Employment law changes often require more than simply updating a handbook. They can affect payroll configuration, leave tracking, employee notices, recordkeeping, offboarding, and other day to day HR procedures.
At Forework, we anticipate regulatory changes that affect payroll and HR administration and work to incorporate those changes into the systems, policies, and procedures our clients rely on. The goal is to help businesses stay ahead of new requirements rather than discover too late that their processes are no longer aligned with the law.
The new NYC Paid Safe and Sick Leave rules are a timely example of why that proactive approach matters.
The New York City Department of Consumer and Worker Protection (DCWP) has issued final regulations implementing the 2026 amendments to the Earned Safe and Sick Time Act (ESSTA). While many of the final rules mirror the agency’s proposed regulations released earlier this year, several important revisions create new administrative, payroll, and recordkeeping obligations for employers. The new rules take effect July 23, 2026, giving employers a limited window to review policies, update payroll systems, and modify leave administration procedures.
What’s Changing?
The 2026 amendments significantly expanded employees’ protected leave rights by:
- Creating a new 32-hour annual bank of unpaid protected time off that is available immediately;
- Expanding the qualifying reasons employees may use protected leave;
- Codifying up to 20 hours of paid prenatal leave; and
- Updating notice, payroll, and recordkeeping requirements.
The newly finalized regulations provide additional guidance on how employers are expected to administer these expanded leave entitlements.
New Offboarding Requirement for Former Employees
One of the most significant changes affects how employers provide leave records after an employee leaves the company. Under the final rules, employers that maintain electronic payroll or leave tracking systems must now either:
- Continue allowing former employees to access their leave information electronically for six months after separation, or
- Provide a written statement showing the employee’s required leave information within one week after the employee’s final payday.
This is a new compliance obligation that was not included in the original proposal.
What Employers Should Do
Many employers automatically deactivate employee access to HR and payroll systems immediately upon separation. Those employers should review their offboarding procedures to ensure they can either maintain limited post-employment access or timely provide the required written leave statement.
Unused 32-Hour Leave Must Be Restored Upon Rehire
The final regulations also clarify an employer’s obligations when rehiring former employees. If an employee leaves employment and is rehired during the same calendar year, the employer must restore any unused portion of the employee’s 32-hour unpaid protected leave bank. This requirement is separate from the existing ESSTA rules governing reinstatement of accrued paid leave.
Clarification on the New 32-Hour Unpaid Leave Bank
The regulations provide additional guidance regarding the administration of the new unpaid leave entitlement. Employers may choose to provide some—or even all—of the required 32 hours as paid leave instead of unpaid leave. However, the regulations make clear that doing so does not eliminate the employer’s separate obligation to provide paid sick and safe leave under ESSTA’s existing accrual or frontloading requirements. In other words, employers cannot substitute the new 32-hour leave entitlement for their existing paid sick leave obligations.
Paid Leave Generally Must Be Used First
The final rules also explain how employers should administer leave when employees have both paid and unpaid protected leave available. In most situations, if an employee requests leave for a qualifying reason and has available paid protected leave, the employer must apply the paid leave first unless the employee specifically elects to use unpaid leave instead. Only after available paid leave has been exhausted may the employer rely on the separate unpaid 32-hour leave bank.
Updated Recordkeeping and Payroll Requirements
The final regulations continue the City’s emphasis on accurate leave administration and documentation. Among other changes, employers should ensure their systems can:
- Track paid and unpaid leave separately (unless all protected leave is provided as paid leave);
- Reflect the expanded categories of protected leave;
- Maintain required payroll and leave records; and
- Comply with updated notice and pay statement requirements.
For employers using HRIS or payroll software, these changes may require system updates before the July 23 effective date.
What Employers Should Do Now
Before the new rules become effective, employers should:
- Review and update employee handbooks and leave policies;
- Confirm that payroll and HR systems properly track the expanded leave entitlements;
- Update offboarding procedures to address post-separation leave record requirements;
- Review rehire procedures to ensure unused leave is restored when required; and
- Train HR personnel, payroll staff, and supervisors on the new rules.
When was the last time your payroll company through so far ahead for your business, and actually programmed the new law into payroll and HR, without you having to ask? With Forework, clients always have peace of mind that they are on track.