New State and Federal Employment Laws Require Employers to Keep Pace with the Changes and Focus on Compliance 

State and Federal legislators, as well as the Trump Administration, have been busy in 2025, enacting new employment laws that affect Colorado employers. This article discusses some of the new state and federal employment laws and highlights the importance of keeping pace with the ever-changing regulatory landscape to ensure compliance and avoid enforcement actions. 

New State Laws Affecting Employers 

During the 2025 Legislative Session and subsequent Special Session, the Colorado General Assembly enacted several new employment laws that all Colorado employers need to be aware of: 

Effective August 6, 2025, HB25-1001 [1] expands employee rights under the Colorado Wage Act (CWA) in multiple areas, including: (1) widening the definition of “employer;” (2) adding remedies available to employees in wage claim cases; (3) increasing the cost of monetary penalties against employers; (4) making it harder for employers to recover attorney fees and costs in cases in which the employer prevails; (5) prohibiting the state from waiving a claim against an employer when a claim is paid if the alleged violation is the second or a subsequent failure or refusal to pay an employee’s wages or compensation in the last five years; (6) requiring the state to publish information about wage claim decisions on its website, including identifying employers by name; (7) allowing the state to report claim results to other governmental entities; (8) expanding the list of entities and individuals who are subject to discrimination and CWA retaliation claims; (9) allowing an employee asserting a CWA retaliation claim to seek damages for economic and noneconomic losses, including those for emotional distress and reasonable attorney fees and costs; (10) requiring the factfinder in a retaliation proceeding to consider the time between an individual’s exercise of a protected activity and an employer’s adverse action which may, without more, be sufficient to find retaliatory intent; and (11) prohibiting employers from retaliating against an employee based on the individual’s immigration status. 

Under Colorado law, a local government may establish a local minimum wage above the statewide minimum wage established in the state constitution. A local government that enacts a minimum wage must provide a tip offset for tipped employees in an amount equal to the tip offset amount described in the state constitution, which is $3.02. The legislature amended that requirement when it passed HB25-1208. [2] Under the new law, which applies to local governments on and after January 1, 2026, a local government that has enacted a code or an ordinance imposing a minimum wage that is higher than the state minimum wage may increase the amount of the tip offset associated with the local minimum wage. However, local governments are prohibited from imposing a tip offset in an amount that allows a tipped employee to earn less than the state minimum wage minus $3.02. 

 In 2024, the Colorado legislature enacted SB24-205 [3] governing Consumer Protections for Artificial Intelligence (the “Act”) and established a regulatory framework aimed at lowering the risk of algorithmic discrimination in artificial intelligence-based decision-making technology. The Act applies broadly to “developers” and “deployers” of “high-risk artificial intelligence systems,” including employers, and was originally to be implemented by February 1, 2026. During a Special Legislative Session in August of 2025, however, the General Assembly enacted SB25B-004 [4] and amended SB24-205 by extending the compliance deadline to June 30, 2026, to allow industry leaders and legislators additional time to address concerns about SB24-205 before it is implemented. For more information about this legislation, read Colorado Legislature Further Delays Implementation of Consumer Protections for Artificial Intelligence Law to June 30, 2026: What Employers Need to Know. 

In 2020, Colorado voters approved Proposition 118, creating the Family and Medical Leave Insurance (FAMLI) program, which provides workers in Colorado up to twelve (12) weeks of paid leave in the event of a serious health condition of the worker or their family member or for other enumerated reasons. An additional four weeks of leave is available for individuals with a serious health condition related to pregnancy complications or childbirth complications. FAMLI benefits became available on January 1, 2024. SB25-144 [5] extends the duration of paid family and medical leave, up to an additional 12 weeks, for a parent who has a child receiving inpatient care in a neonatal intensive care unit. The new law also revises the premiums that finance program benefits. For more information, read What Colorado Employers Need to Know About Recent Changes to the Paid Family Medical Leave Insurance Program. 

New Federal Laws Affecting Employers 

As of the writing of this article, there have been several changes to federal employment laws in 2025 that may affect Colorado employers: 

President Biden issued Executive Order (EO) 14026 in 2021, which provided that, effective January 1, 2025, the minimum wage rate would be increased to $17.75 per hour without any exceptions. [6] On March 14, 2025, President Trump issued EO 14236, revoking EO 14026, thereby returning the federal minimum wage to $13.30 per hour, except that federal recreational services contractors are paid $7.25 per hour. [7] EO 14236 has been challenged in several ongoing lawsuits.

Under the Fair Labor Standards Act (FLSA), most employees in the United States must be paid at least the federal minimum wage for all hours worked up to 40 hours in a workweek and at least time-and-a-half pay for overtime. There are, however, exemptions under the FLSA from both minimum wage and overtime pay for certain types of employees. In 2024, the U.S. Department of Labor published a final set of rules updating and revising the regulations related to exemptions from the FLSA’s minimum wage and overtime pay requirements for executive, administrative, professional, outside sales, and computer employees, which applied beginning January 1, 2025. [8] Among other things, these rules increase the FLSA’s executive, administrative, and professional exemptions to $844 per week and the minimum salary required for those exemptions to $1,128 per week. The rules also affect the highly compensated employee exemption, increasing the annual compensation requirement to $132,964 per year. However, these rules have been subject to numerous legal challenges, including one case in which a court order restricted their implementation. [9] As a result, the Department of Labor states that it is currently “applying the 2019 rule’s minimum salary level of $684 per week and total annual compensation requirement for highly compensated employees of $107,432 per year.” [10]

In 2024, the Federal Trade Commission (FTC) announced a new rule banning noncompete agreements nationwide with the aim of “protecting the fundamental freedom of workers to change jobs, increasing innovation, and fostering new business formation.”[11] Litigants challenged the ban in court, and a district court judge issued an order stopping the FTC from enforcing the rule. The FTC appealed to the Fifth Circuit. On September 5, 2025, the FTC took steps to dismiss its appeal, effectively abandoning its efforts to implement the rules. [12] 

As part of the One Big Beautiful Bill Act (OBBBA), Congress passed a “no tax on tips” income tax exemption. Effective in 2025-2028, employees and self-employed individuals may deduct qualified tips received in occupations listed by the IRS as customarily and regularly receiving tips on or before December 31, 2024, and that are reported on a W-2 Form, Form 1099, or other specified statement furnished to the individual or reported directly by the individual on a 4137 Form. [13] “Qualified tips” are voluntary cash or charged tips received from customers or through tip sharing. [14] The law effectively eliminates federal income taxes on the first $25,000 of tips earned by workers making less than $150,000 per year (or $300,000 a year for joint filers). [15] On September 19, 2025, the IRS issued proposed rules on the “no tax on tips” deduction. [16] The proposed regulations define “cash tips” as tips received from customers or, in the case of an employee, through a mandatory or voluntary tip-sharing arrangement, such as a tip pool, that are paid in a cash medium of exchange, including by cash, check, credit card, debit card, gift card, tangible or intangible tokens that are readily exchangeable for a fixed amount in cash (such as casino chips), and any other form of electronic settlement or mobile payment application that is denominated in cash. [17] Cash tips would not include items paid in any medium other than cash or charge, such as event tickets, meals, services, or other assets that are not exchangeable for a fixed amount in cash (such as most digital assets). [18] “Tips” are defined under the proposed rules as amounts paid by customers for services that are in excess of the amount agreed to, required, charged, or otherwise reasonably expected to have to be paid for the services in an arm’s length transaction. [19] The proposed rules also list qualifying occupations. [20] The public may now make comments on the proposed rules before they are finalized and approved.

Keeping Pace with the Changes 

It can be challenging to keep track of state and federal employment laws. There are, however, a variety of ways to stay up to date on federal, state, and local employment laws. These include, but are not limited to, taking the following steps: 

• Task specific employees with staying abreast of employment laws and hire experts to help, as needed; 
• Use apps and online services that provide employment news and legal alerts; 
• Join professional employment associations that alert their members to upcoming changes in the law, offer live programs and webinars, and publish newsletters or other material to keep their members apprised about new employment laws and regulations;
• Follow labor leaders and governmental organizations on social media and online; 
• Regularly visit the U.S. Department of Labor’s website at https://www.dol.gov/ and Colorado’s Department of Labor and Employment website at https://cdle.colorado.gov/ for news and information; and  
• Watch for client alerts, blogs, and articles on BHGR’s website. 

Focusing on Compliance 

As new laws are enacted, consider these steps to stay focused on timely, accurate, compliance with local, state, and federal laws to avoid penalties and/or legal action being taken: 

• Be proactive and identify and assemble a compliance team within your organization; 
• Identify and consult an employment lawyer to determine what laws apply to your organization and to help develop and implement a compliance plan;
• Develop and implement a compliance plan before the law goes into effect or becomes applicable;
• Review company policies, procedures, employee handbooks, and forms and update them for compliance with the law;
• Review contracts and agreements with employees, independent contractors, and consultants to ensure they comply with the law; 
• Review the company’s website and ensure that it complies with the law;
• Audit payment procedures and policies and adjust as needed;
• Revisit and revise job descriptions;
• Review state and federal workplace posters and replace them if out of date; and
• Offer employees educational and compliance training on the law

Our Team

BHGR’s Employment Group is well-versed in state and federal employment laws and regulations and routinely counsels our clients on compliance issues. In addition, our attorneys assist our clients with compliance efforts, including drafting and developing new workplace policies, procedures, and handbooks consistent with state and federal regulations. Our attorneys also provide compliance and job training seminars for our clients’ employees.

1. https://leg.colorado.gov/sites/default/files/2025a_1001_signed.pdf.
2. https://leg.colorado.gov/sites/default/files/2025a_1208_signed.pdf.
3. https://leg.colorado.gov/sites/default/files/2024a_205_signed.pdf.
4. https://leg.colorado.gov/sites/default/files/2025b_004_signed.pdf. 
5. https://leg.colorado.gov/sites/default/files/2025a_144_signed.pdf.
6. See https://www.dol.gov/agencies/whd/government-contracts/minimum-wage; https://www.federalregister.gov/documents/2021/04/30/2021-09263/increasing-the-minimum-wage-for-federal-contractors. 
7. See https://www.federalregister.gov/documents/2025/03/20/2025-04866/additional-rescissions-of-harmful-executive-orders-and-actions.
8. See  https://www.federalregister.gov/documents/2024/04/26/2024-08038/defining-and-delimiting-the-exemptions-for-executive-administrative-professional-outside-sales-and. 
9. See https://www.dol.gov/agencies/whd/fact-sheets/17a-overtime
10. See id.
11. https://www.ftc.gov/news-events/news/press-releases/2024/04/ftc-announces-rule-banning-noncompetes
12. See id.
13. See https://www.irs.gov/newsroom/one-big-beautiful-bill-provisions#:~:text=No%20tax%20on%20tips%20(Sec.%2070201)&text=Maximum%20annual%20deduction%20is%20%2425%2C000,which%20the%20tips%20were%20earned.
14. See id.
15. See id.
16. https://public-inspection.federalregister.gov/2025-18278.pdf#page=7.
17. See id.
18. See id.
19. See id.
20. See id.