The New York State Legislature has passed the No Severance Ultimatums Act (S372A/A6480A)(the “Proposed Act”), which, once signed by Governor Hochul, would establish notice requirements and minimum review and revocation periods for certain employment severance agreements. If enacted, the Proposed Act would add Section 215-d to the New York Labor Law and take effect immediately. Below is a summary of the proposed requirements.
Who is an “employer” under the Proposed Act?
The Proposed Act would adopt the definition of “employer” in New York Labor Law §190, which “includes any person, corporation, limited liability company, or association employing any individual in any occupation, industry, trade, business or service.” Deviating slightly from the definition in Labor Law §190, the Proposed Act would also expressly include governmental agencies in the definition of employer.
Who is an “employee” under the Proposed Act?
The Proposed Act would adopt the definition of “employee” in New York Labor Law §190, which “means any person employed for hire by an employer in any employment”. This definition would apply to employees and former employees offered covered severance agreements, regardless of age.
What is a “severance agreement” under the Proposed Act?
Under the Proposed Act, a “severance agreement” would “mean an agreement offered by an employer to an employee upon separation from employment and related to such separation that requires such employee to release waivable claims against their employer”.
What would an employer be required to do upon offering a severance agreement under the Proposed Act?
An employer would be required to notify the employee that such employee: (i) has the right to consult an attorney regarding the severance agreement; (ii) has at least 21 calendar days to consider the severance agreement; (iii) may revoke the agreement within seven calendar days after signing (meaning such agreement will not become effective or enforceable until that seven-day period expires); and (iv) may voluntarily sign before the consideration period ends, provided that the employee’s decision to shorten the consideration period is made knowingly, voluntarily and without the employer’s inducing such employee to sign earlier.
When can an employee sign before the 21-day consideration period expires?
An employee would be able to sign prior to the expiration of the 21-day consideration period when the decision is made knowingly and voluntarily. The employer could not induce early signing through fraud, misrepresentation, threats, or offers of different terms based on whether the employee signs early. For example, an employer could not offer an increased severance payment amount in exchange for an employee’s signature prior to the expiration of the consideration period.
Can the seven-day revocation period be shortened under the Proposed Act?
The Proposed Act would not permit the seven-calendar-day revocation period after an employee signs to be shortened. An executed severance agreement would not become effective or enforceable until the seven-day period expires, even if the employee signs before the 21-day consideration period ends.
Would the Proposed Act apply to severance agreements negotiated under a collective bargaining agreement?
The Proposed Act would permit a collective bargaining agreement to waive these requirements, if such collective bargaining agreement specifically acknowledges the Proposed Act’s provisions.
What would happen if an employer failed to comply with the Proposed Act?
A severance agreement that violates the Proposed Act’s notice, consideration, or revocation requirements would be void and unenforceable. An employer could therefore lose the ability to enforce the release of claims for which it negotiated within the severance agreement.
Would the Proposed Act replace existing protections under other laws?
No. The Proposed Act would preserve greater protections available under other laws, rules, or regulations. For example, the federal Older Workers Benefit Protection Act generally requires a 45-day consideration period for waivers of age discrimination claims by employees age 40 or older in connection with covered group terminations or exit incentives programs. Employers would still need to comply with that longer consideration period when applicable.
When would the Proposed Act become effective?
The bill provides that the Proposed Act would take effect immediately upon becoming law. Currently, the Proposed Act has passed both houses of the New York State Legislature, but has not yet been delivered to the Governor for execution.
What next steps should an employer take?
Employers with employees in New York should review their standard severance agreements and separation procedures in anticipation of possible enactment of the Proposed Act. Employers should prepare to include the required notices, allow sufficient time for review and revocation, and instruct personnel handling separations on the restrictions against inducing early signing. Employers should also monitor the bill’s status so that any necessary changes be implemented promptly if it becomes law.
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For further information or guidance on revising your offer letters, employment contracts, employment severance agreements, policies and procedures, please contact David Paseltiner or Rose Egan. For guidance on any labor or employment related litigation, please contact our Labor and Employment Practice Group.












