From Rulemaking to Reality: NYC’s Finalized Employer ESSTA Obligations Take Effect July 23

Takeaways

• The New York City Department of Consumer and Worker Protection’s final rules implementing the 2026 amendments to the Earned Safe and Sick Time Act adopted several notable revisions that impose additional administrative and recordkeeping obligations on employers effective 07.23.26. 
• The final rules clarify various aspects of the new unpaid 32-hour leave entitlement, including the interplay with more generous paid leave policies and reinstatement obligations upon rehire.
• Organizations should update policies, payroll systems and rehire procedures.

Related links

• DCWP Rules Relating to Earned Safe and Sick Time Act
• NYC’s Amended ESSTA: Expanded Employee Time Off Rights Businesses Need to Know
• NYC Employer Obligation Changes: Amendments to Increase Earned Safe and Sick Time Act + Reduce Temporary Schedule Change Act Requirements
• NYC’s Enhanced ESSTA Rules for Prenatal Leave Create Policy, Posting + Paystub Requirements for Employers

Article

Following enactment of Local Law 145 of 2025, the New York City Department of Consumer and Worker Protection (DCWP) recently finalized amendments to the rules implementing the Earned Safe and Sick Time Act (ESSTA). The final amended rules largely adopt the regulatory framework proposed in January 2026, but they provide additional guidance on employer administration of the law’s expanded leave requirements and impose several new compliance obligations. The rules go into effect July 23, 2026.

The amended ESSTA significantly expanded employees’ protected time off rights by adding new qualifying reasons for leave, creating an immediately available separate annual bank of 32 hours of unpaid protected time off, and codifying up to 20 hours of paid prenatal leave. The final rules primarily focus on how employers must administer those new entitlements.

Final Rules Largely Track Proposed Rules

Most of the final rules mirror the provisions DCWP originally proposed. Among other changes, the rules:

• Replace many references to “safe/sick time” with the broader term “protected time off.”
• Incorporate the new authorized uses of leave established by Local Law 145.
• Address administration of the new 32-hour unpaid protected time off entitlement available on an employee’s first day of employment and the first day of each calendar year. 
• Update recordkeeping, notice, payroll, and policy requirements to reflect the expanded law.

However, after receiving comments from the public, DCWP made several additional revisions before adopting the rules.

New Requirement: Employee Access to Leave Records Following Separation

One of the most significant changes applies to electronic pay statements and leave tracking systems.

The proposed rules required employers using electronic systems to make protected time off information available to employees during employment.

The final rules, however, go further. Employers must either:

1. Continue providing former employees access to the electronic system for six months following separation; or
2. Provide the employee with a written statement containing required leave information no later than one week after the employee’s final payday.

This requirement creates a new offboarding obligation for employers. Organizations that disable employee access immediately upon separation may need to modify their practices or develop a process for generating and distributing compliant leave statements.

Rehire? Employers Must Restore Unused 32-Hour Unpaid Leave Banks

The final rules add a new provision not in the proposed rule relating to restoration of the unpaid leave banks. If an employee separates from employment and is rehired during the same calendar year, the employer must reinstate the employee’s unused portion of the 32 hours immediately available unpaid protected time off hours (as opposed to an automatic new bank of 32 hours). This obligation applies in addition to any reinstatement obligations that already exist for accrued paid time under ESSTA.

Administration of New 32-Hour Unpaid Leave Entitlement

DCWP expanded its guidance on the newly created 32-hour unpaid protected time off bank.

The proposed rules stated that employers could satisfy this obligation by providing an equivalent amount of paid protected time off.

The final rules retain that concept but clarify several important points. The final rules state that:

• Employers may provide some or all of the 32 hours as paid leave.
• Employers should provide paid leave when necessary to comply with other legal obligations or preserve exemptions under federal or state wage-and-hour laws, including the Fair Labor Standards Act salary basis test.
• Providing paid versions of the 32 immediately available hours does not eliminate or reduce an employer’s separate obligation to provide paid protected time off under ESSTA’s accrual or frontloading requirements.

Clarification: Use of Paid and Unpaid Leave Banks

The final rules reinforce employer administration when employees have access to both paid protected time off and the 32-hour unpaid protected time off bank.

When an employee has a qualifying reason for time off and has both paid and unpaid protected time available, the employer generally must apply paid protected time off first unless the employee affirmatively chooses to draw from the unpaid bank. Only after the employee exhausts available paid protected time off may the employer rely on the unpaid bank to cover the absence.

Next Steps

Although DCWP adopted the amended final rules substantially as proposed, the agency incorporated several changes that created new operational obligations for employers and clarify how the agency expects employers to administer the expanded protected time-off scheme.

Employers should:

• Review protected time off policies and related policies in employee handbooks or elsewhere;
• Evaluate payroll and HRIS capabilities for time off tracking and post-separation access;
• Ensure rehire procedures account for reinstatement of unused protected time off as required by law;
• Confirm that paid and unpaid protected time off banks are tracked separately (assuming the employer has not elected to provide all such time off as paid); and
• Train human resources, managers, and payroll personnel on the administration of the final rules.

The final rules underscore DCWP’s focus on implementation and recordkeeping and provide additional guidance regarding the agency’s compliance expectations with New York City’s expanded protected time off requirements.

Please contact a Jackson Lewis attorney if you have any questions.

*Summer Associate Safa Y. Bilal contributed to this article.