Attention NYC Employers: Final Rules Clarify the City’s Protected Time Off Law

Earlier this year, New York City significantly expanded the Earned Safe and Sick Time Act (ESSTA) now referred to as the Protected Time Off Law (PTOL).

Earlier this year, New York City significantly expanded the Earned Safe and Sick Time Act (ESSTA) now referred to as the Protected Time Off Law (PTOL).

In our January 2026 alert we detailed the amendments that took effect on February 22, 2026, including the new 32-hour unpaid leave requirement, expanded reasons employees may use leave, and amended paid prenatal leave requirements.

Now, effective July 23, 2026, the New York City Department of Consumer and Worker Protection (DCWP) has adopted final rules that clarify several new compliance obligations and explain how employers are expected to administer the law.

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Key Clarifications for Employers

Paid Leave Must Be Used First

• If an employee has both paid and unpaid protected time off available, the employer must apply paid leave first, unless the employee specifically asks to use unpaid leave instead.
• If the employee has exhausted paid leave, the employer must allow the employee to use any available unpaid protected time off for a covered reason.

The 32-Hour Unpaid Leave Bank Must Be Available Immediately

The final rules confirm that employees must have access to the required 32 hours of unpaid protected time off:

• on their first day of employment; and
• on the first day of each calendar year.

Employers may satisfy this requirement by providing the equivalent amount as paid leave. Unused unpaid protected time does not have to carry over into the following year.

New Obligations When Employment Ends

To ensure employees are aware of their leave balances in the event of rehire or in the event that their employer does not explicitly state that unused leave will not be paid out upon separation of employment, employers must either:

• Allow former employees to access their electronic leave balances for six months after separation; or
• provide a written statement within one week after the employee’s final payday showing:
  • paid protected time accrued;
  • paid and unpaid protected time used;
  • remaining paid leave balance;
  • remaining unpaid leave available; and
  • paid prenatal leave used and remaining.

New Documentation Rules

• Employers must notify employees each pay period of the amount of protected time off they have used, accrued, and have available – either through a pay statement or other written documentation.
• When an employee is absent for more than three consecutive workdays, employers may request reasonable documentation.
• The final rules clarify that any documentation that reasonably confirms the protected reason for the absence must be accepted.

Exempt Employees

Employers may need to pay exempt employees during otherwise unpaid protected time off if doing so is necessary to preserve the employee’s exempt status under federal or state wage and hour laws.

Remedies for Violations

The final rules also clarify the penalties for failing to provide protected time off. In addition to restoring the leave, employers may be required to provide additional protected time off and could face civil penalties of $500 per affected employee for each calendar year the violation exists.

What Should Employers do Now?

Before the July 23, 2026 effective date, employers with employees in New York City should:

• Review and update protected time off (formerly ESSTA) policies and handbooks.
• Confirm payroll and leave tracking systems separately track paid and unpaid protected time off.
• Update offboarding procedures to comply with the new balance notification requirements.
• Review paid prenatal leave policies.
• Train HR personnel and managers on the new rules and administrative requirements.

QUESTIONS?

If you have questions about these developments or would like assistance updating policies or practices, please contact Jonathan Adler, Casey Hail, or Melanie Sarver.