Thank you for joining us for our presentation, "Reducing Risk in 2026: Key Updates in New York Employment & Benefits Law."
To recap: The program addressed several significant developments affecting New York employers in 2026. With respect to wage and hour compliance, minimum wage rates and exempt salary thresholds have increased statewide, creating heightened risk in employee classification, overtime exposure, and payroll practices. We also reviewed important updates to New York City's Earned Safe and Sick Time Act (ESSTA or Protected Time Off Law), including the addition of a new unpaid leave bank, expanded permissible uses of leave, the incorporation of a paid prenatal leave bank, and enhanced tracking and policy requirements for employers.
We further discussed the statewide expansion of restrictions on the use of consumer credit history in employment decisions, which will require many employers to revise hiring practices and background check procedures. From a benefits perspective, we addressed key developments under SECURE 2.0 and other federal initiatives, including mandatory Roth catch-up contribution rules, expanded health and welfare plan opportunities, and upcoming deadlines for plan amendments. We also highlighted New York's Secure Choice Savings Program, which imposes new obligations on certain employers to either participate in the state-sponsored retirement program or certify an exemption beginning in 2026.
Finally, we reviewed emerging litigation risks--particularly in the ERISA context, including recent class action trends involving prohibited transactions and forfeitures--and previewed upcoming statutory developments such as amendments to the Trapped at Work Act, which will require employers to reassess certain repayment and clawback arrangements.
We previously distributed a copy of the presentation materials to webinar attendees. If you did not receive a copy or would like us to resend the slides, please feel free to contact us.
Below, we address questions submitted during and after the presentation, along with frequently asked questions we have received from clients.
Questions and Answers
1. Under ESSTA, do the employee headcount thresholds apply based on employees in New York City only, New York State, the United States, or worldwide?
Under ESSTA, employee headcount thresholds are based on the employer's total workforce--not just employees working in New York City. Employers must count all employees, regardless of location (including those outside New York State and the United States), when determining which ESSTA requirements apply.
However, ESSTA's substantive obligations (i.e., the requirement to provide protected time off) apply only to employees who perform work in New York City.
2. Are short-term or seasonal employees covered under ESSTA?
Yes. Temporary and seasonal employees are covered and are therefore entitled to the protections and benefits provided under the law.
3. If an employee has a minor child whose school is closed (for either a routine reason like parent-teacher conferences or an unexpected reason due to a building issue), may the employee use unpaid leave under ESSTA to care for their child?
It depends. Under the amended ESSTA, employees may use protected time off for certain caregiving purposes, including where a child's school or place of care is closed because of a public health emergency or similar event.
Unexpected closures tied to emergencies or safety concerns (such as a building issue) are more likely to qualify. By contrast, routine, pre-scheduled events (such as parent-teacher conferences) generally do not qualify unless the leave is independently tied to a covered reason, such as the child's illness or another qualifying need.
As a result, employers should evaluate these situations on a case-by-case basis and ensure that their policies clearly define qualifying uses and any documentation expectations.
4. Under ESSTA, if an employer already provides more than 88 hours of paid sick leave, is the employer still required to maintain and track separate leave banks?
Not necessarily; however, it depends on how the employer's policy is structured.
Under ESSTA, employers may satisfy their obligations through a single, more generous paid leave policy (such as a PTO policy), provided that the policy meets or exceeds all statutory requirements.
Importantly, although the law requires employers to provide 32 hours of immediately available protected time off, that requirement does not need to be satisfied through a separate unpaid leave bank. Employers may instead meet this obligation by providing at least an equivalent amount of paid leave that is immediately available for use.
In addition, employers must ensure that:
- Leave is usable for all ESSTA-covered purposes without impermissible restrictions and
- Required information (including accrual, use, and available balances) is tracked and provided to employees each pay period
Accordingly, separate leave "banks" are not strictly required if a single policy fully complies with ESSTA. However, many employers continue to maintain separate tracking categories to ensure compliance with the law's distinct requirements, including the separate paid prenatal leave entitlement.
5. If employees can access an online system that tracks accrued and used leave, must the employer still include leave balances on wage statements?
Yes--although the requirement may be satisfied through an electronic system if certain conditions are met.
Under ESSTA, employers must provide employees with information each pay period regarding their leave balances, including the amount of leave accrued, used, and available for use. This information must appear on wage statements or be provided through another compliant method.
An electronic system may satisfy this requirement, but only if the employer (i) notifies employees each pay period that the information is available and (ii) ensures the system clearly and easily displays all required information, including accrual, use, available balances, and immediately available leave, for both current and prior pay periods.
If these conditions are not met, the employer must include the required leave information on wage statements.
6. Does ESSTA apply to a Long Island employer whose employees work exclusively at a single location?
No. ESSTA is a New York City law and applies only to employees who perform work in New York City.
7. Under the ESSTA, can an employer require an employee to use paid time off if unpaid leave is also available?
Generally, yes--with an important limitation. Under ESSTA, when an employee has both paid and unpaid protected time off available, the employer should apply paid leave by default to cover the absence. However, if the employee affirmatively elects to use unpaid leave instead, the employer should permit that choice.
In other words, employers may designate paid leave in the first instance, but they should not require employees to use paid leave if the employee prefers to use available unpaid leave.
8. If an employee anticipates taking more than three consecutive workdays of ESSTA leave, may the employer request documentation in advance?
No. Under ESSTA, an employer may require documentation only after an employee has used more than three consecutive workdays of protected time off--not in advance, even if the need for leave is foreseeable. Employees must also be given at least seven days after returning to work to provide any required documentation.
9. May an employer conduct credit checks for employees in finance leadership roles, such as a CFO or controller?
The amended New York State law generally prohibits employers from requesting or using consumer credit history in employment decisions. However, there are limited statutory exceptions, including for certain positions with significant financial authority.
One such exception may apply where an employee has the authority to enter into financial agreements or exercise control over company funds of $10,000 or more as part of their regular job duties. Roles that meet this threshold--such as certain senior finance positions--may qualify for the exception, depending on the actual duties of the position.
Importantly, the analysis is highly fact specific. Not all roles with financial responsibilities will meet the $10,000 threshold, and employers should carefully evaluate the scope of the employee's authority rather than rely solely on job titles. Absent a clear fit within an exception, employers should avoid conducting credit checks.
10. What is the penalty for failure to timely register with or certify an exemption from the New York State Secure Choice Savings Program?
Currently, there is no specific penalty for failure to register or certify with the New York State Secure Choice Savings Program ("Program"), as the New York State Secure Choice Savings Program Board ("Board") has not yet issued regulations concerning Program enforcement. However, the Board will likely issue such regulations. Such regulations could have a retroactive effect. Additionally, a penalty for failure to register or certify could arise from a different New York State enforcement action, such as a New York State Department of Labor audit. Accordingly, to insulate themselves against any enforcement action relating to the Program, employers that have operated for at least two years and that have had 10 or more employees in New York should register or certify by the applicable deadline or as soon thereafter as possible.
If you have any questions regarding these developments or would like assistance reviewing your policies, practices, or benefit plans for compliance, please do not hesitate to contact us or another member of our Labor & Employment or Employee Benefits practice groups.
We would be happy to discuss how these changes may affect your organization.