Labor & Employment Law Update

W-2s and 1099s will not have new fields this year, but the IRS has now provided guidance on how employees can still claim tax deductions for tips and overtime pay.

A strong workers’ compensation defense strategy begins long before a claim is filed. After all, an unexpected claim can costly regardless of industry. Strategic and proactive measures to prevent accidents coupled with an understanding of how to manage the claims that do arise are indispensable tools for businesses.

In a recent webcast, two of our workers’ compensation attorneys shared their insights and best practices to help employers confidently manage claims and achieve favorable outcomes. Here are three key takeaways from their presentation. 

Several changes impacting employers in jurisdictions across the nation on the federal and state level are summarized in our latest federal and state employment law update.

Register today to join Labor & Employment partners Craig Papka and Sara Zorich for a timely Breakfast Briefing presentation on navigating employee wage and hour requirements and investigations.

The U.S. Equal Employment Opportunity Commission (EEOC), the agency charged with the administration of federal workplace laws, including Title VII of the Civil Rights Act, recently regained a voting quorum. As a result, the agency can now enact sweeping policy changes in line with President Trump’s second term agenda. Employers can expect increased scrutiny of DEI practices and an increase in charges surrounding religious accommodations.  

The Illinois legislature recently passed House Bill 1437 (H.B. 1437), which delays implementation of the fringe benefit payment mandates for apprentices on projects subject to the Illinois Prevailing Wage Act (“IPWA”).  As some may recall, Governor Pritzker signed House Bill 2488 (H.B. 2488) into law effective June 30, 2025.

H.B. 2488 requires the payment of “full journeyman annualized fringe benefits” to apprentices working on prevailing wage projects in Illinois, regardless of the terms in the underlying prevailing area-wide union contract. H.B. 1437 delays the date that contractors must begin paying apprentices full journeyworker fringe benefits on public works projects to July 1, 2026.  

If your organization has been struggling to understand how to implement the new tips and overtime reporting requirements from the One Big Beautiful Bill Act (OBBB), you can breathe a temporary sigh of relief. The IRS has issued Notice 2025-62, providing penalty relief for the 2025 tax year while employers adapt to the tax reporting changes.

Although the Federal Trade Commission (FTC) has vacated its rule banning noncompete agreements nationwide, the FTC continues to scrutinize such agreements and is focusing on the health care setting.

On August 15, 2025, Governor Pritzker signed House Bill 3638 (H.B. 3638) into law, which amends the Illinois Workplace Transparency Act (the “Act”) to provide current, former, and prospective employees with greater rights and protections when executing employment agreements with an employer. The amendments under H.B. 3638 take effect on January 1, 2026, and apply to employment contracts entered into, modified, or extended on or after January 1, 2026, except for collective bargaining agreements. Accordingly, employers need to carefully review their existing employment agreements and ensure they comply with the new requirements under H.B. 3638 by January 1, 2026. 

Across the country, state lawmakers are recalibrating their approaches to regulating the use of AI in employment decisions. This is in direct response to pressure from the technology industry and the Trump administration. The result is a more incremental approach to AI regulation in employment shaped as much by political dynamics as by policy concerns. Employers need to pay close attention to legislative developments and agency-level regulatory actions, which may introduce new compliance expectations.