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On July 4, President Trump signed the ‘One Big Beautiful Bill Act’ into law, including provisions reducing federal income tax on qualified tips and overtime compensation.

For employers, the new law raises a host of practical questions:

  • What do employers need to track and report?
  • How will payroll systems need to adapt?
  • What guidance can we expect as we move forward?
  • How might state tax rules interact with these federal changes?

In this video chat, our Employment & Compensation and Tax partners unpack this significant development in federal tax policy. Tune in to discover what these changes may mean for your operations, and for practical tips to navigate the new law.

Click here to view the video.

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Overview

We reported in May on the provisions in the House’s One Big Beautiful Bill addressing two of President Trump’s campaign promises – no taxation of tips and overtime.  The Senate has now passed its version of the One Big Beautiful Bill, which includes its version of these provisions in sections 70201 and 70202.  See our prior blog post here for a detailed discussion of the House provisions.  While the basic structure of the provisions are similar, there are differences in the details. 

What Stays the Same

Above-the-line deductions for qualified tips and qualified overtime

Like the House bill, the Senate bill would give certain workers an above-the-line deduction for “qualified tips” and “qualified overtime compensation” included on an information return furnished to the individual or reported on a Form 4137 (for tips) for taxable years beginning after December 31, 2024, and ending for taxable years beginning after December 31, 2028.  This means the deductions are proposed to be retroactive and proposed to apply to amounts paid even before enactment of the bill.  Making this deduction available to the worker creates reporting and withholding obligations for the service recipient, as discussed in more detail below. 

In order to be deductible as qualified overtime compensation under the Senate provision, as was true with the House provision, the payment must be overtime paid as required under section 7 of the Fair Labor Standards Act that is in excess of the regular rate (as used in that section) at which such individual is employed. Qualified overtime compensation does not include any amount treated as a qualified tip.

In order to be deductible under the Senate provision, as was the case with the House provision, qualified tips generally must be paid voluntarily to a person who works in an occupation which traditionally and customarily received tips on or before December 31, 2024. The Secretary of the Treasury is directed to provide a list of occupations that traditionally and customarily received tips in 2024 and before within 90 days of enactment. 

As was the case in the House bill, the Senate bill provides that workers in certain specified businesses are not eligible for the tip deduction.  The businesses excluded are ones providing services in accounting, health, law, actuarial science, athletics, brokerage services, consulting, financial services, or the performing arts.  In the case of tips received in the course of a trade or business (other than as an employee of an employer), the deduction is limited to gross income from the business less other deductions allocable to the business.

Continue Reading Senate Passes No Tax on Tips and Overtime Provisions
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Multinational employers operating in the Middle East and Africa face escalating geopolitical tension, challenging economic conditions and evolving social expectations. Our recent webinar covered how countries across MEA are responding to these pressures—and what employers need to know to stay compliant and competitive.

Click here for a link to the recording, and also a preview of the discussion:

A Bird’s Eye View

  • Economically, a mixed bag: while Morocco, the UAE, and Saudi Arabia are experiencing growth and attracting foreign investment, South Africa and Türkiye are grappling with more challenging conditions.
  • Escalating conflict: Regional conflict in neighboring jurisdictions in the Middle East have wide ranging implications for global businesses.
  • 2025 is a landmark year for labor law reform: Significant reforms in Saudi Arabia and the UAE are already in effect, plus anticipated reforms in Morocco, South Africa, and Türkiye.

Country Highlights

Morocco

  • A new labor code is expected by the end of 2025, aiming to simplify hiring and termination procedures and formally regulate remote work.
  • Social protection reforms now cover informal and domestic workers, with legal recognition of unpaid domestic labor under consideration.
  • A new strike law (effective August 2025) introduces protections against retaliation and bans replacement workers during strikes.

Saudi Arabia

  • 2025 labor law amendments include extended maternity leave (12 weeks), clarified paternity leave, and compensatory time off for overtime.
  • Employers must now provide housing and transport allowances or cash equivalents.
  • Litigation risks are relatively high and mutual terminations are common due to employee-friendly courts and the absence of at-will employment.

South Africa

  • Amendments to the Employment Equity Act mean only employers with 50+ employees must comply with transformation plans.
  • A new Code of Good Practice on Dismissal is expected to simplify pre-termination processes, moving away from trial-like hearings.
  • DEI remains a strategic imperative, with persistent inequalities driving transformation efforts.

Türkiye

  • From January 2025, small employers must comply with occupational health and safety requirements or face fines.
  • Labor courts are highly employee-friendly; mediation is increasingly used to avoid litigation.
  • A new circular on workplace harassment encourages employers to adopt anti-harassment policies and highlights the importance of training.

United Arab Emirates

  • Whistleblower protections are now in force per the ADGM Employment Regulations 2024, with penalties including license suspension for noncompliance.
  • Litigation risk is low unless retaliation is involved; discrimination claims are rare but emerging.
  • Employee wellbeing is gaining importance in the UAE, with many multinational companies implementing wellbeing initiatives, including employee assistance programs.

Tune in to learn more, and as always, reach out to your Baker McKenzie employment lawyer with any questions.

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As summer is upon us, many visa holders are planning their travels, and reentry into the United States has become a significant concern. The fast-paced changes in policies and their enforcement by immigration officers at US ports of entry have created widespread anxiety for both employers and travelers.

In our latest Mobility Minute video chat, our Global Immigration and Mobility attorneys address key issues such as travel documents and visa stamping, impacts of federal workforce changes, trends in entry and reentry into the US, travel bans and implications, and proactive steps for employers.

Click here to watch the Mobility Minute.

*Captions are automatically generated. We apologize for any typos or errors.

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In a recent conversation with our colleagues across the Americas—in Argentina, Brazil, Canada, Colombia, Mexico and the United States—we examined the latest developments affecting multinational employers in the region. Please click here to tune in to the recording at your convenience. Read on for a preview of some of the key changes our team discussed.

Several common themes are playing out across these countries in the Americas. Like the rest of the world, the Americas are significantly impacted by escalating trade tensions, inflation, and deep political polarization, creating a tricky operating environment for multinational companies and underscoring the need to maximize business agility. While many businesses appreciate the flexibility of contracting and third-party arrangements, employment misclassification remains a costly risk, particularly in countries like Brazil, Colombia, Mexico, and the US.

Inclusion, diversity, and equity remain in the spotlight and continue to be important areas for strategic workforce planning as well as a focus for litigation risk assessments. We are also seeing a greater focus on gender equality in countries like Brazil, Canada, and Mexico, as well as an increase in statutory employment protections (e.g., leave entitlements, new health and safety obligations, etc.).

At a high level, here are a few of the specific changes — discussed in further detail in the recording —unfolding in particular countries:

  • Under President Javier Milei’s government in Argentina, a key objective for 2025 is to implement labor reforms aimed at reducing labor costs and promoting a more flexible and dynamic labor market.
  • Brazil’s most recent material employment law changes concern equal pay and workplace health and safety.
  • Canada‘s employment law landscape has evolved with greater judicial scrutiny of termination clauses (particularly in Ontario), a marked increase in wrongful dismissal litigation, and growing obligations with respect to pay equity (e.g., in Ontario and British Columbia).
  • In Colombia, recent labor law reforms have aimed at strengthening workers’ rights and improving job security. The most significant developments include new sexual harassment prevention regulations, special protections related to paternity leave, and new regulations on occupational medical evaluations.
  • Mexico has undertaken significant labor reforms to enhance worker protections and promote fair labor practices. Recent changes are aimed at improving working conditions with respect to digital platform work, providing new protections related to gender equality, and reducing overtime as a form of labor exploitation.
  • In the US, employment law changes continue to be driven primarily by state legislators, and we are seeing an increase in employee protections with respect to paid leave, discrimination protections, minimum wages, and restrictions on noncompete agreements. In recent years, and as underscored by President Trump’s January 2025 DEI Executive Orders, we’ve seen growing political and social resistance to workplace DEI programs, particularly from conservative action groups and political figures. As a result of increasing scrutiny, many US-based companies are conducting DEI health checks under legal privilege to assess legal risk and shore up any areas of potential vulnerability.

Tune in to learn more, and as always, reach out to your Baker McKenzie employment lawyer with any questions.

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We recently recorded a lively discussion with several of our Baker McKenzie colleagues to discuss the major developments impacting multinational employers operating in Europe. For your convenience, click here for a link to the recording.

To preview some of the key changes our team highlighted, read on!

The socio-political climate across Europe is contributing to a challenging environment for multinational businesses operating in the region. Economic growth has slowed, there is significant political tumult in a number of countries, and geopolitical tensions and conflict have further complicated supply chains, investment decisions and regulatory compliance.

The European Union is advancing several regulatory priorities that will significantly impact global employers, particularly in the areas of pay equity, competition law, and employee representation.

  • The EU Pay Transparency Directive, set to be implemented by June 2026 mandates (among other things) that employers: (i) disclose salary ranges in job postings and (ii) prohibit inquiries into candidates’ salary histories. Companies with over 250 employees must report gender pay gaps annually, and if disparities exceed 5% without objective justification, they must conduct joint pay assessments with worker representatives.
  • The EU is intensifying enforcement against anti-competitive behavior, with a focus on labor market collusion, such as wage-fixing and no-poach agreements. Employers must be vigilant in their hiring practices and inter-company collaborations to avoid breaching competition law, which now increasingly encompasses employment-related conduct. For more, see our article: Antitrust Scrutiny of HR Practices Intensifies Globally.
  • The EU Commission is seeking to amend the existing European Works Councils legislation which, if the latest proposal is approved, will significantly strengthen workers’ and EWCs’ rights.

At a high level, here are a few of the specific changes – all discussed in further detail in the recording – unfolding in particular countries:  

  • Belgium’s new federal government is focusing on reducing the public deficit, leading to strikes and opposition. Key reforms aim to increase the employment rate and provide more flexible working arrangements. The new legislation introduces a framework for internal investigations into employee conduct, requiring companies to review their investigation protocols by December 2026.
  • France is experiencing political instability and rising unemployment rates. Recent developments include a mandatory profit-sharing obligation for companies with 11 to 50 employees, a two-year postponement of sustainability reporting obligations, and incentives for foreign investments despite economic difficulties.
  • Germany’s new coalition government is pushing for significant investments in infrastructure and digitalization. Upcoming changes include an increase in minimum wage, digitalization of employment-related documents, and a requirement for companies to record working hours, aligning with EU regulations.
  • The Netherlands is adopting a more conservative approach to workforce management due to economic uncertainties. Key employment law changes include stricter enforcement of contractor misclassification and broadening discrimination protections. We are advising companies to review their contractor relationships to avoid potential legal issues.
  • Spain’s left-wing government is struggling to implement employee-friendly legislation due to coalition dynamics. Key employment law developments include a proposed reduction in working hours, changes to disciplinary dismissal procedures requiring a hearing before termination, and efforts to navigate the fragmented political landscape.
  • The UK government is planning significant employment law reforms, including making unfair dismissal a day-one right, increasing union access to workplaces, and changing collective redundancy thresholds, impacting how organizations manage layoffs across multiple sites.

Tune in to learn more, and as always, reach out to your Baker McKenzie employment lawyer with any questions.

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The European Commission has issued its first fine in a no-poach case in the labor market, and its first sanction of the anti-competitive use of a minority share in a competing business. With the fine of EUR 329 million, the Commission joins the ranks of a number of high-profile antitrust enforcers worldwide that have targeted HR-related infringements. The Commission’s first intervention is also likely to encourage other EU regulators to follow suit and is an important reminder of the need to carefully manage antitrust risk (specifically information flows) where a company holds a minority shareholding in a competitor.

The Commission issued its fine after conducting an extensive investigation, which was an own-initiative inquiry into possible collusion in the food delivery sector. The investigation – launched following a market monitoring exercise, which itself had been prompted by information received from a national competition authority and via the Commission’s anonymous whistleblower tool – uncovered a no-poach agreement between the companies which was deemed to restrict competition in the labor market, as well as anti-competitive information exchange and illegal sharing of geographic markets.

Cartel facilitated by a minority shareholding in a competitor:

The companies involved were a minority shareholder and its (competing) investment business. Through this investment, there were structural links between the competitors at several levels which ultimately enabled anti-competitive interactions. It also allowed the companies to share commercially sensitive information and for the minority shareholder to influence decision-making processes in its competitor.

This is the first time that the Commission has sanctioned anti-competitive conduct between a minority shareholder and its competing investment business. The Commission notes in its press release that it is not illegal to own a stake in a competitor. However, in this case, the structural links between the companies allowed them to access each other’s sensitive information and to ultimately align their commercial conduct, and so removing competition between them. The type of information shared between the companies, such as prices, costs, and commercial strategies, is clearly sensitive and goes beyond what a minority shareholder would usually expect to receive to protect its corporate investment.

Competing for talent

Employers are competitors for talent – enforcers have identified the labor market and employers as ‘markets’ and ‘competitors’ in which there needs to be healthy competition. In markets where there is fierce competition for talent, for example due to requirements for specialized skills, no-poach agreements and other anticompetitive HR practices can arise. No-poach agreements are one of five categories of employment-related conduct that attract antitrust scrutiny. The others include:

  • Wage-fixing agreements
  • Non-compete clauses
  • Non-solicitation agreements
  • Information exchange / benchmarking of employee pay and benefits

What should employers do?

Identify HR antitrust risk

Employers need to be aware of the risk factors that give rise to no-poach agreements and be ready to manage risks effectively. Our checklist below provides a starting point:

Risk FactorsSolutions
– Specialized workforce
– High demand/shallow pool of workers
– Large investments needed to train/develop employees
– Higher risk sectors: Healthcare, Sports, Defense, IT/Tech, Financial Services, Consumer Goods, Engineering, Professional Service		– Educate staff, particularly those in HR and senior management
– Ensure training reaches C-suite-level executives to avoid handshake agreements and other risky quick fixes between business colleagues
– Monitor competitive trends and activity in the job market. If there are skills that are in high demand but short supply, or if a particular competitor is on a hiring spree, those situations may create risky conditions leading to illicit discussions or agreements
– Consider making “Legal” the owner of (legitimate) no poach/non-solicitation agreements and have HR check before hiring

For our full Risk Mitigation checklist, and to learn more about this growing trend, read our article International Onslaught Against HR Practices: Act Now to Stay Ahead of the Game.

Manage information flows

This case highlights that a non-controlling shareholder and its (rivalling) investment can be considered competitors and thus be subject to the full force of antitrust regulations, prompting the need to manage respective risks. Our antitrust experts can advise on appropriate measures to ensure that information flows are carefully controlled and to avoid anti-competitive collusion. Joint ventures and collaboration agreements with competitors (including minority shareholdings) should include strict safeguards to ring-fence commercially sensitive information. In an M&A context, if a company is considering acquiring a stake in a competitor, clean team arrangements and protocols governing access to sensitive information need to be rigorously employed. These steps are essential to ensure compliance during the stages of negotiating an investment and for the duration of holding a minority stake in a competitor.

Be prepared for a dawn raid

Competition agencies are increasingly utilizing new tools to detect violations without relying on companies reporting antitrust behavior in exchange for immunity/leniency. Aside from encouraging whistleblowing activity, agencies have invested significant resources in developing digital tools to analyze large amounts of data that may provide evidence of anticompetitive behavior. Companies must be prepared to respond swiftly and effectively. Practical measures, such as maintaining clear compliance protocols, training staff on legal obligations, and ensuring rapid coordination with legal counsel, are essential to mitigate risks and ensure a robust response.

How we can help

Our global HR Antitrust Task Force combines our leading Antitrust & Competition expertise with our leading Employment & Compensation team to provide market leading support to companies facing antitrust investigations and enforcement. We provide immediate support during dawn raids, combining investigation expertise, legal guidance, and eDiscovery tools to help clients cooperate with authorities while safeguarding their rights and minimizing disruption. Our strategic approach ensures clients are well-positioned in multi-jurisdictional investigations.

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Earlier this month, we recorded an action-packed webinar with several of our Baker McKenzie colleagues to discuss the major developments impacting multinational employers operating in Asia. For your convenience, click here for a link to the recording.

And, for a tl;dr of sorts, read on!

Several countries in the Asia Pacific region have held key elections in the first half of 2025, resulting in some degree of political uncertainty in certain jurisdictions and also impacting policy priorities (e.g. in Australia where the newly elected Labor government may embark on significant reform of workplace laws). And, in the wake US tariffs, broader geopolitical tension and inflation across the region, there is marked economic uncertainty which is causing many employers to make changes to ‘right-size’ their business. Of course, this can be challenging in certain jurisdictions where unilateral termination of employment is difficult (e.g. in China, Japan, Indonesia, South Korea and the Philippines).  

We have witnessed an uptick in labor litigation, including unlawful or wrongful dismissal claims (which are increasingly partnered with equity incentive disputes). Authorities in a number of countries in APAC (e.g. in Australia, China, Japan, the Philippines and Vietnam) are increasing the scrutiny of employee-like workers and/or ramping up restrictions on labor dispatch/labor subleasing.

At the same time, there is an increased focus on supporting women in the workplace through targeted legislative changes (e.g. expanding family leave laws like in Japan and Singapore) and requiring gender pay gap reporting in some countries (e.g. in Australia and Japan). Further, several APAC jurisdictions now require employers to take proactive steps to prevent sexual harassment in the workplace (e.g. in Australia, China, Hong Kong, Japan and Taiwan).

Tune in to learn more, and as always, reach out to your Baker McKenzie employment lawyer with any questions.

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As AI adoption accelerates across workplaces, labor organizations around the world are beginning to take notice—and action. The current regulatory focus in the US centers on state-specific laws like those in California, Illinois, Colorado and New York City, but the labor implications of AI are quickly becoming a front-line issue for unions, potentially signaling a new wave of collective bargaining considerations. Similarly, in Europe the deployment of certain AI tools within the organization may trigger information, consultation, and—in some European countries—negotiation obligations. AI tools may only be introduced once the process is completed.

This marks an important inflection point for employers: engaging with employee representatives on AI strategy early can help anticipate employee concerns and reduce friction as new technologies are adopted. Here, we explore how AI is emerging as a key topic in labor relations in the US and Europe and offer practical guidance for employers navigating the evolving intersection of AI, employment law, and collective engagement.

Efforts in the US to Regulate AI’s Impact on Workers

There is no specific US federal law regulating AI in the workplace. An emerging patchwork of state and local legislation (e.g. in Colorado, Illinois and New York City) address the potential for bias and discrimination in AI-based tools—but do not focus on preventing displacement of employees. In March, New York became the first state to require businesses to disclose AI-related mass layoffs, indicating a growing expectation that employers are transparent about AI’s impact on workers.[1]

Some unions have begun negotiating their own safeguards to address growing concerns about the impact that AI may have on union jobs. For example, in 2023, the Las Vegas Culinary Workers negotiated a collective bargaining agreement with major casinos requiring that the union be provided advance notice, and the opportunity to bargain over, AI implementation. The CBA also provides workers displaced by AI with severance pay, continued benefits, and recall rights.

Similarly, in 2023 both the Writers Guild of America (WGA) and Screen Actors Guild-American Federation of Television and Radio Artists (SAG-AFTRA) negotiated agreements with the Alliance of Motion Picture and Television Producers (AMPTP) that include safeguards against AI reducing or replacing writers and actors. WGA’s contract requires studios to meet semi-annually with the union to discuss current and future uses of generative AI—giving writers a formal channel to influence how AI is deployed in their industry. The SAG-AFTRA contract requires consent and compensation for use of digital replicas powered by AI.

Continue Reading Navigating Labor’s Response to AI: Proactive Strategies for Multinational Employers Across the Atlantic
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The implementation of EU Pay Transparency Directive will come into effect in 2026, requiring companies to identify “equal” or “equivalent” positions and ensure they are compensated equally, regardless of gender. This assessment can be particularly challenging for companies with a large workforce in different jurisdictions.

To support in this effort we have developed a specialized scoring model, the Equal Value Assessment Tool (EVA), designed to assist companies effectively in determining comparability across your organizations.

During our virtual session on June 25, we will discuss potential changes to German legislation based on our current pay transparency laws, proactive steps employers should take in preparation for the directive and how we can assist you in navigating these challenges and requirements. We will also demonstrate our EVA tool to demonstrate how companies can best prepare to comply with the new legal framework.

June 25, 2025
12:00 to 12:30 PM EST | 9:00 to 9:30 AM PST

Click here to register.