2025 Employment Law Updates: What Should Be in Your Employee Handbook

As employment regulations evolve at the state and federal levels, your employee handbook isn’t a formality; it’s a frontline defense against risk, not just for employers but also for employees, who need to understand the rules they must follow to remain in good standing. When rules are spelled out, your handbook protects your business, sets employee expectations, and shows your team you're paying attention to the issues that shape the modern workplace.

But here’s the problem: many employee handbooks are outdated. That’s a liability. If it’s been over a year since your last update or you’re just recycling a template with a possible tweak here or there to introduce a new company policy, it’s time for a serious top-to-bottom review. Ensign Partners can help. But first, let’s see why this is a critical area your business should not overlook.

Helping Your Handbook Evolve With Today’s Employment Climate

It’s relatively easy to revise your handbook to reflect changes that occur from time to time in your internal policies. However, the more critical aspect you need to consider is changes from outside your organization, whether from state or federal legislation or regulation, or state or federal court cases that affect employment. Below are some key legal and compliance issues that have experienced recent changes. If you have not recently reviewed your policies regarding these issues, now is a good time to address them.

1. Remote and Hybrid Work Policies: Standardized and Clear

Like it or not, the stay-at-home directives imposed during the COVID pandemic have changed how America works; remote and hybrid work arrangements are now common. But if you allow work-from-home or hybrid work, you can’t just make your rules up on the fly.

First, several states have added compliance requirements related to remote work, including reimbursement policies, data security standards, and out-of-state employee registrations. Second, you don’t want to be on the losing end of an employee complaint if you haven’t clarified your expectations and confirmed that your rules comply with state employment laws for every state where you operate or have employees.

To address this, update your handbook to include matters such as:

• Eligibility and expectations for remote/hybrid roles
• Equipment reimbursement procedures
• Cybersecurity and confidentiality rules
• Jurisdiction-specific wage and hour compliance (primarily if employees work across state lines)

Remote work isn’t going away. If you don’t define it clearly, you’re exposed to wage disputes, tax nexus issues, state tax liability problems, or regulatory compliance violations. If your policies are not clear or not enforced fairly, you could also expose your business to charges of discrimination.

2. Paid Leave Laws: More Complex, More Localized

Employee protection laws, particularly for paid leave policies, are where a lot of regulatory and legislative movement occurs. Generally speaking, states and municipalities continue to expand and differentiate their paid sick leave, paid family leave, and paid time off (PTO) laws. To address this, make sure your handbook includes:

• State-law compliant PTO accrual and usage policy, tailored to where your employees work
• Specific language for state-mandated sick leave, maternity, paternity, and caregiver leave policies
• Guidance on coordinating PTO with federal FMLA and any short-term disability plans

Unfortunately, one-size-fits-all policies are often inadequate to address issues in multi-state businesses, and your company is a multi-state business if you have work-from-home employees in remote locations. While making sure your handbook addresses all state-specific requirements can be research-intensive, getting specific where needed saves time and questions in the long run. However, because laws can change quickly, include language that assures employees that your company’s policy will comply with applicable state laws, even as they may evolve.

3. Harassment and Discrimination Policies: Modernized and Enforceable

Harassment and discrimination laws also vary from state to state. They may be changed often due to new legislation or court decisions. States may require various compliance measures, including expanded harassment training, broadened definitions of protected classes, and stricter reporting procedures. Update your policies to:

• Reflect current legal definitions of discrimination and harassment
• Include clearly defined, confidential reporting procedures
• Outline your training requirements and schedule

If your company does not comply with state requirements, or your handbook does not adequately address these issues or stay up-to-date, courts and administrative agencies will not give your company much leeway in the face of a complaint or lawsuit. Employers are expected to have documented, modern, enforceable anti-harassment and anti-discrimination policies—and to enforce them.

4. AI Use and Workplace Technology: New Transparency Requirements

AI is a rapidly emerging issue both in workplaces and in legislatures. States like Illinois, New York, and California are regulating the use of AI and automated decision-making tools in hiring, promotions, and surveillance. Your company needs to keep abreast of the laws and the problems that might arise from using AI. Accordingly, your handbook should include:

• Disclosures about monitoring tools, productivity software, or surveillance (even on remote devices)
• Clear notice of any AI tools used in hiring or evaluations
• Employee consent procedures where required

If you’re using any AI-driven tools in HR or operations, your policy needs to reflect that transparently and legally.

5. Wage Transparency and Pay Equity

Many jurisdictions now require businesses to disclose salary ranges in job postings and internally promote pay transparency. This is still a developing area, but you can address this in your handbook by covering:

• Your approach to salary levels and promotions
• Compliance with pay transparency laws by location
• Anti-retaliation language for employees who discuss compensation

This issue has gone beyond private advocacy to comply with discrimination grievances; it’s a legal requirement in many jurisdictions.

6. Drug Use and Testing Policies: Cannabis Is Legal, But Complicated

More states have now legalized recreational marijuana, while others have passed protections for off-duty use. At the same time, marijuana is still deemed an illegal drug at the federal level and in many states. That can make your drug policy a tricky area. Still, it doesn’t mean you can’t enforce workplace safety rules, particularly if your workplace involves machinery or vehicles. Make sure your handbook reflects:

• Your stance on drug use during work hours
• How and when drug testing will be used
• Compliance rules for regulated industries or safety-sensitive roles

Make sure your policy reflects current state law and balances legality with liability.

Final Takeaway: Your Handbook Is a Compliance Tool, Not a Placeholder

A strong employee handbook reduces your company’s exposure to liability, and many employers tend to view handbooks solely in light of this purpose. But your handbook also serves other important purposes. It informs your employees what expectations are for them and your company, so the relationship is built on mutual understanding. Further, if legal problems arise, your up-to-date handbook is crucial evidence informing courts, regulatory agencies, or enforcement bodies that you comply with all applicable laws. When done well, your employee handbook can improve your company culture, build trust among your staff that you operate with integrity and fairness, and strengthen your ability to lead confidently.

Ensign Partners provides business owners with integrated legal, tax, financial, insurance, and operational strategies, including ensuring that your HR department is poised to help your company succeed and that your policies protect what you’re working hard to build. For an introduction to our comprehensive consulting services, which can include a legal review of your 2025 employee handbook, contact Ensign Partners today.