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Payroll

New York payroll laws 2025: Updates, rules, resources, and employer tips

By QuickBooks
Published on December 24, 2025

Payroll law forms the backbone of fair and lawful employee compensation, ensuring that workers are paid accurately and on time while employers remain compliant with state and federal standards. In New York, that framework comes with unique layers, some of which add complexity while others provide structure and clarity. The state enforces one of the highest minimum wages in the country, with rates that vary by region and employer size. It also imposes additional rules for specific industries like hospitality and building services.

This 2025 guide outlines key New York payroll laws, where they differ from federal requirements, and the taxes and employer obligations you need to know. It also highlights tips, tools, and payroll services to help you stay compliant.

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What are payroll laws?

Payroll laws are regulations that govern how employers compensate employees. They include rules about wages, tax withholdings, overtime pay, recordkeeping, and employee classification at both federal and state levels.

Why are payroll laws important?

Payroll laws help protect workers’ rights and ensure businesses meet their legal responsibilities. Following these laws reduces the risk of fines, lawsuits, and payroll errors that can affect employee trust and company operations.

What do payroll laws cover?

Payroll laws outline how employees must be paid, how employers withhold and report taxes, and what rights and responsibilities both parties have. In New York, this includes:

  • Ensuring employees are paid at least the applicable minimum wage and receive timely compensation for all hours worked, including overtime.
  • Setting clear standards for wage deductions, tip credits, spread-of-hours pay, and benefits in certain industries.
  • Requiring detailed and accurate payroll records, wage notices, and regular wage statements to ensure transparency and legal compliance.
  • Enforcing federal and state tax withholding, reporting, and remittance requirements.

When businesses follow these laws, they avoid penalties and build a stronger, more compliant workplace.

Who must follow New York payroll laws?

Whether you operate a tech startup in Brooklyn, manage a small business upstate, or employ help in your home, New York payroll laws come into play the moment you hire someone and begin paying wages above the legal threshold.

Here’s who’s required to comply:

  • Any business that employs one or more workers in New York State, including nonprofits and companies based out of state but with employees working within New York
  • Employers who pay at least $300 in cash wages in a calendar quarter to any employee
  • Household employers who pay $500 or more in cash wages in a quarter

In short, if you have employees performing work in New York, you are responsible for following the state’s payroll laws, including minimum wage standards, tax withholdings, recordkeeping, and timely wage payments.

New payroll laws to know in 2025 

The following are some of the key 2025 updates to New York payroll laws:

  • Minimum wage increase (effective January 1, 2025): New York City, Long Island, and Westchester now require an hourly minimum wage of $16.50, up from $16, while the rest of the state increased to $15.50, up from $15.
  • Tipped-cash wages and credits updated (January 1, 2025): New York updated its tip credit rates for food service and other tipped service employees.
  • Service employees:
  • NYC/Downstate: $13.75 cash wage + $2.75 tip credit
  • Upstate: $12.90 cash wage + $2.60 tip credit
  • Food service workers:
  • NYC/Downstate: $11.00 cash wage + $5.50 tip credit
  • Upstate: $10.35 cash wage + $5.15 tip credit
  • Overtime‑exempt salary thresholds raised: NYC/Downstate has a minimum of $1,237.50/week ($64,350/year) while the rest of state has a minimum of $1,161.65/week ($60,405.80/year). These thresholds significantly exceed the federal FLSA threshold ($684/week) and must be met for executive and administrative exemptions. 
  • Paid prenatal leave (effective January 1, 2025): New York became the first state to require employers to provide 20 hours of paid leave per year for prenatal healthcare, available immediately at hire and separate from other leave policies.
  • Sunsetting of COVID‑19 Paid Leave (effective July 31, 2025): New York’s COVID‑19 paid emergency leave requirement will expire, though employees may still use other leave programs like Paid Sick Leave or Paid Family Leave.
  • Paid family leave contribution update: Employee contribution rate is 0.388% of gross wages, based on a statewide average weekly wage of $1,757.19. The maximum annual contribution for 2025 is $354.53.
  • Wage violation penalties revised (effective May 9, 2025): Amendments to Labor Law §198 limit liquidated damages for first-time violations. Employers will owe only interest (capped at 100%) for an initial wage violation. Full liquidated damages (100% of unpaid wages) plus interest may still apply to repeat violations if there’s a prior finding.

Federal payroll laws every employer should know

While payroll laws vary by state, federal payroll laws set the baseline that all employers across the U.S.—including those in New York—must follow. These laws regulate how wages are paid, how taxes are withheld, and what benefits employers must offer in certain situations. Here's a look at the key federal regulations that impact payroll:

Fair Labor Standards Act (FLSA)

The FLSA establishes federal standards for minimum wage, overtime pay, recordkeeping, and child labor. It applies to most full-time and part-time workers in the private sector and in federal, state, and local governments. These are some of the payroll laws that fall under the FLSA.

  • Federal minimum wage: As of 2025, the federal minimum wage is $7.25 per hour. 
  • Employers can pay tipped employees less than the full minimum wage—as long as the employee earns at least $30 per month in tips and their total pay (wages plus tips) adds up to at least the federal minimum wage of $7.25 per hour.
  • Overtime pay: Nonexempt employees must be paid 1.5 times their regular rate for hours over 40 worked in a week.
  • Recordkeeping: The FLSA requires employers to keep accurate, accessible records for all nonexempt employees. This includes basic information like name, address, Social Security number, occupation, hours worked, wages paid, and pay rates. Employers using the tip credit must also maintain weekly records of reported tips and the amount of credit claimed.
  • Keep for at least 3 years: Payroll records, collective bargaining agreements, and sales or purchase records
  • Keep for at least 2 years: Timecards, wage rate tables, schedules, and records of wage changes

Internal Revenue Service (IRS) Regulations

Employers are required to comply with IRS rules pertaining to payroll taxes. Taxes must be calculated, withheld, and submitted accurately and on time. Employers need to:

  • Withhold federal income tax from employee wages based on Form W-4 information and current IRS federal withholding tax tables.
  • Withhold and match Social Security and Medicare taxes (FICA) from employee wages. For 2025:
  • Social Security tax: 6.2% each for employer and employee, up to a wage base limit of $176,100.
  • Medicare tax: 1.45% each for employer and employee, with no wage base limit.
  • Pay Federal Unemployment Tax Act (FUTA) taxes:
  • Employers must pay a federal unemployment tax of 6.0% on the first $7,000 of each employee’s annual wages.
  • If all state unemployment taxes are paid on time and the employer’s state is not designated as a credit reduction state, the FUTA tax may be reduced by a credit of up to 5.4%, resulting in an effective rate of 0.6%.
  • Only employers pay FUTA; it is not withheld from employee wages.
  • FUTA taxes are reported annually using IRS Form 940.

Affordable Care Act (ACA)

The Affordable Care Act (ACA) requires employers with 50+ full-time employees to offer affordable health insurance and report coverage to the IRS. 

  • They must offer affordable, minimum-value coverage to at least 95% of full-time employees and dependents.
  • "Affordable" means the employee's share of self-only coverage doesn’t exceed a set income-based percentage.
  • Employers must file Forms 1094-C and 1095-C with the IRS annually to report coverage details.
  • Visit the IRS website to see if the ACA applies to your business. 

Smaller businesses with fewer than 50 full-time employees may still be subject to certain ACA requirements depending on their specific circumstances. Check the IRS website for additional information on ACA tax provisions for small employers. 

Key New York payroll laws

While federal payroll laws lay the essential groundwork, New York implements state‑specific rules that often extend worker protections and require detailed compliance. If you employ anyone in New York, it's crucial to understand where state standards differ and where they go beyond the federal baseline.

Minimum wage in New York for 2025

As of January 1, 2025, New York’s minimum wage increased to $16.50/hour in New York City, Long Island, and Westchester County, and to $15.50/hour in the rest of the state. Tipped service and food‑service workers have separate lower cash wage rates paired with tip credits, depending on the region.

Local minimum wage rates

New York requires employers to pay the higher of the local or state minimum wage. NYC, Nassau, Suffolk, and Westchester counties have the elevated $16.50/hour rate, while elsewhere, the base $15.50 applies. Tipped industries follow region‑specific wage and credit schedules. Always verify the exact work location to ensure accurate payment.

New York overtime rules

Under New York law, most non‑exempt employees are entitled to 1.5 × regular pay for hours over 40 worked in a week. Special rules also apply for residential live‑in and farm workers:

  • Residential (live‑in) workers: Overtime at 1.5 × pay after 44 hours/week.
  • Farm employees: Overtime begins after 56 hours/week in 2024, dropping gradually to 44 hours by 2032.

New York vs. federal overtime laws

While both New York and federal laws aim to ensure fair compensation for overtime work, New York’s regulations are more stringent. Here's a comparison:

New York does not have daily overtime or double‐time; it focuses strictly on weekly hours.

Exempt salary thresholds for 2025

To classify employees as exempt under New York law, employers must meet both a duties test and a higher salary cutoff than the federal baseline of $684/week. As of January 1, 2025, these thresholds are now:

$1,237.50/week ($64,350/year) for NYC, Long Island, and Westchester County

$1,161.65/week ($60,405.80/year) in the rest of the state. In contrast, the professional exemption remains aligned with federal standards and carries no additional NY salary threshold requirement.

Pay frequency

  • Pay frequency: Section 191 of New York Labor Law requires manual workers be paid weekly, and "other workers" at least semi‑monthly. A manual worker in New York is an employee who spends at least 25% of their working time engaged in physical labor, such as lifting, carrying, or operating machinery.

Semi-monthly pay periods

  • Wages earned from the 1st to the 15th must be paid by the 26th of the same month.
  • Wages earned from the 16th to the end of the month must be paid by the 10th of the following month.

Other pay periods (weekly, biweekly, etc.)

  • Wages for manual workers must be paid no later than 7 calendar days after the end of the week in which they were earned. For other workers, no strict “7-day rule” exists, but pay must be made on the set payday.

Overtime pay

  • This must be paid by the next regular payday after the overtime was earned.
  • If there's an error or correction, it must appear on the next itemized wage statement, along with the corrected period's dates.

Exception for exempt employees

Executive, administrative, and professional employees (as specified by FLSA rules and regulations) who earn at least New York’s salary threshold are not subject to New York’s pay frequency requirements under Labor Law § 191. These exempt employees may be paid monthly, semi-monthly, or biweekly as long as the schedule is consistent and agreed upon. 

Employers must pay the full salary on or before the designated payday. They must also follow FLSA salary rules,which generally prohibit salary deductions for partial-day absences and require full weekly pay if the employee is ready, willing, and able to work.

If an exempt employee earns less than the threshold, they may still be subject to state pay frequency rules, even if exempt from overtime under federal law.

For additional information about NYS pay frequency rules, read Labor Law Section 191 FAQs. 

Final paycheck laws in New York

In New York, the timing and content of a final paycheck depend on how employment ends. 

  • Termination (fired or laid off): Final wages must be paid no later than the next scheduled payday. This applies to all earned wages up to the termination date, but not necessarily on the same day of discharge.
  • Voluntary resignation: Similarly, when an employee resigns, they must be paid by the next regular payday for the pay period in which they worked their final day.
  • With 72+ hours’ notice: There is no specific requirement in New York that changes the final paycheck deadline based on notice given. The regular payday rule applies regardless of notice.
  • Without notice: If an employee quits without notice, wages are still due by the next scheduled payday.
  • Accrued vacation (PTO payout): New York law does not require payout of unused vacation or paid time off (PTO) unless the employer’s written policy or collective bargaining agreement promises it. Employers must follow their own written policy. If the policy is silent, payout is generally expected.
  • Waiting time penalty: New York does not impose a daily waiting time penalty for late final pay. However, failure to pay wages on time can result in interest, civil penalties, and liquidated damages under the New York Labor Law.
  • Additional considerations: 
  • Sick leave: Employers are not required to pay out accrued sick leave at separation, unless their own policy states otherwise.
  • Severance pay: This is not required under state law unless provided in a company policy, contract, or separation agreement.
  • Deductions: Employers may not deduct for unreturned property, uniforms, or other items unless authorized in writing by the employee and permitted by law.

For more detailed information, refer to the New York State Department of Labor and its guidance on wage payment and separation policies.

New York paid sick leave

New York has mandated paid sick leave under the New York State Paid Sick Leave Law (PSL), since September 30, 2020.

  • Qualification criteria: All private-sector employees in New York qualify, regardless of full-time, part-time, seasonal, or temporary status. Accrual begins on the first day of employment, though employers may delay use for up to 120 days.
  • Amount of leave: The amount depends on company size:
  • 1-4 employees and net income less than $1 million: up to 40 hours unpaid (or paid if income is $1 million or more)
  • 5-99 employees: up to 40 hours of paid leave per year
  • 100+ employees: up to 56 hours of paid leave per year
  • How sick leave is accrued: Employers can use one of two methods:
  • Accrual method: Employees earn one hour of sick leave for every 30 hours worked.
  • Front-loading method: Employers may grant the full amount of leave at the beginning of the year. In this case, carryover is still required, but employers may cap annual usage (e.g., 40 or 56 hours, depending on size).
  • Permitted use: Sick leave can be used for personal or family member illness, injury, or medical care. Use is also permitted for domestic violence, sexual assault, stalking, or human trafficking, including legal proceedings and relocation.
  • Local laws: Some localities, like New York City and Westchester County, have sick leave laws that offer equal or greater benefits. Employers must comply with the most generous applicable standard.

State disability insurance

In New York, payroll laws require most private employers to provide short-term disability insurance coverage for employees who are unable to work due to non-job-related illnesses, injuries, or pregnancy. This is governed by the Disability Benefits Law (DBL) and considered a core payroll obligation.

Under New York payroll law, employers must:

  • Secure DBL coverage through a private insurance carrier or by applying to self-insure through the New York State Workers’ Compensation Board.
  • Provide coverage for all eligible employees, including part-time workers after 25 days of work or full-time workers after 4 consecutive weeks.
  • Deduct from employee wages no more than 0.5% of weekly wages, up to a maximum of 60 cents per week, unless the employer chooses to cover the full cost.
  • Remit premiums to the insurance carrier or fund timely and accurately as part of their regular payroll cycle

Family leave policies

New York also mandates Paid Family Leave (PFL) under the New York Paid Family Leave Act. Eligible employees may take up to 12 weeks of paid leave to:

  • Bond with a new child
  • Care for a seriously ill family member
  • Assist with family needs related to active military service

As of 2025, the maximum weekly benefit is 67% of an employee’s average weekly wage, capped at $1,177.32 a week. Leave is job-protected, and health insurance must be maintained during the leave period.

New York recordkeeping requirements

As mandated under the Wage Theft Prevention Act, New York employers must retain the following records on an ongoing basis for at least six years:

  • Hours worked and wages paid
  • Pay rate notices (Form LS 54 or LS 58)
  • Wage statements
  • Payroll deductions
  • Dates of employment

In addition, employers must provide written pay notices at hiring and detailed pay stubs each payday, showing hours worked, rates of pay, gross/net wages, and all deductions.

Tip credit rules

New York permits tip credits, but the rules vary by region and occupation.

  • Tipped food service workers (e.g., servers):
  • NYC/Downstate: $11/hour cash wage + $5.50 tip credit
  • Upstate: $10.35/hour cash wage + $5.15 tip credit
  • Tipped service employees (e.g., hotel workers):
  • NYC/Downstate: $13.75/hour cash wage + $2.75 tip credit
  • Upstate: $12.90/hour cash wage + $2.60 tip credit

To use the tip credit legally:

  • Employees must earn enough in pay plus tips to meet the full minimum wage.
  • Employers must give proper notice about the tip credit being applied.
  • Tip pooling is allowed among eligible employees, but managers and supervisors cannot participate.

New York payroll taxes 

New York has more complex rules compared to other states. For example, employers are required to comply with federal tax regulations as well as several key state-specific payroll tax obligations. These include unemployment insurance, disability benefits, and state income tax. These taxes fund critical worker protections and state services.

Unemployment Insurance (UI)

Unemployment Insurance provides temporary income to workers who become unemployed through no fault of their own. The program is managed by the New York State Department of Labor (NYSDOL).

Reemployment Services Fund (RSF)

The RSF helps fund career centers and reemployment services for job seekers. 

Disability benefits 

New York’s Disability Benefits Law requires employers to provide short-term disability insurance for off-the-job illnesses or injuries. Employers may collect contributions from employees to offset the cost.

Paid Family Leave (PFL) 

Paid Family Leave, administered through private insurance carriers, allows eligible employees to take paid time off to care for family members or bond with a new child. It is entirely funded by employee payroll deductions.

New York State Personal Income Tax (NYS PIT)

New York State Personal Income Tax is withheld from employee wages and submitted to the New York State Department of Taxation and Finance. The rate varies based on income level and filing status.

While UI, RSF, and DBL are employer responsibilities (with limited employee contributions to DBL), PFL and PIT are withheld directly from employees’ wages. Employers must ensure accurate withholding and timely deposits. 

New York local payroll taxes

While New York has statewide payroll tax requirements, certain local jurisdictions, most notably New York City, also impose their own payroll-related taxes. These local taxes may affect your business depending on where you operate and the type of entity you run.

To determine if local taxes apply to you:

  • Check with your city or local taxing authority for up-to-date information on payroll-related obligations, such as the Metropolitan Commuter Transportation Mobility Tax (MCTMT).
  • Consult a New York tax professional to ensure you're meeting both state and local payroll tax requirements.

New York payroll compliance requirements

New York employers must follow a range of payroll-related obligations to comply with state labor laws and tax regulations. Here is a breakdown of key responsibilities to align your business with New York State law.

Register as an employer

In New York, businesses must register with the New York State Department of Labor (NYSDOL) and the New York State Department of Taxation and Finance (DTF) before paying any wages to employees working in New York. The most common and efficient way is to register online using the New York Business Express portal. This registration covers unemployment insurance, wage reporting, and tax withholding obligations. You must have your federal employer identification (EIN) to register.

Household employers:

If you employ a domestic worker (such as a nanny, housekeeper, or caregiver), you are required to register as an employer when you pay $500 or more in cash wages to a household worker in a calendar quarter. You do not need to register before reaching this threshold. Registration can be completed with NYSDOL by phone, online, or by mail once you reach the threshold.

Penalty: Failure to register on time can result in late filing penalties, loss of tax credits, and interest charges.

Provide itemized wage statements

Under New York Labor Law § 195(3), employers must provide employees with a written wage statement every payday that includes:

  • Pay period dates
  • Gross wages and net wages
  • Rate of pay (hourly or salaried)
  • Any deductions (taxes, benefits, etc.)
  • Number of hours worked (for nonexempt employees)
  • Overtime hours and pay (if applicable)
  • Employer name, address, and phone number

Records of wage statements must be retained for six years.

Penalty: Failure to provide proper wage statements may result in damages of up to $250 per workday per employee, capped at $5,000 per employee.

Furnish wage notice upon hiring

Under the Wage Theft Prevention Act (WTPA), all private employers in New York must provide each new hire with a written wage notice at the time of hiring. The notice must include:

  • Employee’s rate(s) of pay and basis (e.g., hourly, salary)
  • Overtime rate (if applicable)
  • Regular payday
  • Employer’s legal name and DBA
  • Employer’s address and contact info
  • Any allowances claimed (e.g., meals, lodging)

The law also requires the notice in the employee’s primary language (if available from NYDOL), and notice must be updated if key wage terms change.

The notice must be signed and acknowledged by the employee and retained for six years. 

Penalty: Employers who fail to provide the wage notice may owe $50 per day per employee, up to $5,000 per employee.

Offer direct deposit only with employee consent

New York employers may offer direct deposit, but only with the employee’s voluntary, written consent. Employers must also:

  • Provide a written notice of rights
  • Let employees choose their financial institution
  • Offer alternative payment methods (e.g., check)

Penalty: Violating direct deposit rules may result in wage claims, audits, and penalties under state labor law.

Follow timely wage payment laws

Employers must pay wages on designated paydays, with frequency based on the employee’s job classification.

Penalty: Late payments may trigger wage claims, civil penalties, and interest.

Remit payroll taxes on time

Employers must file and pay several payroll taxes through the Department of Taxation and Finance (DTF) and NYSDOL, including:

  • New York State Income Tax (PIT)
  • Unemployment Insurance (UI)
  • Reemployment Services Fund (RSF)
  • Metropolitan Commuter Transportation Mobility Tax (MCTMT) if applicable
  • Disability Benefits and Paid Family Leave premiums

Penalty: Late or missed payments may result in penalties, plus interest and potential audits.

Submit quarterly and annual tax filings

New York employers are required to file:

  • Quarterly Combined Withholding, Wage Reporting, and UI Return (Form NYS-45)
  • Annual Reconciliation if applicable
  • W-2s to the Social Security Administration and state

These filings can be submitted through the NY.gov Employer Services portal.

Penalty: Missing a filing deadline can result in penalties—often $1,000 or more per return for state wage/tax filings—plus interest and potential audits. The exact penalty depends on the specific form, the number of employees, and how late the return is filed.

Electronic filing and payment requirements

Most New York employers are required to file payroll taxes and submit payments electronically, unless granted a waiver due to hardship.

  • Use online services to file and pay withholding, UI contributions, and wage reports.
  • Waivers may be requested through the Department of Taxation and Finance.

Penalty: Paper submissions without a waiver may be subject to penalties of $50 or more per filing.

New York wage theft protections

New York has strong wage theft laws. Employers may not withhold wages for any unauthorized reason. 

Penalty: Wage theft violations can lead to damages, back pay, attorney’s fees, and fines of up to $20,000 for repeat violations.

Can an employer withhold a paycheck for any reason?

No. Employers cannot withhold a paycheck for any reason not allowed by law. They are legally required to pay all earned wages on time. Deductions are permitted only if:

  • Required by law (e.g., taxes, wage garnishments)
  • Authorized in writing by the employee (e.g., benefits)
  • Covered under a collective bargaining agreement

Employers may not withhold wages as punishment or for issues like property damage. Unlawful withholding can lead to legal action by the employee.

Consequences of noncompliance

In addition to the specific regulatory actions outlined above, failing to follow New York’s payroll rules can lead to broader consequences for your business.

Financial penalties 

Agencies like the New York State Department of Labor (NYSDOL) and the Department of Taxation and Finance (DTF) may impose fines for late wage payments, inaccurate filings, or failure to provide required notices and wage statements.

Employee claims and lawsuits

Non-compliance can lead to employee complaints, wage theft claims, or lawsuits under the Wage Theft Prevention Act. These can result in back pay, statutory damages, and costly legal fees.

Audits and investigations

Payroll violations may trigger audits or investigations from state or local tax and labor departments, which can lead to the discovery of further noncompliance and require detailed payroll documentation.

Reputation damage

Payroll issues, such as unpaid wages, misclassified workers, or delayed paychecks, can damage employee trust and harm your company’s reputation, affecting retention and recruitment.

Operational setbacks

Correcting payroll mistakes, paying penalties, or responding to wage claims can create unexpected administrative burdens and disrupt day-to-day business operations.

Common payroll mistakes (and how to avoid them)

Payroll mistakes can cost businesses more than just money. They can lead to fines, compliance violations, and damaged employee trust. Below are some of the most frequent errors companies make, along with ways to prevent them. 

Misclassifying employees

Classifying a worker incorrectly, such as treating an employee as an independent contractor, can lead to audits, back taxes, and steep penalties from the New York State Department of Labor (NYSDOL) and the IRS. This issue is taken seriously, especially when employers issue both a W-2 and a 1099 to the same individual.

How to avoid this:

  • Use IRS and NYSDOL criteria to distinguish contractors from employees
  • Use QuickBooks payroll features to categorize workers and file the correct forms.
  • Audit classifications regularly to stay compliant.

Underpaying employees 

Paying employees less than they’re entitled to under New York's minimum wage or overtime laws can lead to wage theft claims, lawsuits, and government enforcement actions.

In recent years, the New York State Department of Labor’s Wage and Hour Division recovered $63 million for nearly 65,000 workers in wage theft. New York’s own enforcement actions have also increased, especially in industries like food service, retail, and construction.

How to avoid this: 

  • Stay current on wage and hour laws.
  • Run regular payroll audits.
  • Use automated payroll and time-tracking tools, such as a time card calculator.
  • Train staff on compliance basics.
  • Keep accurate, organized records.

Miscalculating overtime

Overtime mistakes are a top source of wage claims. Errors like not separating regular from overtime hours or applying the wrong rate can add up fast.

How to avoid this:

  • Make sure your payroll system automatically correctly tracks and calculates overtime.
  • Review exempt vs. nonexempt classifications.
  • Train staff on both federal and New York overtime rules.
  • Use timesheet templates to help employees accurately track their hours and overtime.

Late wage payments

Paying employees late damages trust and can lead to penalties.

How to avoid this:

  • Automate payroll with scheduled direct deposits.
  • Monitor cash flow regularly.
  • Use payroll calendar templates, alerts, and reminders to track due dates and meet deadlines.

Poor recordkeeping

Incomplete or inaccurate records can derail compliance, lead to fines, and make it hard to defend against claims.

How to avoid this:

  • Keep detailed records of hours, wages, classifications, and deductions.
  • Use secure, digital payroll software to track and store information.
  • Back up your data regularly.

Timesheet errors

According to QuickBooks research, U.S. employers report needing to fix errors on 80% of employee-submitted timesheets. One of the main causes? Employees forget to clock in or out and later struggle to recall their actual hours worked.

How to avoid this:

  • Employ digital time-tracking software and tools with real-time clock-in/clock-out features.
  • Enable automated reminders or mobile alerts to prompt employees throughout the day.
  • Train staff on proper timekeeping procedures and the importance of accurate reporting.
  • Review timesheets regularly before processing payroll to catch discrepancies early.

Incorrect tax withholding

Failing to withhold the correct amount of federal, state, or local taxes can result in penalties. 

How to avoid this:

  • Use payroll software that automatically calculates and withholds the correct taxes for each jurisdiction.
  • Stay up-to-date with IRS and state tax rate changes each year.
  • Review employee W-4 forms regularly, and update them as needed.
  • Reconcile payroll tax filings with payment records to catch discrepancies early.
  • Consider working with a payroll provider that offers tax filing and accuracy guarantees.
  • Accurately estimate taxes and net pay by using a New York paycheck calculator before processing payroll.

Consult a tax professional in New York who understands the state’s payroll landscape to ensure you're meeting all local obligations and staying compliant.

Payroll resources for New York employers

Employers in New York must comply with both state and federal requirements, and this involves coordination with several government agencies. Here's a summary of the most relevant ones:

  • New York State Department of Labor (NYSDOL): Oversees payroll-related state programs, including Unemployment Insurance (UI), Disability Benefits (DBL), Paid Family Leave (PFL), and minimum wage and labor law compliance. It also handles employer registration and audits related to wage and hour laws.
  • New York State Department of Taxation and Finance (DTF): Administers state income tax withholding, electronic filing requirements, and payroll tax remittance. Employers use this agency’s systems to file Forms NYS-45 and remit PIT.
  • New York City Department of Finance: Manages local taxes such as the Unincorporated Business Tax (UBT) and coordinates with the Metropolitan Transportation Authority for the Metropolitan Commuter Transportation Mobility Tax (MCTMT). This may apply depending on your payroll size and location.
  • New York State Division of Human Rights: Enforces New York’s civil rights laws, including anti-discrimination in employment. Employers must comply with laws related to harassment, accommodations, and equal pay protections.
  • Internal Revenue Service (IRS): Handles federal payroll tax responsibilities, including federal income tax withholding, Social Security, Medicare, and Federal Unemployment Tax Act (FUTA) compliance.
  • U.S. Department of Labor (DOL): Enforces federal labor laws under the Fair Labor Standards Act (FLSA), including minimum wage, overtime, and recordkeeping rules. 

Simplify payroll law compliance for your New York business 

New York’s payroll laws are complex, and mistakes can result in steep penalties. QuickBooks Payroll helps you stay accurate and compliant by automatically calculating, filing, and paying your federal and state payroll taxes—backed by a 100% accuracy guarantee and tax penalty protection.** On-the-go time tracking with QuickBooks Time keeps employee hours organized and synced. Plus, as your business grows, QuickBooks scales with you, offering the right tools to support faster, more seamless payroll.


Disclaimer:

**Accuracy Guaranteed: Available with QuickBooks Online Payroll Core, Premium, and Elite. We assume responsibility for federal and state payroll filings and payments directly from your account(s) based on the data you supply. As long as the information you provide us is correct and on time, and you have sufficient funds in your account, we'll file your tax forms and payments accurately and on time or we'll pay the resulting payroll tax penalties. Guarantee terms and conditions are subject to change at any time without notice.

Tax penalty protection: If you receive a tax notice and send it to us within 15 days of the tax notice we will cover the payroll tax penalty, up to $25,000. Additional conditions and restrictions apply. Only QuickBooks Online Payroll Elite users are eligible to receive tax penalty protection.

This content is for information purposes only and information provided should not be considered legal, accounting or tax advice or a substitute for obtaining such advice specific to your business. Additional information and exceptions may apply. Applicable laws may vary by state or locality. No assurance is given that the information is comprehensive in its coverage or that it is suitable in dealing with a customer's particular situation. Intuit Inc. does not have any responsibility for updating or revising any information presented herein. Accordingly, the information provided should not be relied upon as a substitute for independent research. Intuit Inc. cannot warrant that the material contained herein will continue to be accurate, nor that it is completely free of errors when published. Readers should verify statements before relying on them.


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