Category: New York

September 24, 2025

New York Unemployment Benefits Increase in October 2025

Beginning in October 2025, New York will substantially increase the maximum weekly unemployment benefit. It will jump from $504 to $869. The elimination of the state’s long-standing federal debt from the unemployment insurance trust fund made the move possible. With the debt finally repaid, benefit levels that had been frozen for more than a decade are now being adjusted upward in one move.

For unemployed workers, this increase provides a stronger safety net. For employers, however, it means that the potential cost of unemployment claims will rise considerably, especially for employees whose wages already placed them near the old benefit ceiling.

Financing Changes to the System

As part of the same policy shift, New York has announced that the Interest Assessment Surcharge—an extra cost that employers have been paying for years to cover interest on the trust fund debt—will go away. At the same time, the state plans to increase the taxable wage base in 2026 to help rebuild the trust fund’s reserves. When the taxable wage base increases, employers pay unemployment taxes on a larger portion of each employee’s wages. Thus, even with declining 2026 rates, employers could still see higher UI costs since more wages are subject to tax.

What This Means for Employers

The most immediate impact for employers is greater exposure when employees file claims. A discharge or layoff that previously resulted in benefits capped at $504 per week will soon trigger payments of up to $869 per week. Employers that experience high turnover, seasonal layoffs, or workforce reductions will notice this difference most quickly.

The longer-term effects are tied to the financing structure. The elimination of the surcharge is welcome, but the higher taxable wage base could offset some of that benefit. Payroll and HR teams will need to pay close attention to their unemployment contribution rates when 2026 arrives. Both the rate and the base will factor into actual liability.

Try the interactive calculator we’ve built to see your potential unemployment insurance exposure under the new rules.

Preparing for the Change

Employers should take time now to assess how these changes will affect their operations. Finance and HR leaders may want to model the cost of separations under the new maximum benefit. Doing so will ensure that workforce planning and budgeting accurately reflect the higher exposure. Companies that offer severance should also consider whether more generous unemployment benefits may influence employee expectations in separation negotiations.

While the October 2025 increase purports to modernize New York’s unemployment system, it creates very real financial considerations for businesses. Taking steps now to understand and plan for those changes will reduce the likelihood of surprises once the new benefit levels take effect.

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September 15, 2025

New York Tries to Expand State Labor Relations Jurisdiction

On September 5, 2025, Governor Kathy Hochul signed off on a potentially monumental change in New York’s labor law. The amendment to the New York State Labor Relations Act purports to give the New York Public Employment Relations Board (PERB) broad jurisdiction over private employers. As its name suggests, PERB historically focuses on public sector labor relations issues. The National Labor Relations Board (NLRB), a federal agency, governs most private-sector labor relations throughout the country, including New York. Can New York step in and take over this historically federal role?

Read here for more on the scope of NLRB’s jurisdiction.

NYS Labor Relations Act Amendment

The amendment to Labor Law § 715 purports to expand PERB’s jurisdiction to private employers in a novel way. Specifically, the statute now provides that PERB has jurisdiction over private-sector labor relations unless the NLRB “successfully asserts jurisdiction over any employer, employees, trades, or industries pursuant to an order by the federal district court established under article three of the United States constitution.”

If you’re not sure what that means, you’re not alone. The wording appears to be ambiguous in multiple respects. But we do at least know what the NY Legislature wants it to mean.

State Senator Ramos sponsored the legislation in the NY Senate. Her introducer’s memorandum explains the goal: to prevent a gap in labor law enforcement during periods when the NLRB cannot act, such as when the Board lacks a quorum. In other words, “This bill intends to give New York the power to protect employees if the National Labor Relations Board is not fulfilling its duty.”

The amendment took effect immediately upon signing.

Federal Preemption

The NY Legislature knows that this amendment will face preemption challenges. The Sponsor’s memo acknowledges that “[u]nder current law the National Labor Relations Act preempts any attempt to take up these cases at the state level.”

The Supreme Court has long held that the NLRA preempts most state regulation of private-sector labor relations:

Garmon preemption blocks state action in areas “arguably protected or prohibited” by the NLRA.
Machinists preemption blocks states from regulating areas Congress intended to leave to the “free play of economic forces.”

The Sponsor’s memo asserts that “The National Labor Relations Act simply remaining in place does not guarantee that the provisions will successfully protect employees.” Thus, the Legislature’s theory seems to be that by amending state law as they have, PERB can assert jurisdiction unless the NLRB stops it from doing so. However, that reasoning still appears to be at odds with established preemption case law.

The Garmon and Machinists preemption doctrines don’t shut off just because the NLRB is not acting. Federal law still governs, even if enforcement is delayed.

There are two narrow exceptions where states can act:

When the NLRB formally declines jurisdiction over entire categories of employers under NLRA § 14(c)(2) (e.g., very small local businesses).
When the NLRB cedes jurisdiction to a state agency under NLRA § 10(a).

New York’s amendment doesn’t fit either exception. Instead, it aims directly at the NLRB’s core jurisdiction, effectively daring federal courts to enforce existing preemption standards.

On September 12, 2025, the NLRB sued the State of New York and its PERB seeking to enjoin the enforcement of the amendment. If the NLRB (which is not itself an employer subject to the NYS law) is deemed to lack standing, then private parties may need to take up the litigation fight.

How New York’s State Labor Relations Act Differs from the NLRA

One reason the recent amendment is so consequential is that New York’s own Labor Relations Act is not just a copy of the NLRA. The differences are significant.

Devalues Employer Interests

Most importantly, the New York law is written as a one-sided protection for employees. The NLRA recognizes both employee rights and certain employer rights. The New York state labor relations statute does not include that balancing language. Its focus is on ensuring employees’ right to organize.

Certification procedures under the state law are also potentially more favorable to unions. While the NLRB strongly favors secret-ballot elections, the NY State Labor Relations Act permits certification based on alternative showings of majority support. In practice, that could mean greater reliance on card-check recognition and fewer opportunities for employers to communicate with their employees before a union is installed.

Lacks Relevant Precedent

The NLRA has nearly 90 years of precedent guiding questions like: What is an appropriate bargaining unit? When is an election necessary? What counts as unlawful conduct during a campaign? PERB has far less (essentially zero) precedent in the private-sector setting, and the State Labor Relations Act does not replicate all the more detailed parameters found in federal law. In essence, PERB would be starting from scratch in this area.

Broader Remedies

Finally, remedies under the state law are not identical to those under the NLRA. At the federal level, remedies are historically limited: reinstatement, back pay, and cease-and-desist orders. The New York statute authorizes PERB to fashion remedies for unfair labor practices with little guidance on limits. Without decades of judicial gloss, employers could face new uncertainty about what remedies PERB might impose.

In short, if PERB were to exercise jurisdiction broadly under this amendment, employers would not simply be dealing with the familiar NLRA system transplanted to Albany. They would be operating under a different statute—one that is more protective of employees, less protective of employers, and far less developed in terms of jurisprudence.

What Employers Should Do

Stay alert to petitions. If a union files at PERB citing the new law, you may need to respond quickly with a preemption defense.
Know your thresholds. If you are in one of the small categories where the NLRB has formally declined jurisdiction, PERB jurisdiction is nothing new—it already applied.
Prepare for litigation. Expect forum fights. Legal battles are inevitable—effectively invited by the amendment. The question is which employers will be the ones stuck in the crosshairs and forced to take up the fight.

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May 3, 2025

Conducting a New York Independent Contractor Audit

If your business relies on independent contractors—whether in New York or elsewhere—you’ve likely heard that misclassification can lead to serious legal trouble. But for companies with individuals physically performing services in New York, the risks have only intensified in recent years. That’s why now is the time to perform a New York independent contractor audit of your existing relationships.

Why This Matters Now

New York State has significantly expanded protections for freelancers and increased its scrutiny of worker classification. With the 2024 enactment of the Freelance Isn’t Free Act and ongoing state and federal enforcement actions, it’s more important than ever to evaluate whether your independent contractor arrangements truly comply with the law.

Misclassifying an employee as an independent contractor can lead to liability for:

Unpaid minimum wage and overtime
Unpaid unemployment insurance and workers’ compensation contributions
Interest and penalties from tax authorities
Legal fees and liquidated damages in private lawsuits
Liability under New York’s Freelance Isn’t Free Act

In addition, enforcement efforts are increasing:

The New York State Department of Labor (NYSDOL) continues to aggressively investigate misclassification claims.
The IRS and state/local tax authorities remain interested in employer tax compliance.
Private litigation and class actions are becoming more common, particularly where workers are denied benefits or final payment.

Bottom line: if someone is working in New York—physically, even remotely—your business may be subject to New York’s worker classification rules, regardless of where your headquarters or other business locations are located.

Step 1: Know the Legal Standard (It’s Not the Same Everywhere)

In New York, the legal tests for employee vs. contractor status vary depending on the law at issue. That complexity is a common pitfall for employers.

For Wage and Hour Purposes:

New York follows a multi-factor “economic realities” test, similar to the federal DOL standard. The core question: Is the worker economically dependent on the business or truly in business for themselves?

Relevant factors include:

The degree of control the business exercises over the work
The worker’s opportunity for profit or loss
The permanency of the relationship
The extent to which the work is integral to the business
The skill and initiative required
The extent of the worker’s investment in tools or equipment

No one factor is determinative. Control is important, but courts and agencies look at the totality of the relationship.

For Unemployment Insurance:

New York applies a worker-friendly test, meaning it is easier for a worker to be deemed an employee eligible for unemployment insurance. The NYSDOL looks primarily at whether the employer exercises any degree of supervision, direction, or control over the worker’s services. This includes not just direct oversight, but also indirect control, such as setting hours, assigning work, or requiring status reports.

As a result, a worker may be classified as an independent contractor for federal tax purposes under IRS standards, yet still be considered an employee for New York unemployment insurance eligibility.

For Freelance Isn’t Free Act Compliance:

Even if the contractor is properly classified, businesses must comply with New York’s new requirements for freelance contracts. For independent contractors in New York earning $800 or more, a written contract must exist, identifying payment timelines and retaliation protections.

Click here for more on New York’s Freelance Isn’t Free Act.

Step 2: Conduct an Internal Audit

An internal audit is your best defense against future liability. Start by identifying anyone providing services to your business who is not on payroll. Then, for each worker:

1. Document the Relationship

Do you have a signed contract?
Does the contract describe an independent business relationship, with clear project-based deliverables and no guarantee of ongoing work?
Is the contract consistent with how the relationship works in practice?

2. Evaluate Control

Who sets the worker’s hours?
Where is the work performed?
Who provides tools, equipment, and software?
Do you require regular check-ins or approval for routine tasks?

3. Assess Economic Independence

Does the worker have other clients?
Do they advertise their services publicly?
Can they subcontract the work or delegate it?

4. Examine Duration and Integration

Has this person worked with you for years on repeat assignments?
Is their work central to your business function?

Red flags may include:

Contractors working set hours or reporting to a manager
Use of internal email addresses or being listed on the company website
Reimbursement of expenses that should be borne by the contractor
Prohibitions on working for other clients

In most cases, there are no single factors that are entirely determinative of the proper classification. Multiple criteria must be considered. But the presence of any of the above red flags should generally trigger further analysis.

Step 3: Address the Risks

After identifying questionable arrangements, you have a few options:

Option 1: Reclassify as an Employee

This may be the safest course, especially if the worker is full-time, works under close supervision, or performs a core function of your business.
It may also open access to benefits, improve morale, and reduce turnover.

Option 2: Restructure the Relationship

Limit control and supervision.
Update the contract to emphasize the contractor’s independence.
Avoid integrating the worker into your business structure (e.g., no internal email, no title).

Option 3: Continue the Relationship with Mitigation Measures

Require evidence of the contractor’s separate business (e.g., EIN, business insurance, W-9).
Educate your managers on boundaries to maintain independence.
Set project-based deliverables with defined scopes and deadlines.

Step 4: Consider the Impact of Remote Work

Employers sometimes overlook that remote workers still “perform services” in a physical location—namely, wherever they are sitting with their laptop. If that’s New York, your business may need to:

Register for a New York employer ID
Comply with NY wage and hour laws
Withhold and remit NY state taxes and unemployment contributions
Follow the Freelance Isn’t Free Act if you engage independent contractors based in New York

Step 5: Train and Monitor

The law is clear: labels don’t matter—substance does.

Train your managers and HR personnel not to treat contractors like employees. Common mistakes include:

Directing day-to-day work
Including contractors in internal Slack or Teams channels unrelated to their assignment
Having contractors attend staff meetings or performance reviews

Monitor the relationships over time. What starts as a one-off project can evolve into an employment relationship if not carefully maintained.

Don’t Ignore This Potential Source of Serious Liability

The financial implications of improper classification depend on how many people are involved, the volume of their work, and other considerations. But it can result in fines, penalties, backpay, liquidated damages, and more. All of that adds up quickly and, in some cases, the liability can accrue to individuals, such as business owners, who may not be able to easily escape it even through bankruptcy or other business dissolution.

If you’re unsure whether your contractor relationships would withstand scrutiny from the NYSDOL, the IRS, or a plaintiff’s attorney, now is the time to act. And if you engage any freelancers in New York—whether directly or through third parties—you’ll want to ensure that your contracts and processes are updated to comply with both classification standards and the Freelance Isn’t Free Act.

Given the complexity of the applicable classification standards, consulting with an experienced employment attorney is recommended if there is any uncertainty whether someone is properly treated as an independent contractor.

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