Labor & Employment Law Update

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.

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.

On Friday, September 19, 2025 the Internal Revenue Service issued proposed regulations clarifying the “no tax on tips” provisions under President Trump’s One Big Beautiful Bill Act.  Starting January 1, 2026, eligible tipped workers can deduct up to $25,000 each year in “qualified tips” from their federal taxable income through December 31, 2028. This will allow eligible tipped workers to take home more income each year. The deduction is retroactive to the beginning of the 2025 tax year, meaning it can be used by tipped workers to deduct qualified tips in the 2025 tax year. But the catch is that your payroll systems need updates NOW in order to properly track and report this new benefit for employees.