The New York Legislature has passed a bill that would impose significant new requirements on employers offering severance agreements to workers in the state.
The legislation, informally known as the No Severance Ultimatums Act, now sits with Governor Kathy Hochul, who must decide whether to sign it into law.
The Act introduces a new Section 215-d to the New York Labor Law, explicitly prohibiting what it describes as “coercive severance ultimatums” by employers.
Under the bill, any employer offering a severance agreement upon separation of employment must notify workers of their right to consult an attorney before signing.
Employees must also be given at least 21 calendar days to consider any agreement and a further seven calendar days after signing during which they may revoke it.
Critically, a severance agreement would not become effective or enforceable until after the seven-day revocation period has fully expired without challenge.
Employers may recognise similar provisions from the federal Older Workers Benefit Protection Act, which applies comparable rules to employees aged 40 or older.
The No Severance Ultimatums Act would extend these protections to most employees covered under New York Labor Law, regardless of their age.
Any severance agreement that fails to comply with the Act’s requirements would be rendered void and unenforceable, including the employee’s release of claims against the employer.
This creates a serious practical risk for businesses, as an employer could pay severance only to find the legal release obtained in return has no binding effect whatsoever.
The Act notably includes governmental agencies within its definition of “employer,” broadening its reach beyond the private sector in a significant departure from typical employment legislation.
A limited exception exists for severance agreements negotiated under a collective bargaining agreement, provided that agreement specifically acknowledges the provisions of Section 215-d.
Should the Governor sign the bill, the Act would take effect immediately, with no grace period provided for employers to adjust their existing practices or documentation.
Questions remain about agreements already in progress at the time of enactment, including whether agreements delivered but not yet signed would need to be reissued in a compliant form.
Employers with New York operations are advised to review and revise existing severance agreement templates now, incorporating the attorney-consultation notice and the required review and revocation windows.
Internal communications should also be audited to ensure HR personnel and managers are not inadvertently pressuring employees to sign agreements before the full consideration period has elapsed.
Businesses should further inventory any anticipated New York separations in the near term and establish protocols for handling agreements at various stages if the Act is signed.