Preparing for the New Year: A Guide for New York Employers as We Enter 2026

Key Takeaways

• Employers will soon face a host of new obligations as a result of New York state and New York City laws that take effect in 2026. This means that employers should begin preparing for these new rules and verify compliance with those that were recently added in 2025.

• Employers should remain diligent with respect to several noteworthy employment storylines in the coming year that may result in major policy changes.

The BakerHostetler Labor and Employment Practice Group consistently monitors new and upcoming employment and labor laws that can significantly impact our clients operating in New York. Below is a summary of some recently implemented and notable state and city laws that take effect in 2026, a preview of what labor and employment developments to keep an eye on in the near future, and a reminder of important legal obligations that recently went into effect.

Upcoming Changes in 2026

Increases to Minimum Wage and Exempt Salary Thresholds

The state minimum wage will increase again on Jan. 1, 2026. Employees in New York City, Long Island (Nassau and Suffolk counties) and Westchester County will see their hourly wage increase to $17, up from $16.50 in 2025. The remainder of the state’s employees will see an hourly increase from $15.50 to $16.

The state will also raise the salary thresholds for overtime exempt employees beginning on Jan. 1, 2026. Employers typically must compensate employees at 1.5 times the minimum hourly rate for hours worked over 40 hours in a week, but exceptions apply to certain positions that meet specific requirements, including a minimum salary threshold. In 2026, employees in New York City, Long Island and Westchester County must earn at least $1,275 per week ($66,300 annually) to qualify for exempt status. Employees in the remainder of the state must earn at least $1,199.10 per week ($62,353.20 annually).

Paid Family Leave Adjustments

New York Paid Family Leave (NY PFL) will increase the applicable premium rate and employee contributions as of Jan. 1, 2026. NY PFL enables eligible employees to receive 67 percent of their wages for up to 12 weeks while taking time off to bond with a new child, to care for a family member with a serious health condition or to manage obligations arising from a family member’s overseas military service.

Due to an adjustment in the average weekly wage used to determine benefits, the maximum weekly amount of NY PFL benefits that an employee receives will increase to $1,228.53 next year, up from $1,177.32 in 2025. Correspondingly, premium rates are also increasing, with the maximum annual employee contribution increasing from $354.53 to $411.91.

Amendments to New York City’s Earned Safe and Sick Time

New Unpaid Leave Hours

The New York City Council adopted amendments to the Earned Safe and Sick Time Act (ESSTA), including a new requirement that employers offer employees 32 hours of unpaid leave annually. These hours are in addition to the 40 or 56 hours of paid safe and sick leave (depending on the size and income of the employer) that employers already must provide under ESSTA.

As set forth below, employees are now entitled to three different banks of leave, which must be kept – and tracked – separately:

The recently added 32 hours of unpaid leave must be made immediately available to employees at the time of hire and must also be made available to all employees on the first day of each calendar year. Although employers cannot impose a waiting period on usage of the unpaid leave, they may set a minimum usage increment of up to four hours per day (just like with ESSTA leave).

If an employee requests time off for an ESSTA-covered reason, employers must apply available paid leave before unpaid leave, unless the employee asks to use unpaid leave first. Like with paid leave, employers must include, on pay stubs or other documentation provided to employees each pay period, the amount of unpaid ESSTA leave used and available to the employee. However, unlike with paid leave, employers are not required to carry over unused unpaid leave from year to year.

With the introduction of this additional unpaid sick leave bank, employers will no longer have to grant employees’ temporary schedule change requests. The city currently requires that employers accommodate employees with two temporary schedule changes per year for “personal events” such as caregiving for a minor child or attending a legal proceeding, or other reasons permitted under ESSTA. However, beginning on Feb. 22, employers no longer have to approve a request for a temporary schedule change now that employees will have access to another 32 hours of unpaid leave. Of note, employers are still prohibited from retaliating against an employee who requests a temporary schedule change.

New Eligible Uses for ESSTA Leave

The ESSTA amendments also expand the circumstances under which employees may use these leave benefits. The additional permissible uses include:

• The caregiving of a minor child or care recipient
• Attending or preparing for legal proceedings related to subsistence benefits and housing in which they, their family member or their care recipient is a party
• Experiencing workplace violence or if a family member is a victim of workplace violence
• Public disasters that result in:
  • Closure of the employee’s workplace
  • A directive from public officials to remain indoors or avoid travel
  • Childcare needs due to school or childcare provider closure or restriction of in-person operations

Discriminatory Impact Discrimination

Gov. Kathy Hochul recently signed into law a bill that codifies disparate impact as a method of establishing unlawful discrimination under the New York State Human Rights Law (NYSHRL). Employers may be liable if they have implemented a neutral policy that, in effect, has a discriminatory impact on a certain group of individuals based on their shared protected characteristic – even if the employer did not intend such an outcome. The law clarifies that employers may defend against such claims if they successfully demonstrate that the policy at issue was legally justified, meaning (i) it was job related for the position in question and consistent with business necessity and (ii) the business necessity could not be accomplished by a different practice that has a less discriminatory effect.

Discriminatory impact has long been a method of establishing liability under Title VII, the federal equivalent of the NYSHRL. However, the Trump administration has taken steps this year to stop pursuing investigations into employee complaints that are based on disparate impact discrimination.

State Ban on Using Credit History in Employment Decisions

Hochul also recently signed into law a bill that prevents employers from requesting or considering a job applicant’s or current employee’s credit history with regard to hiring, compensation, or the terms and conditions of employment. New York City passed a similar ban a decade ago. The state law includes several carve-outs, including, but not limited to, for employers that are required to use an individual’s credit history for employment purposes under state or federal law; for job applicants who are applying to be police officers; for individuals in nonclerical positions who have regular access to trade secrets, intelligence information or national security information; and for individuals in positions that have signatory authority over third-party funds or assets valued at $10,000 or more that involve a fiduciary responsibility to the employer with the authority to enter into financial agreements valued at $10,000 or more on behalf of the employer.

Ban on Employment Training Reimbursements

New York state recently enacted a law referred to as the “Trapped at Work Act.” This law prohibits employers from requiring new hires to sign a contract requiring reimbursement of certain expenses, like training costs, if they leave their job before a designated period of time. Many employers utilize these promissory notes – sometimes referred to as training repayment agreement provisions or “TRAPs” – to recoup the expense of specialized training and for the cost of licenses and certifications necessary for employment, but critics argue that these types of agreements trap workers who may be facing poor working conditions. Employers that use these agreements, or attempt to enforce such agreements, are subject to stiff fines and penalties. The law includes limited exceptions, such as agreements requiring repayment of money that the employer lends to an employee so long as it is unrelated to employment training and agreements for programs entered into pursuant to the terms of a collective bargaining agreement.

New York State Secure Choice Savings Program

Certain private employers that do not offer a retirement plan to staff will soon have to enroll their employees in a state-sponsored program pursuant to the New York State Secure Choice Savings Program. Under this program, eligible employees will be automatically signed up for a Roth IRA that they contribute to via a payroll deduction. The default contribution is 3 percent of wages, but employees are allowed to change that rate or opt out of the program entirely. Employers are not required to match or otherwise contribute to these Roth IRA accounts; they just need to facilitate the wage deductions for this purpose. The law, which was passed in 2021, applies to businesses with 10 or more employees that (i) do not offer a qualified retirement plan and (ii) have been in business for at least two years. The deadline to begin facilitating the program depends on the size of the business: March 18, 2026, for employers with 30 or more employees; May 15, 2026, for employers with 15-29 employees; and July 15, 2026, for employers with 10-14 employees.

Changes from 2025

Prenatal Leave Benefits

At the beginning of 2025, certain New York state employees became eligible for 20 hours of paid prenatal leave to use during their pregnancy or related to their pregnancy, for example, for fertility treatment and end-of-pregnancy care. These benefits are separate and apart from sick leave and paid time off benefits that employees are afforded elsewhere under the law.

Later in the year, New York City amended ESSTA to formally implement the 20 hours of paid prenatal leave mandated by the state and adopt additional obligations for city employers concerning required policies, notices, documentation and recordkeeping related to these benefits. Among other requirements, city employers must also:

• Prepare a written policy that covers paid prenatal leave benefits and distribute a copy of it to employees
• Maintain written safe and sick leave policies and paid prenatal leave policies in a single writing, which means that they should not be split up across multiple documents or locations
• Post and provide employees with an updated copy of the Notice of Employee Rights related to ESSTA, which now includes a section on paid prenatal leave benefits
• For each pay period, provide employees with an accounting of how much paid prenatal leave was taken in that pay period as well as the amount that remains

Retail Worker Safety Act

The Retail Worker Safety Act went into effect earlier this year. The law, which applies to any store with 10 or more employees that “sells consumer commodities at retail and which is not primarily engaged in the sale of food for consumption on the premises,” is designed to prevent violence at retail stores. As we previously reported, affected employers must adopt and provide training on a violence prevention policy, inform employees of emergency procedures for situations like active shooters, and train employees on de-escalation tactics, among other requirements.

The state Department of Labor has since issued guidance and regulations, including model policies and training outlines that employers can use to comply with the new requirements. Starting Jan. 1, 2027, retailers with 500 or more employees in the state must additionally provide each of their employees with a “silent response button” that, once pressed, alerts security officers, managers or supervisors. These silent response buttons can only be installed on employer-provided equipment, and employers are prohibited from using this technology to track employee whereabouts, except in the event of an emergency after the button has been triggered.

New Damages Limitations for Manual Workers’ Claims

In the state budget that passed in May, lawmakers amended New York Labor Law to place limits on what employees can recover in certain late wage payment cases. New York Labor Law Section 191 requires that businesses pay “manual workers” – those who spend more than 25 percent of their working time performing physical labor – on a weekly basis rather than biweekly. Failure to pay these wages within seven days of when they are earned previously subjected employers to liquidated damages equal to the full amount of the late payment, regardless of whether the wages were subsequently paid in the next biweekly cycle. The revised law now limits recovery for manual workers to only interest on any late wages, so long as employees are paid at least semimonthly. However, if an employer has previously been found liable for late wage payments, full liquidated damages in the form of the entire late payment may be recovered.

What’s on the Horizon

Mayor Mamdani

On Jan. 1, 2026, Zohran Mamdani will be sworn in as New York City’s 111th mayor. While on the campaign trail, Mamdani made several campaign promises that would significantly impact employers operating in New York City. Notably, Mamdani called for an increase in the city’s minimum wage to $30 an hour by 2030. According to a plan he outlined, the raise would be gradually phased in to $20 per hour in 2027, $23.50 in 2028, $27 in 2029 and $30 in 2030. After Jan. 1, 2031, the city’s minimum wage would then automatically increase every year based on either cost-of-living increases or productivity increases, whichever are higher at the time. Whether the former assemblyman’s plan will succeed will ultimately depend on what Albany decides to do, as the power to increase the minimum wage resides with the New York Legislature.

Mayor-elect Mamdani has also pledged that his administration will ban all noncompete clauses. Among those who were appointed to Mamdani’s transition team is Lina Khan, who was formerly chair of the Federal Trade Commission in the Biden administration when it introduced a proposed nationwide ban on noncompete provisions.

Finally, Mamdani has pledged to expand staff and double funding for the Department of Consumer and Worker Protection, which enforces some of the city’s workplace laws. Mamdani said increasing the department’s current budget of $65 million will give “regulations sharper teeth” in a response to deregulation actions taken by the Trump administration.

New Pay Equity Reporting Obligations

The New York City Council recently voted to enact new annual reporting requirements for certain private employers as part of a pay equity initiative. Employers with 200 or more employees in the city will be required to submit yearly reports that disclose their employees’ race, ethnicity and gender by job category and pay range. Employers that fail to comply with the disclosure requirements will face fines and will potentially be listed on a city website that identifies noncompliant employers.

The reporting requirement will not take effect immediately, as the mayor must first establish a city agency to oversee the pay equity initiative and develop a data collection system. Once that is finalized, employers will have one year to provide the required information and must report annually thereafter. The city agency designated to review the data will have up to six months to conduct a pay equity study to evaluate whether there are disparities in compensation among employees based on gender, race or ethnicity and, if there are, to identify industries where disparities may be prevalent and any trends in occupational segregation based on gender, race or ethnicity. The agency must then prepare a report to the mayor and the City Council that includes recommendations regarding employer action plans for addressing any identified disparities.

Noncompete Bans

Some New York lawmakers continue to pursue their efforts to ban noncompete agreements. In June 2025, the Senate passed a bill that would ban any noncompete agreements for individuals earning less than $500,000 annually and for health-related professionals. The bill defines a noncompete agreement as any agreement “between an employer and a covered individual that prohibits or restricts such covered individual from obtaining employment, after the conclusion of employment with the employer.” However, the legislation does not restrict the use of such agreements that establish a fixed term of employment, require exclusivity during employment, protect trade secrets or confidential and proprietary information, or prohibit the solicitation of an employer’s clients.

This legislation resembles a 2023 act that Hochul later vetoed, which sought to ban most noncompete agreements but did not include an exemption for high-earning individuals.

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BakerHostetler’s New York Labor and Employment Practice Group will continue to monitor the status of all proposed bills and recently enacted laws, and will provide updates as appropriate. In the meantime, we recommend that employers speak with their employment counsel about how their business may be impacted and the steps they can take to address required workplace changes to ensure continued compliance therewith.

Associate Sinead Brennan-Gatica also contributed to this alert.