Sep 7, 2025
6 Labor Law Updates Your SMB Must Act on in July 2025
Upeka Bee
July 1, 2025, marked a mid-year checkpoint for a wave of new and updated employment laws across the United States. For small and medium-sized businesses (SMBs), especially those with a distributed workforce, overlooking these changes isn't an option. It's a path to costly fines, legal disputes, and reputational damage.
Navigating the complex regulatory environment is a top concern for business leaders, as the legal landscape shifts faster than ever before. This article identifies the six most critical trends that took effect in July.
1. The expanding reach of pay transparency
The movement for pay equity continues to gain momentum. Effective July 1, 2025, several new state minimum wage laws and pay transparency requirements are active.
Vermont: Employers with five or more employees must now disclose compensation ranges in most job postings.
Washington: The state's Equal Pay and Opportunities Act has been significantly expanded to prohibit pay discrimination based on a wide range of new protected classes, including age, race, marital status, and veteran status, moving far beyond its original focus on gender.
What you must do: Conduct a pay equity audit to identify and rectify any wage gaps. Update all job posting templates to include salary ranges where required and train your hiring managers on how to discuss compensation in compliance with these new state labor laws.
2. The crackdown on non-compete agreements continues
The push to limit or ban non-compete agreements is a major national trend impacting how you protect your business. Several states have new rules effective July 1, 2025.
Virginia: The state has expanded its ban on non-competes to include any employee who is eligible for overtime under the FLSA, regardless of their salary.
Maryland: New restrictions are now in place that ban non-competes for healthcare professionals earning $350,000 or less.
Wyoming: A sweeping new law voids most new non-compete agreements, with minimal exceptions for executives or the sale of a business.
What you must do: Audit all of your existing employment agreements. Stop using non-compete clauses for newly covered employee groups and explore alternatives like non-solicitation and confidentiality agreements to protect your business interests.
3. Paid leave is becoming more generous (and complex)
Paid leave is no longer a simple vacation and sick day calculation.
Alaska: A new voter-approved law takes effect, requiring nearly all employers to provide paid sick leave, accrued at a rate of one hour for every 30 hours worked.
Vermont: The state's Family and Medical Leave Act has been expanded to include bereavement and ‘safe leave’ for victims of domestic violence.
What you must do: Update your leave policies in your employee handbook immediately. Work with your payroll provider to ensure your system is correctly configured to track the new accrual and usage rules for each state.
4. Workplace safety and violence prevention mandates are growing
Following a trend of rising concerns about workplace safety, more states are mandating formal prevention plans.
Virginia: As of July 1, 2025, healthcare employers in the state must establish a formal system to track and report all incidents of workplace violence and notify employees of the new system. This follows a similar, broader law that recently took effect in California.
What you must do: If you are in an affected industry or state, you must develop and implement a written Workplace Violence Prevention Plan, create an incident log, and conduct employee training on the new procedures.
5. Employee privacy laws are expanding
The regulation of employee and consumer data is becoming stricter.
Colorado: As of July 1, 2025, the state's Privacy Act now requires any entity, including employers, that collects biometric data (like fingerprints for a time clock) to meet stringent notice and consent requirements.
What you must do: Review all of your data collection practices, especially for tools like time clocks or security systems. Provide clear, written notice to employees and obtain their explicit consent before collecting any biometric information.
6. New notice and posting requirements
Finally, new laws often come with new communication requirements.
California: The Civil Rights Department has released a new required notice for Survivors of Violence that must be distributed to all new hires and annually to all employees.
Ohio: The state now allows employers to post many required labor law notices digitally on an intranet, rather than physically in a breakroom.
What you must do: Update your employee onboarding checklists to include any new required notices. Additionally, check your state's rules on digital vs. physical workers' compensation notices.
Keep Tabs on Evolving Laws With DianaHR
Tracking and implementing legal changes across states, especially in the case of a distributed workforce, can be challenging. Without adequate legal knowledge and attention, you run the risk of non-compliance, inviting penalties, fines, and even lawsuits.
That’s where DianaHR can chip in with its HR experts for you. They don’t just share advice but take over HR operations.
Proactive monitoring and implementation
Our experts don't just tell you the law has changed. They update your employee handbook, reconfigure your payroll management settings for state labor laws breaks, and ensure you are compliant.
State-specific onboarding
They build and manage state-specific onboarding workflows, ensuring every new hire in every state receives the correct policies, notices, and tax forms from day one.
Expert guidance on demand
When a complex issue arises, such as a tricky accommodation request under the ADA or a nuanced question about AI in hiring, you have direct access to the seasoned HR professionals for expert advice.
Rope in DianaHR to boost HR compliance with evolving laws. Get in touch today.
FAQs
1. How can a small business keep up with all these changing state labor laws?
Subscribing to alerts from reputable employment law firms (like Fisher Phillips or Seyfarth Shaw) is a great start. Additionally, regularly check your state's Department of Labor website. However, for a business without a dedicated compliance team, partner with an expert HR compliance service whose job it is to monitor and implement these changes for you.
2. What is the most common mistake employers make with multi-state compliance?
The most common mistake is applying the policies and laws of the headquarters' state to all employees. In US employment law, the laws of the state where the employee physically performs their work are the ones that apply. This is important for issues like minimum wage, overtime, and final paycheck rules.
3. If a new law seems to conflict with our company culture, do we still have to follow it?
Yes, absolutely. While building a strong company culture is important for engagement and retention, it does not supersede your legal obligations. All workplace policies must be compliant with federal, state, and local laws. If a new state labor law, such as a mandatory paid leave requirement, conflicts with your existing unlimited PTO policy, you must adjust your policy.
July 1, 2025, marked a mid-year checkpoint for a wave of new and updated employment laws across the United States. For small and medium-sized businesses (SMBs), especially those with a distributed workforce, overlooking these changes isn't an option. It's a path to costly fines, legal disputes, and reputational damage.
Navigating the complex regulatory environment is a top concern for business leaders, as the legal landscape shifts faster than ever before. This article identifies the six most critical trends that took effect in July.
1. The expanding reach of pay transparency
The movement for pay equity continues to gain momentum. Effective July 1, 2025, several new state minimum wage laws and pay transparency requirements are active.
Vermont: Employers with five or more employees must now disclose compensation ranges in most job postings.
Washington: The state's Equal Pay and Opportunities Act has been significantly expanded to prohibit pay discrimination based on a wide range of new protected classes, including age, race, marital status, and veteran status, moving far beyond its original focus on gender.
What you must do: Conduct a pay equity audit to identify and rectify any wage gaps. Update all job posting templates to include salary ranges where required and train your hiring managers on how to discuss compensation in compliance with these new state labor laws.
2. The crackdown on non-compete agreements continues
The push to limit or ban non-compete agreements is a major national trend impacting how you protect your business. Several states have new rules effective July 1, 2025.
Virginia: The state has expanded its ban on non-competes to include any employee who is eligible for overtime under the FLSA, regardless of their salary.
Maryland: New restrictions are now in place that ban non-competes for healthcare professionals earning $350,000 or less.
Wyoming: A sweeping new law voids most new non-compete agreements, with minimal exceptions for executives or the sale of a business.
What you must do: Audit all of your existing employment agreements. Stop using non-compete clauses for newly covered employee groups and explore alternatives like non-solicitation and confidentiality agreements to protect your business interests.
3. Paid leave is becoming more generous (and complex)
Paid leave is no longer a simple vacation and sick day calculation.
Alaska: A new voter-approved law takes effect, requiring nearly all employers to provide paid sick leave, accrued at a rate of one hour for every 30 hours worked.
Vermont: The state's Family and Medical Leave Act has been expanded to include bereavement and ‘safe leave’ for victims of domestic violence.
What you must do: Update your leave policies in your employee handbook immediately. Work with your payroll provider to ensure your system is correctly configured to track the new accrual and usage rules for each state.
4. Workplace safety and violence prevention mandates are growing
Following a trend of rising concerns about workplace safety, more states are mandating formal prevention plans.
Virginia: As of July 1, 2025, healthcare employers in the state must establish a formal system to track and report all incidents of workplace violence and notify employees of the new system. This follows a similar, broader law that recently took effect in California.
What you must do: If you are in an affected industry or state, you must develop and implement a written Workplace Violence Prevention Plan, create an incident log, and conduct employee training on the new procedures.
5. Employee privacy laws are expanding
The regulation of employee and consumer data is becoming stricter.
Colorado: As of July 1, 2025, the state's Privacy Act now requires any entity, including employers, that collects biometric data (like fingerprints for a time clock) to meet stringent notice and consent requirements.
What you must do: Review all of your data collection practices, especially for tools like time clocks or security systems. Provide clear, written notice to employees and obtain their explicit consent before collecting any biometric information.
6. New notice and posting requirements
Finally, new laws often come with new communication requirements.
California: The Civil Rights Department has released a new required notice for Survivors of Violence that must be distributed to all new hires and annually to all employees.
Ohio: The state now allows employers to post many required labor law notices digitally on an intranet, rather than physically in a breakroom.
What you must do: Update your employee onboarding checklists to include any new required notices. Additionally, check your state's rules on digital vs. physical workers' compensation notices.
Keep Tabs on Evolving Laws With DianaHR
Tracking and implementing legal changes across states, especially in the case of a distributed workforce, can be challenging. Without adequate legal knowledge and attention, you run the risk of non-compliance, inviting penalties, fines, and even lawsuits.
That’s where DianaHR can chip in with its HR experts for you. They don’t just share advice but take over HR operations.
Proactive monitoring and implementation
Our experts don't just tell you the law has changed. They update your employee handbook, reconfigure your payroll management settings for state labor laws breaks, and ensure you are compliant.
State-specific onboarding
They build and manage state-specific onboarding workflows, ensuring every new hire in every state receives the correct policies, notices, and tax forms from day one.
Expert guidance on demand
When a complex issue arises, such as a tricky accommodation request under the ADA or a nuanced question about AI in hiring, you have direct access to the seasoned HR professionals for expert advice.
Rope in DianaHR to boost HR compliance with evolving laws. Get in touch today.
FAQs
1. How can a small business keep up with all these changing state labor laws?
Subscribing to alerts from reputable employment law firms (like Fisher Phillips or Seyfarth Shaw) is a great start. Additionally, regularly check your state's Department of Labor website. However, for a business without a dedicated compliance team, partner with an expert HR compliance service whose job it is to monitor and implement these changes for you.
2. What is the most common mistake employers make with multi-state compliance?
The most common mistake is applying the policies and laws of the headquarters' state to all employees. In US employment law, the laws of the state where the employee physically performs their work are the ones that apply. This is important for issues like minimum wage, overtime, and final paycheck rules.
3. If a new law seems to conflict with our company culture, do we still have to follow it?
Yes, absolutely. While building a strong company culture is important for engagement and retention, it does not supersede your legal obligations. All workplace policies must be compliant with federal, state, and local laws. If a new state labor law, such as a mandatory paid leave requirement, conflicts with your existing unlimited PTO policy, you must adjust your policy.
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