New York Proposes New Protections for Employees Offered Severance Agreements

The New York State Legislature has passed the No Severance Ultimatums Act, landmark employment legislation that, if signed into law by Governor Kathy Hochul, will substantially reform the drafting, negotiation, and execution of workplace separation and severance agreements statewide.

The bill creates statutory notice, consideration, and revocation rights for departing workers presented with severance agreements that contain releases of claims. Modeled in part after the federal Older Workers Benefit Protection Act (OWBPA), the Act mandates a minimum 21-day consideration window, a seven-day post-execution revocation period, and an express written advisement of the right to consult legal counsel.

Crucially, the legislation applies across the workforce—regardless of age—and covers general waivers of legal claims, extending far beyond the harassment, discrimination, and retaliation carve-outs established under New York’s earlier Section 5-336 reforms. Any severance agreement executed in violation of these procedural mandates is rendered void and unenforceable as against public policy.

The Legislative Measure: Key Provisions

Historically, New York employers offering standard severance packages to workers under age 40 were under no statutory obligation to provide consideration windows or revocation periods, unless the agreement involved non-disclosure provisions tied to claims of discrimination, harassment, or retaliation under New York General Obligations Law (GOL) § 5-336 and CPLR § 5003-b.

The No Severance Ultimatums Act harmonizes and broadens this framework across all covered employment separations:

1. Mandatory 21-Day Consideration Period

Employers must provide departing personnel with at least 21 calendar days to review and evaluate the severance agreement. While employees may voluntarily elect to sign prior to the expiration of the 21 days—provided the choice is demonstrably knowing and voluntary—employers are strictly prohibited from exerting coercion, offering financial incentives for early execution, or threatening the revocation of severance terms before the window lapses.

2. Mandatory Seven-Day Revocation Period

Following execution by the employee, the agreement cannot become effective or enforceable until a seven-day revocation period has elapsed. The employee retains the unilateral statutory right to revoke the agreement during this period, and any severance payout must remain conditioned on the expiration of the revocation window without withdrawal.

3. Written Notice of Right to Legal Counsel

Agreements must include clear, conspicuous written language advising the employee of their statutory right to consult with an independent attorney prior to executing the agreement.

4. Severe Statutory Sanction: Complete Invalidation

Unlike technical disclosure defects under some regulatory regimes, non-compliance under the Act carries severe contractual consequences: non-conforming agreements are deemed void and unenforceable. If an employer fails to provide the required notice, review period, or revocation term, the underlying general release is invalidated, leaving the enterprise exposed to downstream litigation while having potentially already disbursed separation consideration.

Expanding Beyond Existing New York Precedent

The Act marks an important shift in New York employment practice, expanding procedural requirements that previously applied only to specialized claims:

Tactical Separation Risks: The Ban on "Exploding Offers"

The legislative intent behind the measure is to eradicate "exploding offers"—the practice of conditioning severance payouts on immediate, same-day, or 48-hour turnarounds. In-house counsel and human resources teams must prepare for immediate operational changes:

• Separation Meeting Conduct: Presenting separation agreements during termination meetings with verbal pressure to execute before departure will serve as prime evidence of statutory invalidity.

• Revocation Operational Bottlenecks: Payroll and HR operations must avoid processing severance disbursements upon contract receipt. Automatic payroll releases prior to Day 8 post-signing will constitute administrative non-compliance.

• Group Redundancy Alignment: For enterprise reductions in force (RIFs), employers must reconcile New York's 21-day standard with the federal 45-day review period mandated under the OWBPA for group layoffs affecting individuals aged 40 and above.

Strategic Considerations for Employers and In-House Counsel

Pending gubernatorial signature, corporate legal departments and HR leaders with New York personnel should take the following preemptive measures:

1. Conduct a Form Agreement Audit: Review standard separation, release, and settlement agreement templates. Integrate mandatory language advising consultation with legal counsel and establish explicit 21-day review and 7-day revocation clauses across all template tiers.

2. Train Frontline HR and People Managers: Issue strict guidance to HR business partners and departing managers prohibiting any verbal or written communication that implies an offer will expire before the 21-day threshold.

3. Restructure Payroll and Benefit Triggers: Recalibrate automated HRIS workflows to ensure severance pay, COBRA subsidies, and equity acceleration mechanisms only disburse after the statutory 7-day revocation period has fully closed without notice of withdrawal.

4. Reconcile Multi-State Separation Protocols: Multinationals utilizing universal multistate separation agreements must append New York-specific addenda to prevent broad releases from being invalidated under New York’s strict public policy rule.