As we look ahead to 2025, small businesses must navigate an evolving legal landscape shaped by technological advancements, regulatory changes, and shifting consumer expectations. Whether running a local shop or providing online services, understanding these trends will help ensure your business stays compliant and competitive. Here are five legal trends that small businesses should prepare for in the coming year. For personalized legal advice on how these trends might impact your business, contact the Dohrwardt Law Firm to help your company navigate complex regulatory environments.

1. Data Privacy and Cybersecurity Regulations

Data privacy and cybersecurity remain top priorities for regulators worldwide, and 2025 will see the continued tightening of rules to protect consumers' personal information. Following the implementation of laws like the EU's General Data Protection Regulation (GDPR) and California's Consumer Privacy Act (CCPA), more jurisdictions are adopting their privacy frameworks.

In 2025, businesses should anticipate:

• Increased enforcement of existing data protection laws, with stiffer penalties for non-compliance.
• Expanding global and local privacy laws, including potentially adopting new U.S. federal privacy legislation.
• Heightened cybersecurity standards, requiring businesses to implement more robust protections for customer data, including multi-factor authentication, encryption, and incident response plans.

What You Should Do: Small businesses should thoroughly audit their data practices to ensure compliance with applicable regulations. This includes updating privacy policies, improving cybersecurity measures, and training employees to handle data securely. If you are collecting customer information, you should know your compliance obligations.

2. Evolving Employment Laws and Remote Work Compliance

As remote and hybrid work arrangements become more common, employment laws continue to evolve to address the challenges of this new work environment. Governments are introducing legislation related to remote worker rights, work-from-home safety standards, and equitable access to benefits.

For 2025, expect:

• New remote work regulations include employee reimbursement for home office expenses, tax implications, and mandatory time tracking for wage and hour compliance.
• Expanding protections for gig and freelance workers, with more states and countries reclassifying these workers as employees rather than independent contractors.
• Enhanced workplace diversity and inclusion mandates, requiring more proactive reporting and policies around fair hiring, anti-discrimination, and pay equity.

What You Should Do: Review your employment agreements, remote work policies, and contractor relationships to ensure they comply with the latest regulations. Invest in HR tools that facilitate payroll, time tracking, and compliance for both in-office and remote employees.

3. Ransomware Threats and Cybersecurity Liability

Ransomware attacks continue to be a significant threat to businesses of all sizes, and small businesses are often seen as easy targets due to fewer resources dedicated to cybersecurity. In 2025, the stakes are higher than ever as ransomware tactics evolve and regulators impose stricter guidelines to mitigate these threats.

Ransomware attacks can cripple a business by locking critical data and systems, demanding large payments to restore access. Even if the ransom is paid, there's no guarantee the attackers will honor their word, and businesses may still face long-term damage, including lost revenue, reputational harm, and legal liabilities.

Areas to Watch Include:

• Increased frequency and sophistication of attacks: Cybercriminals are using more advanced methods to infiltrate networks, and ransomware-as-a-service (RaaS) has lowered the barrier for less skilled hackers to launch attacks.
• Growing legal and financial liability: Regulators are holding businesses accountable for failing to implement adequate cybersecurity protections, which could result in fines, lawsuits, and breach notification requirements. In some industries, new cybersecurity regulations require businesses to maintain minimum security standards or face penalties.
• Insurance challenges: Cyber insurance policies that cover ransomware payments are becoming more expensive and more complicated to secure, with insurers demanding that businesses meet stricter cybersecurity protocols before coverage is granted.

What You Should Do: Invest in cybersecurity tools and services that can monitor your systems, detect vulnerabilities, and respond quickly to any threats. Ensure your business meets legal standards for cybersecurity and understand your obligations under state and federal data breach laws. If you don't already have one, consider purchasing a cyber insurance policy, but be prepared to demonstrate your business's commitment to strong security practices.

4. AI and Automation: Legal and Ethical Considerations

Artificial Intelligence (AI) and automation are transforming industries, and small businesses are no exception. From customer service chatbots to automated supply chain management, AI can increase efficiency and reduce costs. However, using AI also comes with legal and ethical challenges that small businesses must be prepared for in 2025.

Areas to watch include:

• Intellectual property (IP) rights for AI-generated content, as existing IP laws may not fully cover creative works produced by AI.
• AI bias and discrimination concerns, especially in hiring, where businesses using AI for recruitment must ensure their tools are accessible from biases that could violate anti-discrimination laws.
• Data handling and transparency requirements for AI tools exist, with regulators seeking to ensure that businesses using AI provide clear information on how data is processed, and decisions are made.

What You Should Do: If using AI in your operations, ensure that your AI systems comply with anti-discrimination laws and data privacy regulations. Work with legal counsel to review contracts and data handling procedures involving AI tools.

5. Contract Management and Digital Transactions

With the rise of e-commerce and digital platforms, small businesses increasingly enter digital contracts with consumers and suppliers. The legal framework around digital agreements continues to evolve, especially as blockchain technology and smart contracts gain traction.

In 2025, businesses should expect:

• Greater acceptance and enforcement of digital contracts, with courts recognizing electronically signed and blockchain-verified agreements as legally binding.
• Smart contract adoption in specific industries, automating contract execution through blockchain without the need for intermediaries.
• More stringent e-commerce regulations, particularly around consumer protections for online transactions, refund policies, and cross-border sales.

What You Should Do: Invest in digital contract management solutions that allow secure e-signatures, accessible storage, and compliance with jurisdiction-specific regulations.

Final Thoughts

As we approach 2025, small businesses must stay ahead of these legal trends to avoid costly fines and potential litigation. By proactively addressing data privacy, employment law, ransomware, AI usage, and digital contract management, small business owners can ensure that they are legally compliant and positioned to thrive in a rapidly changing environment.

Whether you manage these changes in-house or seek external legal support, remaining informed and agile is critical. The legal landscape is shifting fast, and those who stay ahead of the trends will be best positioned for long-term success.

For personalized legal advice on how these trends might impact your business, contact the Dohrwardt Law Firm to help your company navigate complex regulatory environments.

The information provided is only for general information and is not meant to be legal advice.  Information on this website, including third-party links, may not include the most up-to-date information, so you should contact your attorney to discuss your particular matter. Third-party links are provided for convenience only and are not an endorsement by the Dohrwardt Law Firm.