New York employers may soon be required to follow strict new procedural rules when offering separation agreements to departing employees.
A bill passed by the New York State Legislature and awaiting delivery to Governor Kathy Hochul would mandate a minimum 21-day review period and a 7-day revocation period for any covered severance agreement.
Known as S372A, the “No Severance Ultimatums Act” would apply to any agreement offered at separation that requires an employee to release waivable claims against their employer.
Under the bill, employers must notify employees that they have the right to consult an attorney before signing any such agreement and that the agreement will not take effect until the revocation period has expired.
Employees would be permitted to sign before the 21-day window closes, but that decision must be entirely voluntary and free from any pressure or inducement by the employer.
The bill explicitly prohibits employers from inducing early signatures through fraud, misrepresentation, threats, or by offering more favourable terms in exchange for faster sign-off.
The proposed law would effectively extend protections similar to those currently available under the federal Older Workers Benefit Protection Act to all employees, regardless of their age.
Under existing New York law, the 21-day review and 7-day revocation requirements only apply in limited circumstances, such as when employees aged 40 or over are releasing federal age discrimination claims.
The new legislation goes considerably further, applying baseline procedural protections to all covered severance agreements that require employees to release any waivable claims, not only those tied to discrimination or harassment.
Any severance agreement that fails to meet the new requirements would be rendered void and unenforceable in its entirety, including the employee’s release of claims, which is typically the primary benefit employers seek.
The bill also creates a pathway for employees to challenge even technically compliant agreements if they can demonstrate the employer used fraud, misrepresentations, or threats to undermine the Act’s protections.
A waiver provision is included for severance agreements negotiated under a collective bargaining agreement, provided that agreement specifically acknowledges the new Section 215-d of the New York Labor Law.
The bill carries an “immediate” effective date, meaning employers would have very little time to adjust their practices after any signature from Governor Hochul.
Employers across New York are advised to monitor legislative developments closely and have updated separation agreement templates ready to deploy should the bill be signed into law.