US Department of Labor Changes Ease Regulatory Burdens

by | Jul 24, 2025 | Business Articles, Human Resources

USDOL changes

Summary

So far in 2025, Trump's US Department of Labor (USDOL), shifting its focus toward deregulation and pro-business policies, has rolled back several rules established by the Biden administration. USDOL has also introduced measures to reduce compliance costs and enhance flexibility for employers.

So far in 2025, Trump’s US Department of Labor (USDOL), shifting its focus toward deregulation and pro-business policies, has rolled back several rules established by the Biden administration. USDOL has also introduced measures to reduce compliance costs and enhance flexibility for employers. These changes aim to spur job creation, minimize administrative hurdles, and prioritize American workers in a competitive global economy. As of July 24, 2025, key actions include pausing:

  • Enforcement of worker classification rules, and
  • Court-blocked overtime adjustments.

And implementing:

  • Broad deregulatory proposals, and
  • Targeted support for industries such as manufacturing and AI.

Let’s examine these efforts and their implications for businesses.

Pausing the Independent Contractor Rule: Greater Flexibility for Gig and Contract Work

One of the most significant shifts occurred in May 2025, when the USDOL issued Field Assistance Bulletin (FAB) 2025-1, announcing it would no longer enforce the 2024 independent contractor classification rule for Fair Labor Standards Act (FLSA) purposes. This rule, which had adopted a stricter six-factor economic reality test, made it harder for businesses to classify workers as independent contractors (ICs), potentially requiring reclassification as employees with associated benefits, overtime, and tax obligations.

For businesses, this pause signals a return to a more lenient approach, similar to the 2021 rule, which allows for easier use of ICs in sectors such as tech, transportation, and the gig economy. Companies can now avoid federal audits under the previous framework. This elimination of federal audits can potentially save 20-30% per worker in costs by sidestepping employee-related expenses. However, companies should be aware that the rule remains in effect for private litigation and state laws. Therefore, businesses should continue to conduct audits to mitigate risks. This change aligns with broader efforts to reduce regulatory burdens, fostering innovation and cost efficiency.

Overtime Exemption Threshold: Relief from Planned Increases

Biden’s USDOL 2024 overtime rule raised the salary threshold for white-collar exemptions to $58,656 annually, effective January 1, 2025. Federal courts blocked the rule in late 2024, declaring it non-binding on businesses, and Trump’s USDOL is unlikely to appeal or enforce it.

This development provides substantial relief for businesses, particularly those in the retail, hospitality, and management-intensive sectors. Employers who had prepared for the increase by raising salaries or tracking overtime can now revert without additional payroll hikes, avoiding an estimated $1.5 billion in annual nationwide costs. The lighter enforcement approach encourages hiring and operational flexibility, though ongoing litigation could introduce uncertainty for employers.

Broad Deregulation Efforts: Cutting Red Tape and Compliance Costs

In July 2025, the USDOL unveiled aggressive deregulatory initiatives, proposing to rescind or amend over 60 “obsolete” labor regulations, including those under the Workforce Investment Act. Secretary Lori Chavez-DeRemer emphasized putting “American workers first” by reducing burdens that hinder job creation and economic growth. Comments on these proposals are due by September 2, 2025.

Additionally, the Office of Federal Contract Compliance Programs (OFCCP) announced plans to wind down affirmative action mandates for federal contractors, reducing its offices from 55 to four, and rescinding Executive Order 11246’s implementing regulations, while retaining anti-discrimination provisions. This change could save contractors a significant amount of time and resources.

For businesses, these moves promise millions in savings through simplified reporting, fewer inspections, and reduced litigation risks. Small and medium-sized companies can anticipate a benefit from the updated OSHA penalty guidelines issued on July 14, 2025. This guidance aims to minimize burdens and promote prompt hazard abatement. However, while deregulation boosts efficiency, companies must maintain worker protections or risk facing private lawsuits if these protections are perceived as weakened.

Minimum Wage and Wage Policies: State-Level Focus with Federal Stability

The federal minimum wage remains at $7.25 per hour, with no broad increases planned in 2025. For federal contractors, however, wages under Executive Order 13658 may be adjusted, although the specifics are tied to inflation rather than new mandates. State minimum wage increases continue to impact multi-state operations.

Another matter to note is that the USDOL’s July 10, 2025, guidance restricts illegal immigrants from participating in taxpayer-funded workforce programs. This new restriction will likely indirectly tighten labor markets for some employers.

Support for Emerging Sectors: AI and Manufacturing Initiatives

On July 23, 2025, the USDOL applauded President Trump’s AI Action Plan. This plan, developed under a January Executive Order, focuses on positioning the US to achieve global dominance in artificial intelligence. This policy roadmap could impact workforce training and regulations in the tech sector.

Similarly, a Memorandum of Understanding signed on July 16, 2025, with the Small Business Administration aims to support domestic manufacturing by developing skilled worker pipelines. It is believed that 98% of affected manufacturers are small businesses.

These initiatives provide businesses with access to talent and help mitigate labor shortages, potentially lowering training costs and enhancing competitiveness without imposing new regulatory burdens.

Summary of Key 2025 USDOL Changes and Business Impacts

ChangeDateKey DetailsBusiness Impact
Independent Contractor Rule PauseMay 2025No enforcement of the 2024 rule; easier IC classification.Cost savings (20-30% per worker); increased flexibility in gig/contract models.
Overtime Threshold BlockOngoing (court ruling late 2024; no 2025 enforcement)$58,656 increase halted; potential revisions are being considered.Avoids $1.5B in payroll costs; simplifies salary structures.
Deregulation ProposalsJuly 2025Rescind/amend 60+ regs; OFCCP wind-down.Reduced compliance burdens; savings in time/resources for contractors/SMEs.
Minimum Wage AdjustmentsJanuary 2025 (state/federal contractors)State hikes (e.g., IL to $15); federal stable.Variable costs by location; no broad federal increases.
AI and Manufacturing SupportJuly 2025AI Action Plan; SBA MOU for skilled workers.Enhanced talent access boosts innovation in technology and manufacturing.

Conclusion: A Pro-Business Landscape with Some Uncertainties

Trump’s USDOL 2025 actions mark a clear departure from prior worker-focused expansions—the new USDOL emphasizes deregulation to fuel economic growth. Businesses can expect lower costs, greater operational freedom, and support in key industries. However, they must also navigate state variations, potential litigation, and evolving enforcement. Employers are advised to stay informed via USDOL updates and consult legal experts to capitalize on these changes while minimizing risks.

References

  1. Labor Department looking to lighten workplace regulation with … – https://www.cbsnews.com/news/labor-department-deregulate-workplaces-rules-changes-repeals/ (Published: 2 days ago)
  2. Trump’s Department of Labor Continues Its Onslaught against Workers – https://tcf.org/content/commentary/trumps-department-of-labor-continues-its-onslaught-against-workers/ (Published: 2 days ago)
  3. Labor and Employment 2025 Federal Legal Updates – https://www.laboremployment-lawblog.com/labor-and-employment-2025-federal-legal-updates/ (Published: December 16, 2024)
  4. New DOL Overtime Rule Effective January 1, 2025: What Employers … – https://www.simcoservices.com/new-dol-overtime-rule-effective-january-1-2025-what-employers-need-to-know (Published: January 1, 2025)
  5. Blocked DOL Overtime Rule Set for Review in the Fifth Circuit (US) – https://www.employmentlawworldview.com/blocked-dol-overtime-rule-set-for-review-in-the-fifth-circuit-us/ (Published: March 6, 2025)
  6. Project 2025’s Plan To Gut Checks and Balances Harms American … – https://www.americanprogress.org/article/project-2025s-plan-to-gut-checks-and-balances-harms-american-workers/ (Published: August 12, 2024)
  7. US Department of Labor Announces It Will No Longer Enforce … – https://www.fordharrison.com/us-department-of-labor-announces-it-will-no-longer-enforce-2024-independent-contractor-rule (Published: May 5, 2025)
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  11. Secretary Chavez-DeRemer unveils aggressive deregulatory efforts … – https://www.dol.gov/newsroom/releases/osec/osec20250701-0
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  13. Labor Department proposes rewriting or repealing more than 60 … – https://www.pbs.org/newshour/politics/labor-department-proposes-rewriting-or-repealing-more-than-60-obsolete-rules-in-push-to-deregulate-workplaces (Politics July 22, 2025)
  14. DOL Proposes Recission or Amendments to Multiple Labor … – https://advocacy.sba.gov/2025/07/16/dol-proposes-recission-or-amendments-to-multiple-labor-regulations/ (Published: July 16, 2025)
  15. US Department of Labor applauds President Trump’s ‘AI Action Plan … – https://www.dol.gov/newsroom/releases/osec/osec20250723
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  17. White House Unveils America’s AI Action Plan – https://www.whitehouse.gov/articles/2025/07/white-house-unveils-americas-ai-action-plan/ (Published: 22 hours ago)
  18. OFCCP Unveils Regulation Changes Winding Down Federal … – https://ogletree.com/insights-resources/blog-posts/ofccp-unveils-regulation-changes-winding-down-federal-contractor-affirmative-action-mandates/ (Published: June 30, 2025)
  19. OFCCP Seeks Confirmation Contractors Have “Wound Down” E.O. … – https://cwc.org/CWC/CWC/Updates/2025/OFCCP-Seeks-Confirmation-Contractors-Have-Wound-Down-EO11246-AAPs.aspx?ctl01_TemplateBody_WebPartManager1_gwpciRelatedContentSearch_ciRelatedContentSearch_lstSearchResults_Grid1ChangePage=9_5 (Published: July 1, 2025)
  20. SBA and DOL Sign MOU to Support Domestic Manufacturing – https://www.sba.gov/article/2025/07/16/sba-dol-sign-mou-support-domestic-manufacturing (Published: July 16, 2025)
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