US Employment Law Updates

US Employment Law Updates in 2025

Minimum Exemption Salary Thresholds

The following states and localities have adjusted their minimum exemption salary thresholds:

Computer Employee Exemption

The federal hourly rate for employees in a computer-related occupation is $27.63 hourly, or $684 weekly, to be classified as exempt from overtime. The following states have adjusted their minimum salary exemption requirement for computer employees:

• California: $56.97 hourly, or $118,657.43 annually
• Colorado: $34.07 hourly
• Washington: $58.31 hourly

401(k) Updates

The federal “highly compensated” threshold, as it relates to retirement plans, will increase from $155,000 to $160,000. There are also changes to both the Traditional 401(k) and the Roth 401(k), discussed below.

Traditional 401(k)

In 2025, employee contributions will cap at $23,500 – a $500 increase from 2024. The catch-up deposits for individuals aged 50 and older will remain at $7,500. Under a change made in SECURE 2.0, a higher catch-up contribution limit applies for individuals aged 60, 61, 62, and 63 who participate in these plans. For 2025, this higher catch-up contribution limit is $11,250 instead of $7,500.

Roth IRA

The maximum yearly contribution for a Roth IRA will remain $7,000. The IRA catch-up contribution limit for individuals aged 50 and over is not subject to an annual cost-of-living adjustment and remains $1,000.

Health Savings Account (HSA) Contributions

The annual federal inflation-adjusted limit on HSA contributions for self-only coverage will increase from $4,150 to $4,300. The HSA contribution limit for family coverage will increase from $8,300 to $8,550.

Affordable Care Act (ACA) Affordability

The ACA affordability threshold – used to determine if an employer’s lowest-premium health plan meets the ACA’s affordability requirement – will be 9.02% of an employee’s “household income,” increased from 8.39% in 2024, for plans beginning in calendar year 2025.

State-by-State Employment Law Updates

Alaska

Paid Sick Leave in Alaska

Effective: July 1, 2025

In the November 2024 general election, Alaskans voted in favour of Ballot Measure 1, which, among other new protections for employees, created a new statewide paid sick leave law. Effective July 1, 2025, employers will be required to provide one hour of paid sick leave for every 30 hours worked. Employees will be able to use paid sick leave as it is accrued. The law includes an accrual and maximum use cap, dependent on employee count. It is not clear, currently, whether the employee count is dependent on employees within Alaska or employees nationwide. For employers with 15 or more employees, employees will be entitled to accrue and use up to 56 hours of paid sick leave per year; for employers with less than 15 employees, employees will be entitled to accrue and use up to 40 hours of paid sick leave per year.

California

Freelance Worker Protection Act

Effective January 1, 2025

California has established a statewide freelance worker protection law, imposing requirements for a written contract between the hiring entity and the freelance worker, as well as timely payment – similar to other state and city freelance worker protection laws. Under the law, a freelance worker is defined as a person that is hired or retained as an independent contractor by a hiring party to provide professional services in exchange for an amount equal to or greater than $250, either by itself or when aggregated with all contracts for services between the same hiring party and an independent contractor during the immediately preceding 120 days. A hiring party is any party that retains a freelance worker to provide professional services.

Under the Act, contracts between a freelance worker and a hiring party must be executed in writing and include:

• The name and mailing address of each party;
• An itemized list of all services to be provided by the freelance worker, along with the value of those services and the rate and method of compensation;
• The date on which the hiring party is required to pay the agreed upon compensation, or the mechanism through which the deadline will be determined; and
• The date by which a freelance worker must provide a list of services rendered under the agreement to the hiring party to meeting the hiring party’s internal processing deadlines to allow for the timely payment of compensation.

If the contract does not specify when the hiring party must pay, a freelance worker must be paid no later than 30 days after the completion of services under the contractor.

San Francisco – Health Care Security Ordinance (HSCO)

Effective January 1, 2025

Under San Francisco’s Health Care Security Ordinance, covered employers must satisfy the employer spending requirement by making required health care expenditures on a quarterly basis on behalf of covered employees. The expenditure rate for employers with 100 or more employees nationwide will increase from $3.51 per hour to $3.85 per hour, up to a maximum of $662.20 per month, on January 1, 2025. The 2025 ordinance exempts all managerial, supervisory, and confidential employees who earn more than $125,405 per year from this requirement, increasing from the current threshold of $121,372.

Connecticut

Paid Sick Leave Expansion in Connecticut

Effective January 1, 2025

Connecticut’s paid sick leave law will expand over the next three years, beginning on January 1, 2025. Currently, paid sick leave is available for certain service workers that work for employers that employ 50 or more individuals within the state. The leave is limited to employees that meet the state’s definition of a service worker. Beginning on January 1, 2025, the law will eliminate the service worker criteria.

Employers will be required to provide up to 40 hours of paid sick leave to all employees as follows:

• Beginning January 1, 2025, the law will apply to employers with 25 or more employees in Connecticut.
• Beginning January 1, 2026, the law will apply to employers with 11 or more employees in Connecticut.
• Beginning January 1, 2027, the law will apply to employers with at least one employee in Connecticut.

Please note, if you are an existing PGC client, who are owned by Workwell Global,  we will promptly inform you if paid sick leave is required based on Assigned Worker count and we will keep you updated on any cost considerations.

Illinois

Pay Transparency Law in Illinois

Effective January 1, 2025

Employers with 15 or more employees in Illinois will be required to disclose the pay scale and benefits for a position, including but not limited to bonuses, stock options, and incentive-based compensation. The law will also apply to positions located outside of the state where the work may be performed at least in part in Illinois. As laws on salary disclosure vary by state, we encourage businesses to provide a general, reasonable salary range in job postings for remote roles. If you are a PGC client, who are owned by Workwell Global, please reach out to your PGC Business Manager with any questions on state pay transparency laws and requirements.

Massachusetts

Pay Transparency Law in Massachusetts

Effective October 29, 2025

Employers with 25 or more employees in Massachusetts will be required to disclose the pay range for a job position in any posting for the position. “Posting” includes any advertisement or job posting intended to recruit job applicants for a particular and specific employment position, including, but not limited to, recruitment conducted directly by the employer or indirectly through a third party. The pay range must be reasonable and in good faith. As laws on salary disclosure vary by state, we encourage businesses to provide a general, reasonable salary range in job postings for remote roles.

Michigan

Paid Sick Leave Amendments in Michigan

Effective February 21, 2025

Michigan’s paid sick leave entitlements will be amended, effective February 21, 2025. The current paid sick leave law will be replaced by the Earned Sick Time Act. Under the new law, employers with 10 or more employees nationwide will be required to provide one hour of paid sick time for every 30 hours worked, with a maximum use and carryover cap of 72 hours. Under the state’s guidance, employees may use earned sick time as it is accrued, except that an employer may require an employee to wait until the 90th calendar day after commencing employment before using accrued sick time. For reference, Michigan’s current law allows for an annual accrual and use of 40 hours of paid sick leave, with an accrual rate of 1 hour for every 35 hours worked.

Missouri

Paid Sick Leave in Missouri

Effective May 1, 2025

In the 2024 general election, Missourians voted in favour of creating a new statewide paid sick leave law. Effective May 1, 2025, employers will be required to provide one hour of paid sick time for every 30 hours worked. Employees will be able to use paid sick leave as it is accrued. For employers with less than 15 employees in Missouri, employees will be entitled to use up to 40 hours of paid sick leave per year. For employers with more than 15 employees in Missouri, employees will be entitled to use up to 56 hours of paid sick leave per year. Up to 80 hours of paid sick leave may be carried over per year; alternatively, in lieu of carryover, an employer may pay an employee for unused paid sick leave at the end of the applicable year.

Nebraska

Paid Sick Leave in Nebraska

Effective October 1, 2025

In the November 2024 general election, Nebraskans voted in favour of Initiative Measure 436, to create a new statewide paid sick leave law. Effective October 1, 2025, the Healthy Families and Workplaces Act will require employers to provide one hour of paid sick leave for every 30 hours worked. Employees will be able to use paid sick leave as it is accrued. The law includes an accrual and maximum use cap, dependent on employee count; it appears the count is dependent on employees nationwide, but more guidance should be provided by the state in upcoming months. For employers with fewer than 20 employees, employees will be entitled to accrue and use up to 40 hours of paid sick leave per year; for employers with 20 or more employees, employees will be entitled to accrue and use up to 56 hours of paid sick leave per year. Any accrued sick time will be carried over – however, in lieu of carryover, an employer may pay an employee for any unused paid sick time at the end of the applicable year.

New Jersey

Pay Transparency in New Jersey

Effective June 1, 2025

Effective June 1, 2025, covered New Jersey employers will be required to disclose wage or salary ranges and general benefits information in each job posting or advertisement. An employer is defined as any entity that has 10 or more employees over 20 calendar weeks and does business, employs persons, or takes applications for employment within New Jersey. This includes job placement, referral, and employment agencies. The law does not clarify whether the employees, job applicants, or employment itself must be located within the state – this will likely be clarified in upcoming months; nonetheless, best practice guidance would be to include a reasonable salary range in all job postings. Covered employers must also make reasonable efforts to announce, post, or otherwise make known opportunities for promotion to all current employees in the affected department.

New York

Paid Prenatal in New York

Effective January 1, 2025

Effective January 1, 2025, employers will be required to provide up to 20 hours of paid leave per year for pregnant employees for prenatal care, in addition to employees’ paid sick leave entitlements. The leave will be a stand-alone benefit, separate from statewide paid sick leave, available to employees seeking prenatal healthcare services, including physical examinations, medical procedures, monitoring and testing, discussions with healthcare providers, end-of-pregnancy care, and fertility treatment. Employers must permit employees to take paid prenatal leave in hourly increments and must be paid at the employee’s regular wage rate or at the applicable minimum wage, whichever is greater.

• All employees working in New York may be eligible for this benefit from the first day of their employment; the law does not require employees to accrue paid prenatal leave. Spouses, partners, and other support persons are not entitled to use paid prenatal leave.
• Employees can choose whether to use paid prenatal leave before or after their other available paid time off benefits; in other words, prenatal health care appointments may be covered by New York State paid sick leave, paid prenatal leave, or an existing employee leave policy.
• An employer may not require an employee to disclose confidential information as a condition of granting paid prenatal leave, nor may an employer discharge, threaten, penalize, or in any other way discriminate or retaliate against an employee for requesting or using paid prenatal leave. Upon returning from prenatal leave, an employee must be restored to the position they held prior to that leave, with the same pay and other terms and conditions of employment.
• Employers cannot require verification of an employee’s eligibility for paid prenatal leave or other documentation of an employee’s need for the absence.

For further guidance, please refer to the state’s Frequently Asked Questions or reach out to your business manager if you are an existing PGC client.

Vermont

Pay Transparency in Vermont

Effective July 1, 2025

Effective July 1, 2025, employers of 5 or more employees must disclose the compensation or range of compensation for job openings in all job advertisements. The law applies only to Vermont job openings. The position must either be physically located in Vermont, or are remote and predominantly require the performance of work for an office or work location physically located in Vermont. Nonetheless, as laws on salary disclosure vary by state, we encourage businesses to provide a general, reasonable salary range in job postings for remote roles. If disclosing a range of compensation, the range must be made in good faith.