Key Highlights New York City’s Earned Safe and Sick Time Act (ESSTA) adds 32 hours of frontloaded unpaid safe/sick time to its existing paid safe/sick time requirements for employers. The ESSTA also expands the permissible uses for both types of leave under the Act to include scenarios tied to caregiving, housing or subsistence proceedings, public disasters and workplace violence. Employers, however, will no longer be required to grant a set number of temporary schedule changes; employees, instead, will enjoy a protected right to request such changes. What Is Changing on February 22, 2026? New York City employers should prepare for significant changes to the City’s ESSTA taking effect February 22, 2026—joining changes to New York state laws affecting disparate impact liability and the use of “stay-or-pay” contracts. The amended ESSTA includes a new bank of 32 hours of unpaid safe/sick time, expanded permissible uses of safe/sick time and a scaling back of obligations under the City’s Temporary Schedule Change Act (TSCA). 1. Employers must provide 32 hours of unpaid safe/sick time in addition to paid ESSTA leave. The ESSTA will require employers to provide employees, upon hire and on the first day of each calendar year, a minimum of 32 hours of unpaid safe/sick time that is immediately available for use. Employers will not, however, be required to carry over unused hours from this unpaid bank to the next calendar year. The Act further contemplates that when an employee needs time off for an ESSTA-covered purpose, the employer generally must provide paid safe/sick time first (if available), unless ESSTA paid time is unavailable or the employee specifically requests to use other leave (e.g., other PTO pursuant to an employer’s vacation policy). One potential issue for employers lies in the Act’s text. It ties the unpaid bank to “upon hire” and “the first day of each calendar year.” With a February 22, 2026, effective date, it is not clear from the statute whether employers must make the unpaid bank available to current employees as of the effective date. Given the short time before the effective date, employers likely will have to make a decision on this point before any additional guidance from the City’s Department of Consumer and Worker Protection becomes available. 2. Employees may now use paid and unpaid safe/sick time for new “covered uses.” ESSTA continues to allow leave for traditional illness/injury, preventive care and care of family members but now expands certain categories and adds new ones, including: Sick Time Additions Leave related to business closure or child school/childcare closure may now include closures tied to a public disaster—not just a public health emergency. Instances in which a public official directs an employee to remain indoors or avoid travel during a public disaster that prevents an individual from reporting for work. Safe Time Additions Circumstances where the employee or a family member is the victim of workplace violence in addition to the existing domestic violence/sexual offense/stalking/human trafficking categories. Certain instances of caregiving for minor children or other care recipients. Legal proceedings or hearings related to subsistence benefits or housing and other related steps necessary to apply for, maintain, or restore benefits or shelter. These expansions overlap with what NYC historically treated as “personal events” under the TSCA’s framework but now more expressly integrates the framework into the ESSTA. 3. The TSCA moves from “must grant” to “right to request” when it comes to temporary schedule requests. Following its effective date, the amendment softens the temporary schedule change regime in the City. Employees remain protected from retaliation for requesting a temporary schedule change, but the law provides that an employer may grant or deny the request, must respond as soon as practicable and may propose an alternative change, which the employee is not required to accept. Employers should keep in mind that independent obligations under federal, state and local accommodation laws remain unchanged, so some schedule adjustments may still be required as reasonable accommodations even where the TSCA request itself is discretionary. Why This Matters These amendments significantly expand the scope and administration of protected leave in New York City. By adding a new unpaid ESSTA leave bank, broadening the reasons that trigger protected absences, and shifting temporary schedule changes to a right-to-request framework, the City increases the risk of missteps in policy drafting, payroll administration and day-to-day management of leave requests. Employers should take time now to evaluate how these changes affect their existing leave, scheduling and reporting practices ahead of the February 22, 2026, effective date. Employers with questions about the amended ESSTA, or who would like assistance assessing or updating their policies and practices in advance of the effective date, should contact their Polsinelli Labor and Employment attorney.

Employers utilizing staffing agencies should be on high alert given the Department of Labor’s (“DOL”) recent investigations targeting these arrangements. Specifically, the DOL has been actively investigating businesses that contract with certain types of staffing agencies that rely on placing 1099 independent contractors for labor. Due to unprecedentedly tight labor markets, employers increasingly rely on staffing agencies to provide them with supplemental workers necessary to run their businesses. The businesses contracting for staffed labor often assume that the staffing agency is following the law and will take responsibility for any liability related to the workers they place.  Unfortunately, all too often, this is not the case. In many situations, staffing agencies treat the workers they place as independent contractors, which can result in a misclassification finding when those workers are assigned a routine schedule at a facility or in another office setting and subject to supervision. The most troubling development regarding the staffing agency and staffed business dynamic is that the DOL has recently been targeting the staffed entity for liability associated with non-payment of overtime due to the staffing agency’s misclassification of the workers as independent contractors. In other words, the DOL is attempting to hold the staffed businesses accountable for the staffing agency’s alleged misclassification. For example, the DOL recently sued a healthcare management business for a staggering $19 million allegedly owed in back wages as a result of unpaid overtime to workers the company obtained from a staffing agency that failed to pay the overtime.  The staffing agency, which was not named in the lawsuit, did not pay overtime to the workers based on the position that they were independent contractors and not employees. The legal theory for holding a staffed business liable for the unlawful pay practices of the staffing agency is called “joint employment.” Joint employment liability may exist when two or more employers share control or supervision over a worker, resulting in legal obligations and liabilities for all parties involved. A joint employment finding generally results in joint and several liability for all entities or individuals held to be joint employers. A joint employment finding may occur under a variety of employment-related laws including wage and hour, workplace safety, union organizing and anti-discrimination. Joint employment claims are often brought as class actions, which focus on large groups of workers with the potential for substantial recovery. Independent contractor misclassification cases are frequently brought as class actions with the common thread being the theory that the classification decision was incorrectly applied to a group of similarly situated workers. Similarly, the DOL will generally focus their investigation on all allegedly misclassified independent contractors rather than certain individuals. Staffing agencies typically recruit, screen, and hire workers, and then assign them to work at the staffed employer's preferred work site. However, in some cases, staffing agencies may classify these workers as independent contractors instead of employees. Likewise, the staffed business also treats the worker as independent contractors even when the characteristics of an employment relationship may exist, such as the worker being subject to the employer's control, supervision, and direction. When this happens, the staffed business may be subject to misclassification exposure based on a joint employment theory of liability. The takeaway is that an employer should carefully vet any staffing agency providing supplemental workers to determine how the staffing agency classifies the workers and confirm the business is legally compliant. These workers may be entitled to various legal protections, such as minimum wage, overtime pay, workers' compensation, medical insurance and unemployment benefits. If these workers are misclassified as independent contractors, the staffed business may be exposed to legal claims (usually on a class and/or collective basis) and face significant financial damages. Employers should also carefully review the indemnification and other provisions of the contract entered into with staffing agencies to ensure the staffing agency takes sole responsibility for ensuring the staffed workers are treated in a legally complaint manner.

The U.S. Department of Labor is set to issue a Proposed Rule that will have a significant impact on the test used to determine whether someone is an independent contractor or an employee under the Fair Labor Standards Act (“FLSA”). The DOL’s intent in issuing this Proposed Rule is made clear by Secretary of Labor Marty Walsh’s comments: “While independent contractors have an important role in our economy, we have seen in many cases that employers misclassify their employees as independent contractors, particularly among our nation’s most vulnerable workers.  Misclassification deprives workers of their federal labor protections, including their right to be paid their full, legally earned wages. The Department of Labor remains committed to addressing the issue of misclassification.” An unpublished version of the Proposed Rule indicates it will make it easier for the DOL to find that workers have been misclassified as independent contractors rather than employees. The current test, in effect since March, 2021, analyzes five factors and places the greatest weight on two “core factors”: the nature and degree of control over the work and the worker’s opportunity for profit or loss based on personal initiative or investment.  The DOL now seeks to rescind the 2021 test and replace it with the new Proposed Rule. The new Proposed Rule will focus on the “economic reality” of the worker’s situation, ultimately asking – Are the workers economically dependent upon an employer for work (and therefore an employee) or are they in business for themselves (and therefore an independent contractor)? The economic reality test in the Proposed Rule will return to a “totality of the circumstances” analysis, under which no specific factors have greater weight, and all are considered in view of the economic reality of the whole relationship. The DOL is further proposing to return the consideration of investment as a stand-alone factor, and to provide additional analysis of the control factor, including detailed discussions of how scheduling, supervision, price-setting, and the ability to work for others should be considered. Furthermore, the Proposed Rule will not limit control only to control that is actually exerted. The Proposed Rule will also re-focus the analysis on the “integral” factor, which considers whether the work is integral to the potential employer’s business. The permanency of the relationship is another factor under the Proposed Rule that often weighs against independent contractor status for many workers who provide services for the same entity over an extended period of time. The Proposed Rule is scheduled to be published in the Federal Registry on October 13, which will begin a 45-day comment period. For more information regarding the anticipated Proposed Rule, contact your Polsinelli attorney.