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Client Alert: July 23 Deadline: NYC Sick/Safe Time Law Overhaul Carries $500-Per-Head Sting

Date: July 21, 2026
New York City’s final Earned Safe and Sick Time Act (“ESSTA”) rules will take effect July 23, 2026, and every New York City employer, regardless of size, faces fines of $500 per employee per year for non-compliance, plus forced restoration of all accrued and mandated hours.


What the Law Requires — A Quick Refresher

Local Law 145 of 2025 amended the ESSTA effective February 22, 2026. New York City’s Department of Consumer and Worker Protection’s (“DCWP”) final implementing rules take effect July 23, 2026. Here is what the law now requires:

32 hours of unpaid protected time off—frontloaded on day one of employment and the first day of each calendar year, in addition to existing accrued paid sick/safe leave of 40 hours for employers with 5–99 employees; 56 hours for 100+. Unused unpaid hours from the 32-hour bank do not carry over to the following year. This 32-hour protected time off replaces the old Temporary Schedule Change Act (“TSCA”) two-day guarantee.

Expanded covered uses for protected time off —employees may now use leave to care for a child or care recipient; to attend legal proceedings or take actions related to housing or subsistence benefits; to respond to a public disaster (fire, explosion, severe weather, terrorist attack) and workplace violence. These are in addition to the existing sick time and safe time purposes.

New terminology —“safe/sick time” is now “protected time off.” All policies, handbooks and notices must be updated. Additionally, employers must provide 20 hours of paid prenatal leave as a separate, standalone bank that cannot be satisfied by other paid time off (“PTO”).


What Changed Between the Proposed and Final Rules

As we detailed in our prior Client Alert, the finalized rules largely track the proposed rules with five significant changes:
 
  1. New rules governing how paid and unpaid leave banks interact. The proposed rule created the 32-hour unpaid bank but gave no guidance on three critical questions: Which bank do you draw from first? Can paid time off (i.e., vacation pay/personal days) satisfy the unpaid obligation? What happens when a rehired employee already used some of their hours? The final rule answers all three:

    Draw-down order: paid bank first. When an employee is absent for a covered reason and has time in both paid and unpaid protected time off banks, the employer must draw from the paid bank of protected time off first. The unpaid 32-hour bank is tapped only when (a) the paid protected time off bank is exhausted, or (b) the employee specifically asks to use any portion of the 32-hours of unpaid time. This means the unpaid 32-hour bank depletes more slowly, which matters for rehire crediting (see below). Example from the rules: Beth starts the new calendar year with 20 hours of accrued paid protected time off leave (carried over) and a fresh 32-hour unpaid bank. Her daughter’s daycare closes and she needs 24 hours off. In this case, the employer pays Beth for 20 hours from the paid protected time off bank, then provides 4 hours from the unpaid bank.  

    Paid leave can satisfy the 32-hour unpaid obligation, but no double-counting. The final rule notes that employers may fulfill their obligation to provide 32 unpaid hours by providing some or all of the time as paid protected time off, but “should” pay employees some or all of the 32 hours as paid leave when needed to comply with legal obligations or to maintain the exempt overtime status of an employee under the FLSA or state law. However, those 32 paid hours are in addition to the employer’s separate obligation to provide accrued paid protected time off leave under the law.

    Rehire crediting. When an employee separates and is rehired within the same calendar year, the employer must reinstate the unused portion of the 32 immediately available hours, not a fresh 32-hour bank. The employer must also reinstate any previously accrued paid leave if required by law. A rehire in a new calendar year triggers a fresh 32-hour bank regardless of prior usage. 
     
  2. Prenatal leave penalties moved from Labor Law to Administrative Code. The final rule scraps the Labor Law framework for penalties and routes all prenatal leave penalties through the same Administrative Code enforcement structure used for ESSTA violations: restoration of 20 hours of paid prenatal leave plus $500 per affected employee per calendar year the unlawful policy was in effect.
     
  3. Post-separation electronic records access. When employment ends, the employer must either maintain the former employee’s system access for six months or provide a written statement of the employee’s last-period leave balances within one week of the final payday. The proposed rule addressed only current employees.
     
  4. Written policy requirement clarified. Both the proposed and final rules require employers to distribute their own written protected time off and paid prenatal leave policies as a single policy. The final rule adds an explicit prohibition: employers may not substitute DCWP’s Notice of Employee Rights for their own written policy.
     
  5. “Protected time off” replaces “safe/sick time” throughout. The final rules formally adopt the new umbrella term in all regulatory language, aligning with the statutory amendments.


Immediate Action Items — Before July 23, 2026

With the July 23 effective date approaching, the following steps are time-critical:

1. Update policies and handbooks. Incorporate the “protected time off” terminology and additional authorized uses of protected time off, the 32-hour front-loaded unpaid bank and a provision for paid leave of 32 hours for exempt employees under federal and/or state laws and to comply with other laws, the requirement to maintain former-employee access to electronic leave records for six months post-separation and ensure the protected time off and paid prenatal care leave comprise a single policy.

2. Post and distribute required notices. Provide employees with updated rights notices in all required languages and your own written protected time off and paid prenatal care policy and get signed and dated acknowledgements of receipt; NYC’s Notice of Employee Rights is not, however, a substitute for a written policy.

3. Replace the TSCA two-day guarantee with the new 32-hour unpaid ESSTA allotment. Retain a process to receive and respond to temporary schedule change requests, but note employers are no longer required to grant them.

4. Review pay statements to ensure that per-pay-period accrual, usage and available balances for both paid and unpaid protected time off banks are listed separately. Payroll systems must be updated before the first pay period after July 23.

5. Train. Train managers, HR and payroll personnel on the final rule and your policy, including procedures for tracking and recording on paystubs separate paid and unpaid leave banks, procedures for providing required information to former employees and restoring credit to returning former employees, and on the law’s anti-retaliation requirements and penalties for non-compliance generally.

6. Review rehire rules. Confirm procedures for when former employees return within the same calendar year to ensure unused protected leave is properly credited.
 
If you have questions about how these rules affect your organization, need assistance updating your policies or would like training on these legal requirements, please contact Lisa M. Brauner, a partner in the New York office of Whiteford’s Labor and Employment Law Department. For more information, please contact Lisa M. Brauner at lbrauner@whitefordlaw.com or 646-618-8655.
The information contained here is not intended to provide legal advice or opinion and should not be acted upon without consulting an attorney. Counsel should not be selected based on advertising materials, and we recommend that you conduct further investigation when seeking legal representation.