2025 Payroll and Labor Law Updates: Essential Insights for Construction Teams

2025 payroll and labor law updates are critical for construction teams to understand. Changes in federal and state regulations will impact payroll compliance and workforce management across the industry. To stay ahead, it’s essential to review updates, adjust practices, and ensure your team is ready. Here’s what construction managers, payroll managers, and office admins need to know.

New Year Regulatory Changes

Federal Updates

Understanding 2025 Payroll and Labor Law Updates for federal references is key to compliance. These changes affect payroll calculations, reporting, and workforce management.

1. Overtime Salary Threshold
The U.S. Department of Labor has struck down the previous overtime exemption threshold. Starting 2025, the new minimum salary for overtime exemption is $684 per week or $35,568 per year. This impacts classifications for exempt and non-exempt employees.

• Tip: Review your employee classifications. Ensure any employees earning below the new threshold are reclassified as non-exempt.
• Best Practice: Adjust payroll software to calculate overtime correctly. Set alerts to track employee hours.

2. OFCCP Monthly Utilization Reports
Federal contractors must now submit monthly employment utilization reports. This requirement begins April 15, 2025.

• Tip: Assign a team member to handle reporting. Use automated tools to track metrics like workforce diversity and hours worked.
• Best Practice: Train your staff on the updated reporting process to avoid errors or delays.

State-Specific Updates for 2025 Payroll and Labor Law Updates

State regulations are evolving rapidly. Some updates may require immediate changes to policies and practices.

1. Salary Threshold Increases
Several states now have higher salary thresholds for overtime exemptions than the federal level. Alaska, California, Colorado, Maine, New York, and Washington lead this list.

• Tip: Compare federal and state thresholds. Apply the higher threshold in each applicable state.
• Best Practice: Use state-specific payroll templates to streamline compliance.

2. Paid Sick Leave Expansions
Paid sick leave requirements are expanding in Alaska, California, Connecticut, Michigan, Missouri, Nebraska, and New York.

• Tip: Update your time-off policies to align with these changes. Ensure employees are aware of their rights.
• Best Practice: Use workforce management software to track sick leave balances and prevent scheduling conflicts.

3. Paid Family and Medical Leave Programs
Delaware, Maryland, and Maine have introduced state-mandated paid family and medical leave programs. Contributions to these programs will begin in 2025.

• Tip: Calculate and deduct the required contributions from employee wages. Inform your team about the new deductions.
• Best Practice: Communicate with your payroll software provider to ensure the system supports these contributions.

4. Pay Transparency Laws
New pay transparency requirements have been implemented in Illinois, Maryland, Massachusetts, Minnesota, New Jersey, Vermont, and Washington D.C.

• Tip: Publish clear job descriptions with salary ranges. Avoid discrepancies that could lead to compliance issues.
• Best Practice: Conduct internal pay equity audits to ensure consistency and fairness.

5. Restrictions on Captive Audience Meetings
California, Illinois, and other states have banned mandatory employer-sponsored meetings about unionizing or other workplace issues.

• Tip: Review your communication policies. Avoid scheduling meetings that violate these laws.
• Best Practice: Train managers on legal communication methods to prevent unintentional violations.

Practical Tips for Navigating Changes with 2025 Payroll and Labor Law Updates

Build a Compliance Checklist

A well-structured compliance checklist ensures that no critical updates are overlooked. Break the checklist into categories: federal, state-specific, and company-specific changes.

• Tip: Start by listing all regulatory updates applicable to your organization. Include detailed descriptions of the changes, their impact, and required actions.
• Action Plan: Assign ownership of each task to specific team members. For example, one person can handle federal updates, while another focuses on state regulations.
• Set Milestones: Use clear deadlines for every task. Regularly review the checklist to track progress and identify bottlenecks.
• Leverage Technology: Use task management software or shared spreadsheets to keep the checklist organized and accessible to all stakeholders.

Update Payroll and HR Software

Outdated software can cause compliance failures. Modern payroll systems, such as eBacon software, should handle evolving regulations with ease.

• Tip: Check if your current software supports the 2025 updates, including new overtime thresholds and state-specific requirements like paid leave tracking.
• Action Plan: If updates aren’t available, contact your provider for a timeline or consider switching to a more robust system.
• Optimize Settings: Configure your system to alert you to compliance deadlines, such as reporting due dates or contribution changes.
• Train Staff: Make sure the team responsible for payroll is fully trained on any new features or functionalities added to the software.

Educate Your Team

Keeping your team informed ensures consistent compliance across the organization.

• Host Regular Workshops: Plan interactive training sessions focusing on key updates. Tailor sessions to different roles—managers, admins, and on-site personnel.
• Provide Resources: Share easy-to-digest materials like FAQs, infographics, or video tutorials. These can clarify complex changes like pay transparency requirements or new leave laws.
• Encourage Questions: Create an open forum where employees can ask questions about how the updates impact their work or benefits.
• Document Training: Keep a record of all training sessions and materials for audit purposes or as a reference for future hires.

Communicate Changes Clearly

Clear communication helps employees understand their rights and obligations under the new laws.

• Tip: Use plain language to explain changes. Avoid jargon that might confuse your workforce.
• Visual Aids: Utilize charts or tables to illustrate salary thresholds, leave accrual rates, or other numerical changes.
• Targeted Communication: Customize messages for different groups. For example, send detailed compliance updates to managers while summarizing key points for general employees.
• Reinforce Messages: Use multiple channels—emails, team meetings, bulletin boards, and intranet updates—to ensure everyone is informed.

Audit Regularly

Routine audits can prevent minor compliance gaps from becoming costly issues.

• Tip: Schedule audits quarterly to review payroll data, employee classifications, and adherence to state and federal laws.
• Action Plan: Compare your payroll processes to the latest regulatory guidelines. Ensure deductions, overtime pay, and benefits contributions are calculated correctly.
• Use Checklists: Incorporate the compliance checklist into your audit process. This ensures all areas are covered systematically.
• Engage Third Parties: Consider hiring external auditors for an unbiased review of your practices. They may identify issues your internal team overlooked.

Partner with Experts

Regulatory compliance can be complex, especially for multi-state operations.

• Tip: Build relationships with labor law attorneys, payroll consultants, and compliance specialists.
• Action Plan: Schedule regular consultations to stay ahead of changes. For example, an expert can guide you on interpreting pay transparency laws in your state.
• Join Industry Groups: Networking with peers in construction workforce management can help you share best practices and learn from their experiences.
• Invest in Training: Hire experts to conduct in-depth training sessions for your team, focusing on tricky areas like OFCCP reporting or state-mandated leave programs.

Best Practices for Construction Teams

Align with Federal and State Requirements

Compliance with both federal and state laws ensures you avoid penalties and maintain a positive reputation.

• Tip: Maintain a state-by-state compliance guide for your team. Update it annually to reflect changes in laws like sick leave expansions or salary thresholds.
• Action Plan: Assign a compliance officer or team to monitor updates and inform the company of required changes.
• Policy Templates: Develop and distribute standard operating procedures that align with both sets of laws. This minimizes confusion and ensures consistency.

Automate Where Possible

Automation reduces errors and saves valuable time.

• Tip: Invest in payroll systems that handle multi-state compliance and integrate with time-tracking tools.
• Action Plan: Automate recurring tasks like generating utilization reports or calculating leave accruals.
• Real-Time Alerts: Use systems that provide automatic notifications for deadlines or compliance gaps.
• Integrate Data: Connect payroll software with workforce management tools to streamline processes like job costing or employee scheduling.

Monitor Industry Trends for 2025 Payroll and Labor Law Updates

Staying informed helps you prepare for future regulations and best practices.

• Tip: Subscribe to newsletters or join webinars from industry organizations like the AGC (Associated General Contractors) or SHRM (Society for Human Resource Management).
• Action Plan: Assign team members to monitor trends and share insights during regular meetings.
• Use Online Tools: Follow government websites like the Department of Labor or your state labor agency for real-time updates.
• Stay Ahead: Be proactive. Knowing about potential changes before they happen gives you more time to adjust policies.

Foster Open Communication

A culture of transparency builds trust and ensures compliance issues are addressed promptly.

• Tip: Regularly update employees on their rights under state and federal laws. Make these updates a part of team meetings or newsletters.
• Action Plan: Create a dedicated channel—such as an email address or online form—for employees to voice concerns or ask questions about payroll and labor law changes.
• Feedback Loops: Use employee feedback to identify pain points in your compliance processes and address them proactively.

Plan for the Future

Thinking ahead ensures long-term compliance and operational efficiency.

Invest in Growth: Allocate resources for ongoing compliance training and technology upgrades. These investments reduce risks and position your business for success.

Tip: Use data analytics to forecast the impact of new regulations on your payroll expenses or workforce availability.

Action Plan: Create flexible policies that can adapt to sudden regulatory shifts, like changes to overtime laws or leave contributions.

Scenario Planning: Develop contingency plans for potential challenges, such as delayed implementation timelines or increased costs.

Why Compliance Matters

Compliance is not optional for 2025 Payroll and Labor Law Updates. Failing to follow payroll and labor laws can result in:

• Fines: Non-compliance can lead to substantial penalties.
• Lawsuits: Employees may file legal claims for unpaid wages or violations.
• Reputational Damage: Non-compliance can harm your company’s reputation.

By staying proactive, you can avoid these risks and foster a positive workplace culture.

Conclusion for 2025 Payroll and Labor Law Updates

The 2025 payroll and labor law updates bring significant changes for construction teams. From federal overtime thresholds to state-specific sick leave expansions, these updates require immediate attention. By following the tips and best practices outlined above, you can ensure compliance and protect your business.

Make compliance a priority. Review the new regulations. Update your payroll systems. Train your team. Stay ahead of the curve and keep your workforce management strategies aligned with the latest requirements.

Let 2025 be a year of compliance and success for your construction business.

The material presented here is educational in nature and is not intended to be, nor should be relied upon, as legal or financial advice. Please consult with an attorney or financial professional for advice.