The year 2024 was one of the most active ones for federal and state agencies in passing workplace legislation — many of which created new compliance obligations for employers. Although 2025 does not currently have as much on the agenda, there are some key changes that may affect various businesses. Here is a preview of what employers should expect in 2025.
Statewide Minimum Wage Increase
Effective January 1, 2025, Arizona’s minimum wage increased by 35 cents — from $14.35 to $14.70 per hour — as per The Fair Wages and Healthy Families Act, which requires Arizona’s minimum wage to increase yearly based on the cost of living.
Employers should also be aware of local minimum wage requirements, as several Arizona municipalities have independent minimum wages. Flagstaff increased its minimum wage to $17.85 per hour, and Tucson increased its minimum wage to $15.00 per hour, both effective January 1, 2025.
While certain employees and employers are exempt from the state’s minimum wage requirements, it’s important to note that even if exempt, employers may still be subject to the federal minimum wage of $7.25 per hour, unless a higher state or local minimum wage applies.
Employers should display the updated 2025 Minimum Wage poster in a place that is accessible to employees.
FTC Bans Fake and Other Misleading Reviews and Testimonials
Last year, the Federal Trade Commission announced a final rule banning fake reviews and testimonials in order to combat deceptive practices. In short, it prohibits using reviews and testimonials from someone who does not exist or have actual experience with the business and prohibits businesses from providing compensation or other incentives conditioned on writing reviews. Further, it prohibits companies from using legal threats, intimidation or false accusations to prevent or remove a negative review.
Effective October 21, 2024, the rule allows the FTC to seek civil penalties and monetary remedies up to $51,744 per rule violation against those engaging in false and misleading practices relating to online reviews.
Companies should evaluate their contracts (such as those with influencers and affiliates) and update their policies and terms to ensure current marketing practices comply with the final rule. Professional counsel can train legal and marketing teams on these issues and enhance compliance with the nuanced rules.
Background Check and Verification Requirements for Homecare Workers
Arizona recently passed HB 2764 requiring the Arizona Department of Health Services to implement stricter standards and oversight for nursing care institutions, residential care institutions and home health agencies, particularly memory care services. The new legislation makes it easier to report such conditions, doubles penalty fines and provides additional resources to deny certain proposed actions by health care institutions if they are not in compliance with the licensing requirements or pursue legal action against facilities that violate the required standards.
Beginning January 1, 2025, home care employers are prohibited from hiring anyone listed on the Adult Protective Services registry. Employers must conduct registry verification checks for all new prospective employees and contact an applicant’s previous employers to obtain information relevant to the applicant’s fitness to work in the healthcare institution.
By March 31, 2025, home care employers must verify that each current employee is not on the APS registry, and are required to annually re-verify this for each employee and terminate any employee who is found to be on the APS registry.
Effective June 30, 2025, assisted living facilities providing memory care services must be licensed to provide memory care services and maintain the minimum continuing education and training standards.
Arizona healthcare employers should update their hiring and screening policies to make sure they comply with these requirements.
2024 Legislation — What Is No Longer in Effect
- Increases to exempt salary threshold and overtime requirements: Last November, a Texas judge vacated the Department of Labor’s attempt to increase the minimum salary needed for an employee to be exempt from overtime wages. This means that, for the time being, employees who perform certain duties and are paid a salary of at least $684 per week, or $35,568 annually, are exempt. Thus, the 2019 salary threshold will remain in place until further notice.
A significant raise went into effect on July 1, 2024, and another was set to go into effect on January 1, 2025. Businesses that implemented pay increases in June 2024 and announced increases for January 2025 are advised to seek counsel, as unwinding the pay increases may be difficult. Any increases planned but not announced can now be reevaluated.
- FTC’s non-compete ban: Last April, the FTC introduced a groundbreaking rule designed to ban non-compete agreements for almost all U.S. workers. The ban has since been blocked, and employers may continue enforcing non-compete agreements in accordance with state law (read a detailed analysis and procedural history of the rule here).
Despite the FTC’s setback, employers should continue reviewing non-compete agreements to ensure compliance with state and local regulations. Experienced legal counsel can help ensure non-compete agreements are narrowly tailored and meet state law requirements.
Trending Legislation
A major recent trend is statewide attempts to regulate artificial intelligence use in the workplace. Several states recently proposed or implemented regulations intended to mitigate the risk of algorithmic discrimination arising from an employer’s use of an AI system. Arizona could be next.
Employers should take note and consider implementing policies to regulate the use of AI, including how AI systems communicate, make employment and hiring decisions, and use employee data.
Next Steps for 2025
Now is the time leaders should ensure their business complies with today’s rapidly changing employment and labor laws. From minimum wage increases to new pay transparency requirements, employers have a lot to keep track of to stay ahead of the curve.
Haley Harrigan is a shareholder at Gallagher & Kennedy. She represents and counsels individuals, small businesses, franchised operations and large companies on a wide range of employment and business disputes, and litigates matters spanning labor and employment, commercial litigation and general liability. She serves as chair of the firm’s employment and labor law department.
