Trump administration in terms of wage and hour issues is a push to make tip and overtime wages tax free. We’ll see if those promises were just campaign banter or if the Trump administration is serious about them. If it is serious, one wonders if certain Republican members of Congress would go along with something that might increase the deficit even more.
The Federal Trade Commission’s Noncompete Rule
Another federal agency took it on the chin in 2024, impacting what employers can do with non-compete agreements in 2025.
The Federal Trade Commission’s (FTC) noncompete rule that was set to go into effect on Sept. 4, 2024, would have done two things:
- Prohibited employers from entering into noncompete agreements with workers.
- Invalidated the majority of existing noncompete provisions in employment agreements with workers, with workers including full-time and part-time employees, independent contractors, interns, externs, volunteers, and apprentices. Although multiple lawsuits were filed challenging the rule, a federal court in Texas threw out the rule on a nationwide basis in August, holding that the FTC exceeded its statutory authority and that the rule was arbitrary and capricious (see Ryan LLC v. Federal Trade Commission).
The FTC filed an appeal of the Texas decision on Oct. 18, but nothing of substance has happened, and I doubt anything of substance will happen before Jan. 20. And the other courts in Florida and Pennsylvania have seen an appeal by the FTC of a limited preliminary injunction that was granted against the rule or seen the plaintiff seek a voluntary dismissal of the case.
So with two appeals by the FTC currently pending, I see the possibility of the FTC rule dying the same potential death as the 2024 DOL rule on salary levels, with the Trump administration not pursuing or withdrawing the appeals, effectively letting the court rulings invalidating or enjoining the noncompete rule stand.
But even with the apparent death of the FTC’s noncompete rule, there seems to be a growing movement to limit noncompete agreements, even here in Arkansas.
We will continue to monitor any Arkansas state or federal legislation on the topic, and if any appear likely to succeed, we’ll pass along any pertinent information.
The National Labor Relations Board
There’s no better example of how the pendulum swings back and forth between Republican and Democratic administrations than the guidance and opinions that come out of the National Labor Relations Board’s (NLRB) interpretation of the National Labor Relations Act (NLRA). And starting in 2025 or 2026, expect that guidance and those opinions to swing back in favor of employers, starting with the firing of the current general counsel for the NLRB, a Biden appointee.
So, what does the NLRA do? It generally protects your non-management employees by allowing them to discuss the terms and conditions of their employment and advocate for their mutual aid and protection, something referred to as protected concerted activity.
Where could we see significant shifts that will impact Arkansas businesses when it comes to the NLRA? Definitely in the area of common-sense workplace rules that may impact an employee’s rights under the NLRA. During the first Trump administration, workplace rules that were generally considered lawful by the NLRA included neutral rules that prohibit “behavior that is rude, condescending or otherwise socially unacceptable”; “disparaging or offensive behavior”; and behavior that creates “discord with clients or fellow employees.”
The Biden NLRB took a more pro-employee approach to workplace rules, stating such rules must be “narrowly tailored” and “advance a legitimate and substantial business need.” Any interference with rights of an employee under the NLRA was presumptively unlawful, and it was the employer’s burden to show special circumstances to demonstrate the rules was necessary.
How could this play out? A rule that might get struck by the Biden NLRB — such as one that leads to the termination of an employee for unprofessional conduct toward other employees while arguably advocating for better terms and conditions of employment — probably survives under the Trump NLRB.
The EEOC’s Guidance on Workplace Harassment and The Pregnant Workers Fairness Act
Don’t be surprised if the Equal Employment Opportunity Commission (EEOC) under the Trump administration eventually changes its enforcement guidance on workplace harassment as it relates to gender identity.
Currently, the EEOC guidance states that “sex-based harassment includes harassment based on sexual orientation or gender identity,” which is consistent with the law. It’s the EEOC’s statements that “repeated and intentional use of a name or pronoun inconsistent with the individual’s known gender identity (misgendering)” or “the denial of access to a bathroom or other sex-segregated facility consistent with the individual’s gender identity” that have proven to be controversial. Even a current EEOC commissioner refers to the bathroom rules as an attack on women’s rights, and those rules are being challenged in federal court in Tennessee by several states, including Arkansas.
And no one will be shocked if the EEOC under the Trump administration issues new guidance/regulations on the Pregnant Workers Fairness Act (PWFA) relating to reasonable accommodations for employees having abortions, and only if the current court challenges don’t beat the EEOC to the punch. The PWFA requires covered employers to reasonably accommodate pregnancy and childbirth-related conditions, and the EEOC currently considers the PWFA to require reasonable accommodations related to an employee seeking an abortion.