2025 New York Labor & Employment Year End Review

As is usually the case, in 2025, New York State and City both saw significant employment law changes including new and amended statutes and regulations. Set forth below is a roundup of the most significant developments impacting businesses.

I. New York State Developments

New York State Bans the Use of Consumer Credit History in Employment Decisions

On December 19, 2025, Governor Hochul signed into law Senate Bill S03072, amending the New York Fair Credit Reporting Act to bar employers from requesting or using consumer credit histories as part of their employment decision processes. These processes include, but are not limited to, hiring, terminating, promoting, demoting, disciplining, and compensating employees. The amendment tracks the New York City Stop Credit Discrimination in Employment Act which has been in effect since 2015.

However, there are notable exceptions. Employers may use credit history checks for certain jobs involving:

• Access to trade secrets;
  
• Authority over third-party funds or assets in excess of $10,000;
  
• Fiduciary responsibilities to the employer involving authority to enter into financial agreements worth at least $10,000;
  
• Regular duties that permit the employee to modify digital security systems protecting employer or client databases;
  
• High-level security clearance;
  
• Intelligence or national security information;
  
• Law enforcement and certain other public offices;
  
• Positions in which a regulatory authority or other law requires a credit check.

The law takes effect on April 18, 2026, and will apply to decision-making as to both prospective hires and current employees.

The New York State Trapped at Work Act Takes Effect

On December 19, 2025, the New York Trapped at Work Act (Labor Law §§ 1050–1055) took effect. This law prohibits the use of employment promissory notes, commonly known as "stay or pay" provisions, as a condition of employment. Such provisions require workers to repay amounts paid by an employer if the worker leaves within a certain time period. Such requirements are deemed to be against public policy and therefore unenforceable and void. The prohibition includes repayment requirements characterized as reimbursement for training.

The law defines "employer" broadly to include any individual or entity, including subsidiaries, that "hire or contract" with a worker to work for the employer; or provides training to workers. "Worker" is also broadly defined, including employees, independent contractors, interns, externs, volunteers, apprentices, and sole proprietor service providers, but excludes individuals "whose sole relationship with the employer is as a vendor of goods."

The Act does not apply to: (1) any sums advanced to the worker (unless used to pay for training); (2) any amount paid for property sold to or leased to the worker; (3) agreements requiring educational personnel to comply with terms/conditions of sabbatical leaves granted by employers; and (4) agreements entered into as a part of program agreed to by the employer and its workers' collective bargaining representative.

Employers who violate the law can be fined not less than $1,000 and not more than $5,000 for each violation. There is a separate violation giving rise to such fines as to every employee required to execute such a promissory note.

Notably, the law fails to specify whether it applies retroactively, thus nullifying all such agreements currently in effect.

The legislature introduced proposed amendments on January 6, 2026, which would limit the coverage to employees and carve out exceptions for tuition repayment agreements and certain non-educational repayment agreements, in particular bonuses and relocation payments, as well as to postpone the law's effective date to December 19, 2026. It remains uncertain whether any amendments will be passed. For now, employers must abide by the law as adopted.

New York State Clarifies that Discriminatory Impact Can be the Basis for Employment Discrimination Claims

Governor Hochul signed Assembly Bill A8699A on December 19, 2025. This law establishes that an unlawful employment discriminatory practice may be proven based on the disparate impact of the alleged practice. The Bill took effect immediately. It was passed in response to President Trump's issuance of Executive Order 14281, which stated a policy goal of eliminating the use of disparate-impact liability in all contexts, including in employment discrimination cases.

The Bill provides that a worker must establish that an employment practice exists that causes or will predictably cause discriminatory impact even if such practice was not motivated by a discriminatory intent. However, an employer may then be able to justify the alleged employment practice by presenting evidence establishing that the practice is (1) job-related and consistent with business necessity and (2) such business necessity could not be achieved via another practice with a less discriminatory effect.

It is unclear whether the standard will apply to cases filed after the law's effective date that accrued before its passage.

Manual Worker Pay Frequency Damages Amendment

New York State requires employers to pay manual workers on a weekly basis. In 2019, a New York court ruled employees could pursue a private right of action against employers that paid manual workers on a bi-weekly or semi-monthly basis – even if the employee was properly paid all wages due on the incorrect pay frequency schedule. This led to a flurry of litigation as plaintiffs were able to seek liquidated damages equal to 100 percent of the late-paid wages, plus statutory interest and attorney's fees. As the awarded damages were often disproportionate to the technical pay frequency violation, the business community sought relief from the legislature. The resulting legislation became effective May 9, 2025, and limits liquidated damages for first-time pay frequency violations where the employee was paid for all wages on a semi-monthly or faster schedule. In such event, liquidated damages are now limited to no more than 100% of the lost interest on the delayed wages (not the late wages themselves). Repeat offenders remain subject to stiffer penalties. Employers with a final unappealed order for the same violation for employees performing the same work must pay liquidated damages in the amount of 100% of the total amount of late wages due, plus interest and attorney's fees for any subsequent violation.

Retail Employer Workplace Violence Prevention Program

Effective June 2, 2025, the New York Retail Worker Safety Act requires employers with at least 10 retail employees in New York State to implement strategies to reduce the risk of workplace violence to their employees and increase employee safety. Retail stores include any store that sells goods directly to the public at but exclude businesses that primarily sell food to be eaten on-site, such as restaurants. Employers must adopt a retail workplace violence prevention policy and provide retail workplace violence prevention training. The workplace violence prevention policy must be distributed to employees when they are first hired and annually thereafter. Retail employees also must be provided with retail workplace violence prevention training when first hired and subsequently employers with 50 or more retail employees must provide retail workplace violence prevention training once a year. Employers with 49 or fewer retail employees must provide the training every two years. The New York State Department of Labor recently published FAQs and model violence prevention policies and training materials, which can be accessed here.

Additionally, employers with 500 employees or more must provide employees with access to a silent response button by January 1, 2027. Such silent response buttons allow employees to request immediate assistance if the employee does not feel safe or there is a potential or actual emergency.

Increase to New York Juror Fees

Effective June 8, 2025, juror daily wages increased from $40/day to $72/day. Employers with more than 10 employees pay the juror fee for the first three days of service. Exempt employees who perform any work during a workweek must be paid their full salary, but employers can offset the juror fee paid by the state.

Sunset of New York State COVID-19 Paid Sick Leave

Effective July 31, 2025, employers are no longer required to provide job-protected paid leave to New York workers who are subject to a mandatory or precautionary order of quarantine or isolation for COVID-19. Employees may, however, continue to use paid sick leave or paid family leave for covered reasons related to COVID-19.

II. New York City Developments

Amendments to the Earned Safe and Sick Time Act (ESSTA) and Temporary Schedule Change Act (TSCA)

Effective February 22, 2026, amendments to the ESSTA and TSCA will be in effect. The changes include the following: (1) expansion of the reasons employees can use paid safe/sick time; (2) provision of an additional 32 hours of unpaid safe/sick time immediately upon hire, renewing every "calendar year"; (3) incorporation of an existing New York State requirement providing employees with 20 hours of paid prenatal leave; and (4) elimination of the former requirement that employers provide two guaranteed temporary schedule change requests per year.

Note that employers in the City must continue to comply with both the City and State leave time requirements. Ensuring the difficulty facing employers, their policies must be tailored to ensure compliance with both.

Employers must communicate the new benefits and any changes to how an employee must request safe/sick time with employees and managers, and must issue and post an updated "Notice of Employee Rights" once the City publishes the content for the notice.

Additionally, employers must ensure that their administrative leave management systems and paystubs or other employee-accessible electronic systems separately track the use of both paid and unpaid safe/sick time. They must also maintain records showing leave balances and use for three years.

Other ESSTA Changes Enacted in 2025

Paid Prenatal Leave: On June 3, 2025, the ESSTA rules were amended to include new paid prenatal leave provisions that largely align with the statewide paid prenatal leave law that became effective on January 1, 2025. Under the law, all private-sector employers are now required to provide employees working in New York City with up to 20 hours of paid prenatal leave within a 52-week period for health care services related to an employee's pregnancy (including fertility treatment or care appointments). There is no waiting period or accrual for this leave benefit. All 20 hours of paid prenatal leave are available on the date the employee first begins using leave. Paid prenatal leave is a separate leave right from, and must be provided in addition to, New York State sick leave and NYC sick and safe leave (paid or unpaid).

Record Keeping: Amended NYC ESSTA rules, which took effect on July 2, 2025, impose new notice and recordkeeping requirements. It is necessary for employers to do the following: (i) adopt written policies (with certain content requirements); (ii) distribute an updated Notice of Employee Rights; and (iii) inform employees of their leave balance and usage each pay period.

Please see our NYC Paid Prenatal Leave Client Alert for more information on the amended rules.

New York City Adopts Pay Reporting Requirements for Large Employers

Large employers in New York City must adhere to significant new pay reporting requirements intended to promote wage transparency and identify perceived pay disparities based on race and gender. The new law applies to private employers with over 200 employees working in New York City. Covered employers will be required to submit annual pay data reports with compensation, demographic, and occupational data for their NYC workforce. Notably, the law's reporting structure is expected to be modeled after the federal Component 2 EEO-1 pay data reports that were briefly required by the EEOC for the 2017 and 2018 reporting periods.

The law does not take effect immediately, instead providing a timeline requiring that:

• By December 4, 2026, the Mayor must designate a city agency to administer the law and conduct a pay equity study of the private workforce.
  
• Within one year of designation, that agency must develop a standardized, fillable reporting form and establish submission procedures. Pay data will be submitted anonymously using the form, but employers must separately submit a signed certification identifying the employer and attesting to the accuracy of the information provided.
  
• Employer reporting deadlines must begin within 12 months after the standardized form is finalized and published and will recur annually thereafter.
  Employers who fail to comply may be publicly identified after the passing of a 30-day cure period and subjected to a civil penalty of $1,000, with subsequent violations resulting in penalties up to $5,000.

Although reporting obligations will not take effect until the agency finalizes the reporting framework, covered employers should evaluate their data-collection systems to ensure they are in a position to accurately track pay, demographic and occupational information and report same when these requirements become effective.

New York City Lactation Accommodation Policy Requirements

New York State requires employers to provide employees with written notice of their lactation accommodation rights at the commencement of employment, annually, and when an employee returns to work following the birth of a child. New York City also requires employers to have written lactation accommodation policies and distribute them to employees upon hire. As of May 8, 2025, New York City employers must also conspicuously post their written policies at their place of business and electronically on their intranet, if one exists. As a reminder, New York State already requires mandatory federal and state workplace posters to be made available to employees electronically.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.