Paying Off Unemployment Insurance Debt Will Reduce Costs For Employers and Increase UI Benefits For Workers

Expanding Accessibility in Workforces by Digitizing Youth Working Papers and Strengthening Enforcement Power Following Unpaid Wage Theft Judgment

Cracking Down on Labor Violations and Expanding Access to Workers’ Compensation Providers

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Governor Kathy Hochul today signed new legislation as part of the FY26 Enacted Budget that will make landmark reforms to strengthen and protect our workforce across the state. New York State will pay off the Federal Unemployment Insurance debt, increase the maximum benefit rate for workers who have lost their job, and strengthen unemployment insurance benefits for striking workers. Additionally, the Governor is improving accessibility to youth working papers by digitizing the process and is strengthening enforcement power following an unpaid wage theft judgment. Governor Hochul is also cracking down on child labor violations and ensuring injured workers have access to workers’ compensation providers statewide.

“Every worker in New York deserves to be treated with dignity and respect,” Governor Hochul said. “Whether you’re starting your first job, capping off a long successful career or working to make ends meet after a layoff, you deserve fair treatment. This Budget makes meaningful reforms that will ensure our workforce gets the support they need to survive and thrive in the 21st century economy.”

Bolstering Unemployment Benefits for Workforce

Pay Off Unemployment Insurance Debt

The Unemployment Insurance (UI) Trust Fund began March of 2020 with a positive balance of nearly $2.5 billion. Due to the COVID-19 pandemic and subsequent economic fallout, the balance was quickly paid out to New Yorkers necessitating a loan from the Federal government to continue to pay eligible claims. The Federal Unemployment Insurance Trust Fund debt peaked at $10.4 billion in March of 2021, and employer contribution rates have gone up each year since as the debt continues to be paid down. As of May 2025, the debt is $5.7 billion.

To close this gap, the FY 2026 Budget will pay off the Federal UI loan and achieve solvency in the UI Trust Fund. The Budget also includes legislation to expedite the planned increase to the maximum UI benefit rate. The maximum weekly benefit rate for workers who have lost their job will increase from the current $504 to $869.Together, these actions will increase benefits for workers who have lost their jobs and prevent projected spikes in employer contributions, saving employers an average of $100 per employee in 2026 and $250 per employee in 2027.

Strengthen Benefits for Striking Workers

Governor Hochul signed legislation allowing striking workers to collect unemployment insurance benefits after a two-week waiting period. Previously, striking workers were required to have a three-week waiting period before unemployment insurance benefits could be collected.

Strengthening our Workforce

Streamline Youth Working Papers

The current process to apply for youth working papers is antiquated, exclusively paper-driven, and lacks consistent, uniform data collection. Employers are required to maintain copies of the paper records on file and are hit with fines if papers are missing. To reduce the burden on businesses and streamline the process, Governor Hochul signed legislation to digitize youth working papers, creating a one-stop online portal for youth, caregivers, employers, and school administrators. The legislation also removes outdated requirements, like requiring caregivers to pick up papers from the school district and subjecting youth to a physical fitness exam.

Expand Enforcement Power Following an Unpaid Wage Theft Judgment

The Department of Labor (DOL) has limited ability to compel employers to pay owed wages to workers, even after an employer has been found guilty of wrongfully withholding payment. To ensure hardworking New Yorkers are paid every cent they earn, while respecting the due process rights of employers, Governor Hochul advanced legislation to expand DOL’s enforcement power to include the authority to levy liens, seize financial assets, and issue a stop work order following an unpaid wage theft judgement.

Strengthening Protections for New Yorkers

Increasing Penalties for Child Labor Law Violations

New York State’s child labor laws have not been updated in decades and do not reflect the severity of such violations. In the past 10 years, the U.S. Department of Labor has seen a 316 percent increase in the number of children employed in violation of child labor laws across the country. To combat child labor violations, Governor Hochul advanced legislation to significantly raise the maximum civil penalties for child labor violations.

Clarifying Frequency of Pay

Many small businesses are unaware of the weekly requirement for classes of manual workers or that a certain classification of work is deemed manual work, pay the workers in-full and semi-monthly, and then are sued for large amounts of money despite already paying their employees full wages. To provide relief to businesses, while still ensuring workers are paid timely and in full, Governor Hochul signed legislation amending the law to clarify that manual workers are not immediately entitled to liquidated damages if they were paid regularly on at least a semi-monthly basis. Once an employer is put on notice that the class of workers are manual, they owe interest for the weeks in which the workers were paid semi-monthly rather than weekly. If the employer does not pay those manual workers weekly going forward then they may be subject to liquidated damages.

Amending Healthy Terminals Act

Governor Hochul today signed legislation to amend the Healthy Terminals Act to enhance airport worker benefits in JFK and LaGuardia airports, as well as include part-time workers as covered workers. This ensures workers in all New York City regional airports receive the same standard wages and health benefits. The legislation also creates a new exemption for small employers with 10 or fewer employees.

Improving Injured Workers’ Access to Medical Treatment

Governor Hochul advanced workers’ compensation legislation in the FY 2026 Enacted Budget to give injured and ill workers across New York State greater access to timely medical care. Effective immediately, resident and fellow physicians in programs that are accredited by the Accreditation Council on Graduate Medical Education (ACGME) are allowed to treat injured and ill workers in New York State under the appropriate supervision of faculty physicians, the same way they do for regular health insurance. This represents potentially 20,000 resident and fellow physicians, training in over 1,400 programs, at nearly 70 teaching hospitals across the state.

Additionally, Governor Houchul advanced and signed legislation amending Section 21-a of the Workers’ Compensation Law to permit workers’ compensation insurers to pay for medical treatment, without accepting liability, for up to one year, beginning January 1, 2027. This amendment extends the provision to “medical-only” claims, which account for over 60 percent of all workers’ compensation claims. Extending Section 21-a to all claims will significantly help injured workers get timely medical care, avoid unnecessary claim denials and litigation, and provide swift payment for necessary medical treatment to the injured worker. The amendment also requires insurers to notify injured workers that such payments are being made and that their claim will automatically be accepted by the insurer at the one-year mark, unless the claim is controverted.