New Year, New Compliance Standards: Updating Your Employee Handbook for 2025

Keeping an employee handbook up-to-date can be challenging, especially with the ever-changing landscape of federal and state HR legislation. Business owners and executives often delay the process, finding it daunting and time-consuming. However, maintaining a current handbook is crucial. It forms the foundation of the employment relationship, clearly defining the expectations and responsibilities of both employers and employees.

As we enter 2025, now is the perfect time to review and revise your HR policies and procedures. Doing so ensures legal compliance, enhances workplace transparency, and fosters a positive and productive work environment.

To help you get started, we’ve highlighted the most critical updates your handbook should include. These range from remote work policies to artificial intelligence guidelines and address recent legislative changes like the Pregnant Workers Fairness Act (PWFA) and the PUMP Act.

Remote Work and Hybrid Policies

We recommend having a remote and/or hybrid work policy that addresses eligibility in terms of how remote or hybrid work arrangements are determined and expectations for employees who are working remotely or in the office on a hybrid schedule.

This may include dress code expectations, communication requirements, expectations for work hours, information security, workers’ compensation for remote workers, and other expectations and requirements.  As remote and hybrid work continue to be integral parts of many workplaces, your handbook should be updated to address:

Key elements to include:

• Work hours and availability: Define core working hours and set expectations for availability.
• Company-provided equipment: Specify policies regarding IT support, equipment maintenance, and data security.
• Communication and collaboration: Establish guidelines for communication, including expectations for virtual meetings or in-person requirements.

Consider implementing a separate telework agreement for remote employees to address specific arrangements outside the handbook.

Anti-Harassment Policies

The Equal Employment Opportunity Commission (EEOC) updated its enforcement guidance in 2024, consolidating workplace harassment laws and expanding protections against discrimination.

The guidance incorporates expanded protections against discrimination based on sexual orientation and gender identity. It also addresses issues that are newer to employers, such as harassment in the virtual work environment. 

Ensure your anti-harassment policy includes:

• Broad definition of harassment: Ensure your policies define harassment in a way that aligns with current federal, state, and local laws, covering race, gender, age, disability, sexual orientation, and all other protected categories.
• Reporting mechanisms: Make sure employees know how to report harassment confidentially, with clear protections against retaliation. Employees should be given multiple avenues to report harassment.
• Investigation procedures: State that all harassment complaints will be investigated promptly and appropriately. Do not promise complete confidentiality in the investigation to the complaining party because to conduct an appropriate investigation, complete confidentiality as to who made the complaint can oftentimes not be guaranteed.

As virtual work environments grow, include policies addressing cyber harassment to stay compliant with federal, state, and local laws.

Employee Classification Under the FLSA

Correctly classifying employees as exempt or non-exempt under the Fair Labor Standards Act (FLSA) is essential to avoid costly penalties and back pay.

Key updates:

• Exempt employees: These employees are not entitled to overtime pay. Exempt classifications are typically based on job duties and salary level. The most common exemptions are the executive, administrative, and professional, or “EAP” or “white collar” exemptions. To be exempt under these exemptions, at the present time, employees must be paid on a salary basis of at least $35,568 per year ($684 per week) at the federal level AND meet the requirements of the various “duties tests” for these exemptions.'
  Key Tip: An employee handbook should state that an exempt employee’s salary compensates the employee for all hours worked for the company. That can help reduce damages in the event the employee is misclassified as exempt.
• Non-exempt employees: Clarify their entitlement to overtime pay for hours worked over 40 in a workweek.
• State-specific regulations: Acknowledge that some states have higher salary thresholds or unique overtime requirements. It is important to review both federal and state laws to ensure compliance with the most stringent standards.
  
  

Paid Time Off (PTO) Policies

Align your PTO policies with legal requirements and employee expectations by addressing:

• Provided PTO: Remember to comply with state and local paid sick leave laws if seeking to comply with those laws through your PTO policy.
• Accrual methods: Decide whether PTO will accrue over time or be granted upfront.
• Carryover rules: Clarify whether unused PTO can roll over into the next year.
  Some state and local laws permit “use it or lose it” policies, while some state and local laws do not.
• Separation payouts: Specify if unused PTO will be paid out upon termination.
  Some states, like California, require this, while others, like Tennessee, defer to what the employer's policy is on whether unused PTO is paid out or not.

Parental Leave and Family Support

In 2025, parental leave policies are increasingly viewed as critical to employee satisfaction and retention. Avoid potential discrimination claims by using gender-neutral terms like "parental leave" instead of "maternity leave."

Generally, employers with 50 or more employees are covered by the Family and Medical Leave Act (FMLA).

For Family and Medical Leave Act (FMLA) compliance, clearly outline:

• Requirements for medical certifications.
• PTO exhaustion policies during unpaid FMLA leave.

Pregnant Workers Fairness Act (PWFA)

The PWFA, implemented in 2024, mandates reasonable accommodations for employees with pregnancy-related conditions. Employers are required to provide reasonable accommodations for qualified applicants and employees who have physical or mental conditions related to, affected by, or arising out of pregnancy, childbirth, or related medical conditions. 

Your handbook should address:

• Reasonable accommodations: Examples include modified duties, flexible schedules, and access to water or rest areas.
• Notice of rights: Inform employees about their rights and protections under the PWFA.
• Anti-retaliation policies: Clearly prohibit retaliation against employees who request accommodations.

PUMP Act: Support for Nursing Mothers

The PUMP (Pumping Milk for Nursing Mothers) Act, effective as of 2023, expands protections for breastfeeding employees in the workplace.

Employers must provide:

• Break time: Adequate, paid breaks for nursing mothers to express breast milk.
• Private spaces: Non-bathroom, functional, and private spaces for nursing.

Artificial Intelligence (AI) Policies

As AI tools become more prevalent, your handbook should address their usage and implications.

Include:

• Ethical guidelines: Highlight appropriate AI usage and transparency.
• Data privacy: Stress the importance of safeguarding sensitive company data when using AI tools.
• Employee education: Provide clear definitions of AI terms and examples of acceptable use cases.
  
  

How Dominion Payroll Can Help

At Dominion Payroll, we understand the complexities of HR compliance. Our Boost HR team of experts can analyze your current handbook, recommend updates, and ensure compliance with federal, state, and local regulations.

Don’t let outdated policies put your organization at risk. Reach out to us today to get started on your 2025 employee handbook update and set your organization up for success in the new year!