Labor, Payroll, and Employment Law Compliance
Hiring people in New York State comes with strict legal requirements.
Hiring people in New York City comes with additional layers of enforcement.
Cannabis retail adds another level of scrutiny. Inspectors review labor compliance the same way they review inventory, security, and ID checks.
This page explains the minimum legal requirements for employee classification, payroll, scheduling, workplace safety, onboarding, training, and record-keeping.
Jump To
- Employee Classification (W-2 vs 1099)
- Minimum Wage (NYS and NYC)
- Payroll Rules You Must Follow
- Required New Hire Documents
- Workplace Postings (Required On-Site)
- Scheduling, Breaks, and Overtime
- NYC-Specific Labor Rules
- Harassment, Discrimination, and Required Training
- Employee Files You Must Maintain
- Termination Rules and Final Paychecks
Employee Classification (W-2 vs 1099)
Delivery, budtending, sales, management, and any in-store labor must be W-2 employees.
You cannot use 1099 contractors for:
- Delivery drivers
- Budtenders
- Inventory staff
- Managers
- Sales staff
- Anyone performing core operations
If you control the hours, duties, training, uniform, script, or work location, the worker is a W-2 employee.
Misclassification is aggressively enforced in NYC and carries per-worker penalties.
Minimum Wage (NYS and NYC)
As of 2025:
- NYC, Long Island, and Westchester: $16.00 per hour
- Rest of New York State: $15.00 per hour
Cannabis retail is not a tipped occupation under New York law.
Budtenders may not be paid tip-credit wages.
Payroll Rules You Must Follow
Employers must:
- Pay employees weekly or biweekly
- Pay overtime at 1.5× for hours over 40 per week
- Provide a wage notice at hire
- Provide itemized pay stubs every pay period
- Track hours using a compliant timekeeping system
- Withhold and remit payroll taxes correctly
- Report new hires to NYS within 20 days
- Pay wages via check, direct deposit (with consent), or compliant payroll card
Cash payroll is illegal unless fully recorded, taxed, and reported.
Required New Hire Documents
Each employee file must include:
- NYS Wage Theft Prevention Act notice
- NYS New Hire Reporting form
- I-9 Employment Eligibility Verification
- W-4 (Federal)
- IT-2104 (NYS tax form)
- Direct deposit authorization (if applicable)
- Job description and at-will acknowledgment
- Sexual harassment training acknowledgment
- Employee handbook acknowledgment (recommended)
These documents must be on file and accessible on-site.
Workplace Postings (Required On-Site)
New York State Posters
- Minimum Wage
- Wage Theft Prevention Act
- Paid Sick Leave
- Human Rights Law
- Workers’ Compensation
- Disability Insurance
- Unemployment Insurance
- Smoke-Free Workplace
- Sexual Harassment Notice
New York City Posters
- Paid Safe and Sick Leave
- NYC Human Rights Law
- Workers’ Bill of Rights
- Temporary Schedule Change Rights
- Gender Identity and Expression Rights
Inspectors do check for required postings.
Scheduling, Breaks, and Overtime
Employers must:
- Provide a 30-minute uninterrupted meal break for shifts over 6 hours
- Pay short breaks if offered
- Pay overtime above 40 hours per week
- Track hours accurately
- Allow NYC employees to refuse shifts that violate scheduling laws
Retail cannabis businesses are not exempt from labor laws.
NYC-Specific Labor Rules
Paid Safe and Sick Leave
- Accrual: 1 hour per 30 hours worked
- Up to 40 hours per year (fewer than 100 employees)
- Up to 56 hours per year (100 or more employees)
- Must be paid
- Doctor’s notes may not be required unless absence exceeds 3 days
Temporary Schedule Change Rights
- Employees may request two schedule changes per year
- Employers must grant or offer a reasonable alternative
Freelance Isn’t Free Act
If hiring freelancers, written contracts and timely payment are required.
Salary Transparency Law
All job postings must include salary ranges.
Harassment, Discrimination, and Required Training
New York State requires annual sexual harassment training for all employees.
New York City adds:
- Expanded training content
- Written anti-harassment policy
- Distribution of training notices
- Signed acknowledgment forms
Employers must protect workers from discrimination based on protected characteristics, including gender identity, conviction history, and immigration status.
Employee Files You Must Maintain
Each personnel file must include:
- Onboarding documents
- Timecards and schedules
- Payroll records
- Training certificates
- Performance and disciplinary records
- Policy acknowledgments
- I-9s and tax forms
Retention requirement: minimum 6 years.
Files must be available to OCM, NYS DOL, or NYC inspectors upon request.
Termination Rules and Final Paychecks
When terminating an employee:
- Final wages are due on the next regular payday
- PTO payout follows written policy
- Pay schedule changes require written notice
- Termination must be documented
Employers may not withhold wages, uniforms, or deposits.
Retaliation for exercising legal rights is prohibited.
Common Violations
Retailers are frequently cited for:
- Misclassifying workers as 1099
- Missing wage notices or new hire forms
- Failing to post required labor notices
- Ignoring sick leave accrual
- Skipping meal breaks
- Unpaid overtime
- Missing harassment training records
- Incomplete or incorrect pay stubs
- Missing I-9 documentation
- Retaliatory termination
These violations often trigger DOL investigations and OCM scrutiny.
Why This Matters
Labor violations can result in:
- Civil penalties and fines
- Lawsuits
- NYS or NYC labor investigations
- OCM compliance flags
- Delays or denials for new licenses or renewals
Operators with unresolved labor issues are among the slowest to open and the hardest to renew.
Related Pages
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