As we prepare for 2025, it’s essential to update your employee handbook to reflect the latest legal requirements, workplace trends, and best practices. Now is an opportune time to review and revise your policies to ensure compliance with evolving laws and to maintain a positive and productive work environment.

In this newsletter, we’ll highlight the most important updates to consider, including remote work policies, anti-harassment practices, employee classifications under the Fair Labor Standards Act (FLSA), paid time off, pregnancy accommodations, and more. We’re here to help you navigate these changes and ensure your handbook is fully aligned with legal and operational best practices.

1. Remote Work and Hybrid Policies

Many employers wrestle every day with the challenges that remote work – either fully remote or hybrid – can bring. As remote and hybrid work continue to be integral parts of many workplaces, your handbook should be updated to address:

• Work hours and availability - Define expectations for core working hours and employee availability in remote or hybrid work settings.
• Company-provided equipment - Outline guidelines regarding company equipment, IT support, IP security, and related responsibilities.
• Communication and engagement - Emphasize the importance of clear and consistent communication, regardless of employee location. This includes any required in person meetings.

Employers should consider entering into a remote work or teleworking agreement outside the employee handbook with employees who are working from home on either a part-time or full-time basis.

2. Anti-Harassment Policies

One of the best ways to prevent and combat harassment on the front end is to be prepared for it. Having a good anti-harassment policy can help protect your company against hostile work environment or harassment claims because it shows that the company is not turning a blind eye to harassment and will promptly and appropriately respond to any harassment complaint.

Key updates to your anti-harassment policies should include:

• Broad definition of harassment - Ensure your policies define harassment in a way that aligns with current federal, state, and local laws, covering race, gender, age, disability, sexual orientation, and all other protected categories.
• Reporting mechanisms - Make sure employees know how to report harassment confidentially, with clear protections against retaliation. Employees should be given multiple avenues to report harassment.
• Investigation procedures - State that all harassment complaints will be investigated promptly and appropriately. Do not promise complete confidentiality in the investigation to the complaining party because to conduct an appropriate investigation, complete confidentiality as to who made the complaint can oftentimes not be guaranteed.
• Training programs - Consider making anti-harassment training mandatory for all employees, with regular updates to stay in compliance with new laws.

3. Proper Classification of Employees: Exempt vs. Non-Exempt Under the Fair Labor Standards Act (FLSA)

As the saying goes, the more things change, the more they stay the same. Correct classification of employees as exempt vs. non-exempt should remain a critical focus for employers in 2025. 

Misclassification can expose your organization to significant legal risks, including back pay and penalties, both from the employee and from governmental agencies like departments of labor at the state and federal level as well as the IRS.

Key Points for Correct Classification

As a refresher, here are some key points for correct classification:

• Exempt employees - These employees are not entitled to overtime pay. Exempt classifications are typically based on job duties and salary level. The most common exemptions are the executive, administrative, and professional, or “EAP” or “white collar” exemptions. To be exempt under these exemptions, at the present time, employees must be paid on a salary basis of at least $35,568 per year ($684 per week) at the federal level and meet the requirements of the various “duties tests” for these exemptions.
• Key tip: An employee handbook should state that an exempt employees’ salary compensates the employee for all hours worked for the company. That can help reduce damages in the event the employee is misclassified as exempt.
• Reminder: Simply paying an employee a set salary does not automatically qualify them as exempt.
• Non-exempt employees - These employees are entitled to overtime pay for hours worked over 40 in a workweek. Non-exempt employees are typically paid hourly.
• State-specific variations - Many states have additional regulations or higher salary thresholds for exempt employees as well as higher hourly rates for minimum wage. It is important to review both federal and state laws to ensure compliance with the most stringent standards.

What to Do:

• Review job descriptions - Ensure that job descriptions clearly and accurately reflect the actual duties of each role and align with FLSA exemption criteria. Update descriptions as necessary to avoid misclassification.
• Conduct an internal audit - Periodically review your employee classifications to ensure that all positions are correctly classified as exempt or non-exempt, and make necessary adjustments.
• Document decisions - Maintain detailed records of how employee classifications were determined to help defend against potential claims of misclassification.

4. Paid Time Off (PTO) Policies

PTO policies should be reviewed and updated to align with legal requirements and employee expectations. Employers should consider the following when drafting their PTO policies:

• How much PTO can we provide? Remember to comply with state and local paid sick leave laws if seeking to comply with those laws through your PTO policy.
• Will PTO be granted up front or accrue with each pay period?
• Will unused PTO be carried over from one year to the next? Some state and local laws permit “use it or lose it” policies, and some state and local laws do not.
• Will you pay out unused PTO upon separation of employment? Some state and local laws require this, such as California, but many states like Tennessee defer to whatever the employer’s policy is on whether unused PTO is paid out or not.

Generally speaking, employers are given a lot of discretion to set up their PTO policies how they would like, but if they are doing business within a jurisdiction that requires paid sick leave, then their PTO policy must comply with those paid sick leave laws if they do have a separate sick leave bank.

5. Parental Leave and Family Support

Employers are increasingly offering paid parental leave benefits. Employers should be mindful of having a “maternity leave” policy that provides greater parental leave for mothers than fathers, as that could be argued is discrimination based on sex. A “parental leave” policy that applies equally to mothers and fathers is a safer bet.

Generally, employers with 50 or more employees are covered by the Family and Medical Leave Act. FMLA-covered employers should, of course, have an FMLA policy in their handbook that informs employees, among other items, about whether a medical certification is required to take FMLA and whether exhaustion of PTO is required during otherwise unpaid FMLA leave. 

6. Pregnant Workers Fairness Act (PWFA)

Employers should implement a pregnancy accommodations policy in response to the Pregnant Workers Fairness Act (PWFA), which came into effect in 2023. The PWFA requires employers to provide reasonable accommodations to workers affected by pregnancy, childbirth, or related medical conditions. Key aspects of this law include:

• Reasonable accommodations - The PWFA mandates that employers provide reasonable accommodations to pregnant workers unless it would cause undue hardship. Accommodations might include adjustments to job duties, additional breaks, or modified work schedules.
• Examples of accommodations - These can include more frequent breaks, the ability to sit or stand as needed, access to water, or temporary job reassignment.
• Notice of rights - Ensure that employees are aware of their right to request accommodations. Include this information in your handbook and in any relevant training or orientation materials.
• No retaliation - Ensure that your handbook includes clear language prohibiting retaliation against any employee who requests or uses accommodations under the PWFA.

7. PUMP Act (Pumping Milk for Nursing Mothers)

In addition to the PWFA, the PUMP Act, effective as of 2023, expands protections for breastfeeding employees in the workplace. Under the PUMP Act, employers must provide:

• Break time for breastfeeding employees - Ensure that all employees who need to express breast milk are given adequate break time to do so, free from discrimination.
• Private spaces - Employers must provide a private, non-bathroom space for nursing employees to pump milk. This space must be functional and shielded from view.
• Compensation for break time - If the employee uses their regular break time for pumping, they must be compensated for this time, just as they would for any other work-related break.

Next Steps

• Review and update your handbook - It’s essential to regularly review and update your employee handbook to ensure it remains compliant and reflective of your organizational values.