Labor & Employment Law Update

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.

State lawmakers across the country have been busy this year trying to curb the most consequential uses of AI in employment-related decisions. As those attempts moved from idea to legislation, two powerful forces have pushed back. The tech industry is concerned about a patchwork of state rules, and the Trump administration has prioritized removing barriers to AI use. States are reacting by shifting their strategies to narrow, revise, and/or delay legislation. Employers would be wise to stay abreast of these evolving strategies to ensure compliance in a rapidly shifting regulatory landscape.

On September 19, 2025, the U.S. Department of Labor (DOL) announced the launch of Project Firewall, described as “an H-1B enforcement initiative that will safeguard the rights, wages, and job opportunities of highly skilled American workers by ensuring employers prioritize qualified Americans when hiring workers and holding employers accountable if they abuse the H-1B visa process.”

On August 19, 2025, the Fifth Circuit Court of Appeals upheld injunctions barring the National Labor Relations Board (NLRB) from prosecuting unfair labor practices (ULP)/charges against three employers, including Space X. This decision stems from the constitutional challenges to the way the NLRB is structured and raises broader questions about the current structure of the NLRB.

Employers should review key state employment law updates that occurred in September 2025 to ensure compliance with new leave rights, posting requirements, and employee protections across multiple states.