Melanie L. Ronen

As the third quarter unfolds, employers in New York and New Jersey continue to face a host of new legal obligations in 2026 that will shape workplace policies and practices going forward. From contract restrictions to expanded leave rights, the latest legislative changes demand careful attention and prompt action from businesses of all sizes. The Trapped at Work Act and Employment Contracts in New York New York’s new Trapped at Work Act, although initially signed into law last December, will take effect on December 19. It prohibits employers from requiring employees (but not independent contractors, interns, externs, volunteers, etc.) to sign “employment promissory notes.” These notes typically obligate workers to repay their employer if they leave their job, often for costs associated with training or other employment-related expenses. Several exceptions exist. Repayment agreements are permitted to reimburse employers for costs related to tuition, fees and required education for a “transferable credential,” meaning an industry-preferred qualification enhancing the employee’s position with respect to other candidates. Repayment agreements for transferable credentials must contain set terms. First, repayment agreements for transferable credentials must be formalized in a separate contract from the employment agreement. Second, execution of the repayment agreement for transferable credentials must not be conditional on employment. Further, the repayment agreement itself must contain a specific repayment amount, subject to a cap of actual costs; permit proration; prohibit acceleration; and waive repayment if the employee is terminated for any reason besides misconduct. Other exceptions detail that employers may still require repayment for sums advanced to employees, provided those sums are not for training related to employment. Repayment agreements are also permitted for property sold or leased to the worker, for educational personnel complying with sabbatical terms, or when the agreement is part of a collective bargaining program. The Trapped at Work Act further permits repayment agreements requiring an employee to reimburse signing bonuses, relocation assistance and other nonperformance-based benefits where the employee is terminated for misconduct or misrepresented the job duties. Employees do not have a private right of action under the Trapped at Work Act, but if an employer sues to enforce a promissory note that is void under the statute, the employee can recover attorney fees. Employers that violate the law are subject to fines — $1,000 to $5,000 per violation — making compliance essential. Expanded Leave Rights in New York City and New Jersey Leave laws are evolving. In New York City, the Earned Safe and Sick Time Act (ESSTA) and the Temporary Schedule Change Act (TSCA) were updated, effective February 22. The ESSTA now codifies paid prenatal leave, granting eligible employees 20 hours of paid prenatal leave within a 52-week period. Employers should ensure their policies are updated, notify all employees, and keep detailed records of leave usage and balances. Additionally, employees are entitled to 32 hours of unpaid safe and sick time immediately upon hire and at the start of each calendar year, with no waiting period for use. The reasons for using this time have been expanded to include caregiving, workplace violence, public disasters, and legal proceedings related to subsistence benefits or housing. The TSCA has been scaled back, so employers are no longer required to approve up to two temporary schedule changes annually for personal events. Instead, because such leave requests are now covered by the ESSTA, employers have more discretion to approve, deny or propose alternatives to temporary schedule changes. In New Jersey, the Family Leave Act (NJFLA) was expanded on July 17. NJFLA now covers employers with as few as 15 employees (down from 30), and employees become eligible for leave after three months of employment and 250 hours worked in the preceding 12-month period. Importantly, employees who take medical leave and receive temporary disability insurance or family leave insurance benefits must be restored to their previous job or an equivalent position upon returning to work. New Restrictions in New York on Employment Decisions Employers in New York should also be aware of new restrictions on the use of consumer credit checks in employment decisions. The New York Fair Credit Reporting Act was amended effective April 18 making it an unlawful discriminatory practice to use consumer credit reports in most employment decisions (N.Y. Gen. Bus. Law § 380-b(d)). There are exceptions for positions where such credit checks are required by law, including for law enforcement roles, for jobs requiring bonding or security clearance, and for certain positions involving significant financial or digital security responsibilities. However, for most roles, employers will need to remove credit checks from their hiring and employment processes. Disparate-Impact Discrimination Codified in New York New York has also taken a major step in codifying protections against disparate-impact discrimination. The New York State Human Rights Law was amended last December to now explicitly prohibit employment practices that have a discriminatory effect, regardless of the employer’s intent (N.Y. Exec. Law § 296(5-b).) This means that if a policy or practice actually or predictably results in a disparate impact on a protected class, it may be unlawful. Plaintiffs need only demonstrate that the practice causes or is likely to cause such an impact. Employers can defend their practices by showing the practices are job-related and consistent with business necessity, but must now support this justification with concrete evidence, not just hypothetical or speculative arguments, and that the necessity cannot be served by a less-discriminatory alternative. New York and New Jersey Minimum Wage and Compensation Changes As of January 1, the minimum wage in New York City and Nassau, Suffolk and Westchester counties increased to $17 per hour, with the weekly salary threshold for executive and administrative employees set at $1,275 (or $66,300 annually). The rest of New York state saw a minimum wage of $16 per hour and a weekly salary threshold of $1,199.10 ($62,353.20 annually). The professional exemption in New York continues to follow the federal threshold of $35,568 per year. In New Jersey, effective January 1, the statewide minimum wage increased to $15.92 per hour, with agricultural workers earning at least $14.20 and direct care staff in long-term care facilities receiving $18.92 per hour. Both states have also updated their rules regarding tipped employees for 2026. In New York City and surrounding counties, tipped service employees must receive a cash wage of $14.15 with a $2.85 tip credit, while tipped food-service workers must be paid $11.35 in cash wages with a $5.65 tip credit. New Jersey’s tipped employees must receive at least $6.05 per hour in cash wages, with a $9.87 tip credit, and employers are required to make up any shortfall if tips plus cash wages do not meet the minimum wage. Looking Ahead The employment law landscape in New York and New Jersey is more complex than ever, with new rules affecting contracts, compensation, hiring, discrimination and leave. (For California, see our previous blog post.) Employers should act now to review and update their policies, train HR staff, and ensure compliance with these sweeping changes. Staying ahead of these developments will help organizations avoid costly penalties and foster a compliant workplace in 2026 and beyond. For tailored guidance and to ensure your organization is fully compliant, it is always wise to consult with employment counsel familiar with the latest state and local developments.

With a new year comes new obligations. For employers, that means making several key changes to ensure they are compliant with the changing California employment law landscape. In 2025, the California Legislature enacted into law several bills that alter and expand employer obligations as of January 1, 2026. These new measures include changes in the minimum wage, pay reporting, stay-or-pay provisions and notice requirements — and will require employers to review and update their handbooks, job postings, onboarding materials, recordkeeping practices and relevant notices to employees.  Contracts AB 692: Ban on ‘Stay or Pay’ Provisions As of January 1, 2026, employment agreements shall not require a worker to repay a debt, or impose a fee or penalty upon the worker, when the employment relationship terminates. This will bar common arrangements that require workers to reimburse employers for costs such as relocation or training programs and that impact certain promissory note arrangements, with exceptions for specified tuition and upfront discretionary bonus repayments. This limitation on “stay or pay” agreements is part of the state’s continued efforts to protect employee mobility pursuant to Section 16600 of the California Business and Professions Code. Compensation Increased Minimum Wage California’s minimum wage will increase to $16.90 per hour for all employers statewide, regardless of employee headcount. This likewise increases the minimum annual salary for exempt employees to $70,304. Living wage ordinances have been adjusted in various counties and cities, so employers should confirm requirements with the relevant localities to ensure compliance. For instance, the City of Los Angeles Living Wage Ordinance significantly expanded coverage to new categories of entities, including hotel workers. SB 464: Expanded Pay Data Reporting and Penalties As of January 1, 2026, all employee demographic data must be stored separate from employee personnel files. Civil penalties for failure to comply with the state’s pay data requirements will become mandatory (rather than permissive) upon request of the Civil Rights Department. Beginning January 1, 2027, employers with more than 100 employees must report pay data for 23 job categories (up from 10). SB 261: Penalties for Unpaid Wage Judgments California employers with unpaid wage judgments will be subject to significantly increased liability in 2026. If a final wage judgment remains unsatisfied after 180 days, potential civil penalties may increase to up to three times the outstanding judgment amount. Additionally, SB 261 creates significant enforcement opportunities for public prosecutors as well as "successor" joint and several liability issues. SB 642: Updates to Equal Pay and Pay Transparency Laws In 2022, SB 1162 required employers with 15 or more employees to include an expected pay scale in job postings, as well as to provide employees with pay scale information for their current roles upon request. For 2026, pay transparency laws were amended to require more accurate salary estimates “upon hire” in job postings and to ensure the value of stock, bonuses and other benefits are factored into equal pay determinations. Additionally, employers cannot pay employees of “another” sex — not just the “opposite” sex — less for “substantially similar work.” Workplace Notices SB 294: Workplace Know Your Rights Act Notice Beginning February 1, 2026, all employers must provide a standalone written notice to all current employees and employees upon hire regarding workplace rights related to union organizing, immigration and other workplace protections, and provide such notice annually thereafter. The Labor Commissioner’s Office has prepared a model notice available in English and Spanish. Additionally, by March 30, 2026, employers must allow employees to designate an emergency contact and must notify the contact if the employee is arrested or detained on the employer’s worksite. If the arrest or detention occurs during work hours, or during the performance of the employee’s job duties, but not on the worksite, the employer shall notify the employee’s designated emergency contact only if the employer has actual knowledge of the arrest or detention of the employee. Employers that fail to comply may be subject to penalties of $500 per employee for each day the violation occurs, up to a maximum of $10,000 per employee. SB 617: WARN Act Notice Expansion California has enacted legislation that significantly expands the information that employers must include in their WARN notices and the actions they must take under the California Worker Adjustment and Retraining Notification Act (CalWARN). Employers can no longer simply include the federal WARN Act notice content in their CalWARN notices. As of January 1, 2026, existing CalWARN Act notice requirements for layoffs, closures and relocations have been expanded to include information on whether an employer plans to coordinate reemployment services through a local workforce board or another entity, the workforce board’s contact information and description of services, and a description of CalFresh, the state’s food assistance program. Leaves of Absence AB 406: Expanded Uses of Paid Sick Leave As of October 1, 2025, employees may use paid sick leave if they or a covered family member are crime victims and must attend specified court proceedings, such as sentencing hearings and delinquency hearings. Discrimination California Civil Rights Division regulations clarify that antidiscrimination laws apply to Automated-Decision Systems (ADS) (including vendor tools) used in employment as of October 1, 2025. Employers can be liable if ADS use results in unlawful disparate treatment/impact or fails to accommodate disabilities. Training SB 513: Personnel Records – Training/Education As of January 1, 2026, education and training records must be maintained in employee personnel files. Such documents must specify certain information, including employee name, training provider, date and duration of training, core competencies of training and certification, and these records must be available for employee inspection within 30 days of request. This applies to all employers that maintain such records. SB 303: Bias Mitigation Training As of October 1, 2025, California law clarifies that acknowledging personal bias during employer-provided bias mitigation training does not constitute unlawful discrimination. The law is intended to encourage bias mitigation training, including self-reflection exercises, without fear of retaliation or discrimination claims arising from such activities. Next Steps Employers are invited to contact Stradley Ronon’s employment team to discuss compliance with these and other California employment law requirements.

In the March-April edition of the Employee Benefit Plan Review’s Ask the Expert column, partner Melanie Ronen, chair of the firm’s employment practice, discusses how employers must be mindful of the often-changing and varying requirements in state and local jurisdictions. Read the full Q&A.