January 28, 2025

Critical 2024 Employment Law Changes: Your 2025 Compliance Action Plan

Major employment law changes in 2024 transformed workplace compliance requirements for human resources professionals and business leaders. From the Supreme Court’s landmark discrimination ruling to new Department of Labor guidelines on independent contractors, these updates significantly impact hiring practices, workplace policies, and risk management strategies. Here’s your comprehensive guide to the year’s most critical employment law developments. 

SCOTUS Redefines the Standard for Job Transfer Lawsuits 

In 2024, the Supreme Court of the United States (SCOTUS) set a new precedent governing job transfer lawsuits under Title VII. The ruling in Muldrow v. City of St. Louis determined that employees only need to demonstrate “some harm” to an identifiable term or condition of employment, rather than “significant” harm, to sustain a claim of discrimination. 

Background: Muldrow v. City of St. Louis 

The plaintiff, Sergeant Jatonya Clayborn Muldrow, served as a plainclothes officer in the St. Louis Police Department’s Intelligence Division from 2008 to 2017. Muldrow enjoyed several perks, including FBI credentials, an unmarked take-home vehicle, and the authority to conduct investigations beyond the city’s jurisdiction. In 2017, she was transferred to a uniformed position overseeing neighborhood patrol officers. Her rank and pay remained unchanged, but she did lose her FBI credentials and vehicle privileges. Further, she was placed on a rotating schedule that included weekend shifts. Muldrow alleged that the transfer was discriminatory based on her sex. 

Recent Interpretations 

While Muldrow involved a discriminatory transfer, some courts have interpreted Muldrow’s holding to mean that Title VII also does not require plaintiffs to show a “significant harm” to prove a claim involving a change in an employee’s terms and conditions of employment. 

A mere five months after Muldrow, the Sixth Circuit Court of Appeals interpreted the Muldrow holding to be applicable to a hostile work environment claim. The Court in McNeal v. City of Blue Ash, Ohio held that because hostile work environment claims “arise out of the same statutory language” (Title VII) as disparate-treatment claims, the plaintiff was not required to show that there was a “significant harm” to the terms and conditions of his employment. 

While this type of claim traditionally requires that an employer’s actions be deemed “severe and pervasive,” the court in McNeal held that “when we consider whether a hostile-work environment was severe and pervasive enough to violate Title VII, we effectively ask whether it left an employee worse off respecting employment terms or conditions.” 

DEI Program Compliance: New Legal Challenges  

Diversity, Equity, and Inclusion (DEI) programs face unprecedented legal scrutiny in 2024, as discrimination lawsuits target workplace diversity initiatives nationwide. HR professionals and in-house counsel must understand these emerging compliance risks to protect their organizations’ DEI programs. 

Recent DEI Employment Discrimination Cases 

The landmark American Alliance for Equal Rights v. Southwest Airlines case (ND of Texas Case No. 3:24-CV-1209) demonstrates the new legal risks. Southwest’s diversity program offering free airfare to Hispanic/Latino students prompted discrimination claims, forcing the company to restructure its benefits program. This case, combined with the Supreme Court’s Muldrow decision lowering discrimination claim thresholds, creates new compliance challenges for workplace DEI initiatives. 

Best Practices for DEI Legal Compliance in 2025 

To maintain legally compliant DEI programs while minimizing discrimination lawsuit risks: 

  • Design inclusive workplace programs that avoid excluding any protected classes from benefits. 
  • Implement recruitment strategies that promote diverse applicant pools while complying with employment law. 
  • Structure diversity initiatives with clear documentation of business necessity. 
  • Develop compliant diversity metrics that remain aspirational rather than mandatory. 

WARNING:   President Trump is targeting DEI programs and claims some unlawfully discriminate against employees based on protected EEO characteristics.  

Fifth Circuit Overturns DOL’s 80/20 Rule for Restaurant Workers 

A major victory for hospitality employers arrived on August 23, 2024, when the Fifth Circuit Court invalidated the Department of Labor’s 80/20 rule in Restaurant Law Center v. United States Department of Labor’s Wage and Hour Division. This decision fundamentally changes tip credit calculations under the Fair Labor Standards Act (FLSA). 

The 80/20 rule, reinstated by the Department of Labor (DOL) in its 2021 regulations, restricts employers from taking a tip credit for time spent on non-tipped duties exceeding 20% of an employee’s workweek or for tasks unrelated to tipped work. In its ruling, the Fifth Circuit found the DOL’s interpretation overly restrictive and inconsistent with the FLSA, holding that it creates undue burdens on employers and fails to provide clear, workable guidance. 

The court struck down the 2021 rule within its jurisdiction (covering Texas, Louisiana, and Mississippi), allowing employers in these states to calculate tip credits without adhering to the 80/20 standard. However, this decision does not apply outside the Fifth Circuit, leaving a patchwork of rules across the country and uncertainty for multi-state employers. 

Action Items for Employers 

Despite this favorable ruling, employers should remain cautious and take the following steps: 

  1. Review any tip pooling arrangements to ensure they comply with current law. 
  2. If you have employees in two or more occupations, verify that any tip credit is being applied appropriately. 
  3. Ensure that you are documenting the required notices for tipped employees. 
  4. Stay informed about potential challenges to the DOL’s rule in other circuits. 
  5. Consult with legal counsel to understand how this ruling may apply to your specific situation, specifically if you operate in multiple jurisdictions. 

Florida Minimum Wage Update 

In 2024, Florida continued its phased implementation of the constitutional amendment approved by voters in 2020, which aims to raise the state’s minimum wage to $15.00 per hour by 2026. As part of this schedule, the minimum wage increased from $12.00 per hour to $13.00 per hour on September 30, 2024. For tipped employees, the cash wage similarly rose to $10.00 per hour, with tips making up the remainder to meet the standard minimum wage. 

This increase marks the fourth annual adjustment under the amendment, reflecting Florida’s commitment to gradually providing workers with higher wages while allowing businesses time to adapt. Employers should ensure compliance by updating payroll systems, revising posters, and training management on the new rates. Noncompliance may result in penalties or lawsuits under the Florida Minimum Wage Act. 

Looking ahead to 2025, the next scheduled increase will bring the minimum wage to $14.00 per hour on September 30, 2025. Employers are encouraged to remain proactive in preparing for these changes and addressing questions from employees. 

The Pregnant Workers Fairness Act (PWFA): New Obligations 

The PWFA took effect on June 27, 2023, marking a significant expansion of workplace protections for pregnant employees and those with related medical conditions. The PWFA requires covered employers (those with 15 or more employees) to provide reasonable accommodations for known limitations related to pregnancy, childbirth, or related medical conditions, unless doing so would pose an undue hardship. 

Key Provisions of the PWFA 

  1. Proactive Accommodation Obligations: Employers must engage in an interactive process with affected employees to identify reasonable accommodations, even if the employee is not disabled under the ADA. Examples include offering light duty, additional restroom breaks, or a temporary transfer to a less strenuous position. 
  2. Prohibition of Discrimination: Employers may not deny employment opportunities, require leave when another accommodation is feasible, or retaliate against employees for requesting or utilizing accommodations. 
  3. Alignment with EEOC Guidance: The EEOC has issued guidance to help employers understand their obligations under the PWFA, emphasizing the importance of documentation, flexibility, and employee communication. 

Key Takeaways for Employers 

  1. Review Policies and Procedures: Employers should update policies to explicitly include pregnancy-related accommodations and ensure managers are trained to respond appropriately to accommodation requests. 
  2. Document the Interactive Process: Maintain detailed records of all steps taken to evaluate and implement reasonable accommodations to demonstrate compliance. 
  3. Monitor Intersection with Other Laws: The PWFA complements existing laws such as the ADA, FMLA, and state pregnancy accommodation laws. Employers should ensure policies align with all applicable legal requirements. 
  4. Prepare for EEOC Oversight: The PWFA expands the EEOC’s enforcement authority. Employers should be proactive in compliance efforts to avoid potential liability. 

Changes to Independent Contractor Rules 

In 2024, the legal landscape surrounding independent contractor classification underwent significant shifts as federal agencies and courts continued to grapple with the appropriate tests for determining worker status. The most notable development was the Department of Labor’s (DOL) issuance of a final rule, which revised the framework for evaluating whether a worker is an employee or an independent contractor under the Fair Labor Standards Act (FLSA). 

Key Highlights of the 2024 DOL Final Rule 

  1. Return to the Economic Realities Test: The final rule reaffirms the use of the economic realities test, emphasizing the totality of the circumstances over rigid factors. The DOL evaluates whether a worker is economically dependent on the employer (indicating employee status) or in business for themselves (indicating independent contractor status). 
  2. Core Factors Weighed: While all factors are considered, the DOL highlights key aspects: 
  3. Control: The degree of control the employer exercises over the worker.  
  4. Opportunity for Profit or Loss: Whether the worker can realize profits or losses based on their managerial skill.  
  5. Other factors include the permanency of the relationship, the worker’s investment in tools and equipment, the degree of skill required, and the extent to which the worker’s services are integral to the business. 
  6. Rejection of the 2021 Rule: The 2024 rule replaces the narrower interpretation issued in 2021, which prioritized only two core factors (control and opportunity for profit or loss) and de-emphasized other considerations. This broader approach aligns with the DOL’s aim to reduce worker misclassification and extend employee protections. 

Key Takeaways for Employers 

  1. Reassess Worker Classifications: Employers should review their relationships with independent contractors to ensure compliance with the updated rule. Misclassification can result in back wages, penalties, and liability for unpaid benefits. 
  2. Adapt Contracts and Practices: Update independent contractor agreements to clarify the nature of the relationship and adjust practices to ensure consistency with the factors outlined in the economic realities test. 
  3. Anticipate Scrutiny: The DOL has indicated it will increase enforcement of worker classification standards, focusing on industries prone to misclassification, such as gig economy platforms, construction, and transportation. 
  4. Multi-Jurisdictional Concerns: Employers should note that state laws, such as California’s strict ABC test, may impose more stringent requirements for contractor classification, creating compliance challenges for businesses operating in multiple states. 

 

Moving Forward 

These significant changes in employment law demand careful attention from employers and human resources professionals. The landscape continues to evolve, requiring proactive compliance measures and strategic risk management. For comprehensive legal counsel and proactive strategies to mitigate risk or potential litigation, consider consulting with employment law specialists who can help navigate these complex changes. 

At Kelley Kronenberg, we help businesses navigate these complex regulatory changes. We provide practical guidance on: 

  • DEI program compliance reviews 
  • Updated employee handbook policies 
  • FLSA wage and hour compliance 
  • Pregnancy accommodation policies 
  • Independent contractor classification 
  • Multi-state employment compliance 

Contact our employment law team today to ensure your workplace policies align with 2024’s significant legal changes. We help organizations across industries implement compliant practices while minimizing litigation risks. 


David S. Harvey
Partner, Labor & Employment
Kelley Kronenberg-Tampa, FL
(813) 223-1697
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Talya Haas, Esq.
Practice Partner, Labor & Employment
Kelley Kronenberg-Fort Lauderdale, FL.
(954) 370-9970
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