Keeping Up With Compliance: Q2 2025 Update for Employers

For CEOs and CHROs, navigating a constantly evolving regulatory environment is more than just staying informed — it’s about protecting your workforce and bottom line. As policies shift under the Trump administration, staying compliant is critical. Discover the latest federal developments, key risks to monitor, and practical steps to help your organization reduce liability and maintain compliance.

Recent Federal Developments

EEOC & DOJ Issue Guidance on DEI-related Discrimination

On March 19, 2025, the Equal Employment Opportunity Commission (EEOC) and Department of Justice (DOJ) released joint guidance addressing potentially unlawful diversity, equity and inclusion (DEI) practices. This follows new executive orders from President Trump aimed at eliminating illegal DEI mandates.
The agencies clarified that DEI programs may violate Title VII of the Civil Rights Act if employment decisions are influenced, even partially, by protected traits such as race, gender, or religion. Employers may not justify these decisions solely based on a business interest in diversity. While the guidance doesn’t change the law, it signals a shift in enforcement focus.
What Employers Should Do:

• Review DEI policies & training programs.
• Ensure employment decisions are based solely on job-related criteria.
• Train managers to avoid assumptions based on identity traits.

Executive Order (EO) Revokes Federal Contractor Minimum Wage

On March 14, 2025, a new executive order repealed EO 14026, which had raised the minimum wage for federal contractors to $17.75 per hour. That order, enacted under the Biden administration, applied to contracts signed or renewed after January 30, 2022.

With EO 14026 revoked, the prior order (EO 13658) remains in effect, setting a lower wage floor of $13.30 per hour ($9.30 for tipped workers). However, the new order doesn’t clarify whether previously covered contracts are now subject to EO 13658.
What Employers Should Do:

• Audit federal contracts to determine which wage rules apply.
• Ensure workers are paid the highest applicable wage (federal, state, or local).
• Monitor forthcoming guidance for wage compliance updates.

Mental Health Parity Continues to Be a Top Enforcement Priority

On Jan. 17, 2025, the Department of Labor’s Employee Benefits Security Administration (EBSA) released its annual enforcement report on the Mental Health Parity and Addiction Equity Act (MHPAEA).

EBSA continues to focus on identifying nonquantitative treatment limitations (NQTLs), such as prior authorizations or provider networks, that may limit access to mental health or substance use disorder (MH/SUD) care. Nearly 25% of EBSA’s enforcement efforts now focus on these issues.

Employers found in violation must update plan documents and reimburse improperly denied benefits. However, future enforcement remains uncertain due to budget constraints and shifting administrative priorities.
What Employers Should Do:

• Review plan documents and third-party administrator processes.
• Ensure MH/SUD benefits align with medical/surgical benefit standards.
• Address any compliance gaps proactively to avoid costly audits or claims.

Tips for Staying in Compliance in 2025 & Beyond

Navigating complex and evolving compliance requirements can be challenging, especially as new regulations are introduced and enforcement priorities shift. To reduce exposure to compliance-related risk, consider the following strategies:

• Stay informed. Establish a system to regularly monitor federal and state regulatory changes. Subscribe to legal bulletins, attend webinars, and review quarterly compliance summaries.
• Conduct internal audits. Regularly evaluate employment, wage, and benefit policies, especially in high-risk areas, such as DEI and mental health parity.
• Standardize documentation. Ensure employment decisions (e.g., hiring, promotion, termination, compensation) are based on objective criteria and well-documented.
• Review benefit plans. Work with your benefits advisor to assess compliance with parity requirements and federal nondiscrimination rules.
• Partner with experienced advisors. Legal counsel, HR consultants, and insurance professionals can help interpret new regulations, assess risks, and implement practical solutions.
• Support employee wellbeing. Offer resources like employee assistance programs (EAPs), mental health benefits, and inclusive workplace education.
• Assess your risk transfer strategy. Even with the best intentions, compliance missteps can happen. Insurance solutions like employment practices liability insurance (EPLI) and directors & officers (D&O) coverage can help mitigate the financial and reputational impact of enforcement actions.

Looking Ahead

Today, proactive compliance complacency is essential. As enforcement priorities shift and legal interpretations evolve, your ability to adapt quickly protects your people, operations, and reputation. To learn how our benefits and insurance advisors can help alleviate the burdens of federal compliance, connect with a member of our team.