The New York State Senate passed the “No Severance Ultimatums Act” (“the Act”), which, if enacted, “prevents employers from giving coercive ultimatums to employees or former employees relating to such employee's severance from employment.”
Under the proposed law, employers must:
- Notify employees of their right to consult an attorney about the severance agreement;
- Provide employees with a “consideration period” to review the agreement, not less than 21 calendar days; and
- Provide a seven-day revocation period following execution of the agreement, which would become effective only after the revocation period has expired.
Employees may waive the 21-day review period so long as their consent is knowing, voluntary, and not induced by fraud, misrepresentation, or threats by their employer to withdraw or alter the agreement’s terms. The Act does not apply to severance agreements negotiated pursuant to collective bargaining agreements.
The changes proposed by the Act are quite progressive. The legislation aims to fill gaps in the federal Older Workers Benefit Protection Act (OWBPA), which protects employees who are age 40 or older. However, there are several key differences. First, the OWBPA applies to employers with 20 or more employees, while the Act imposes no restrictions on employer size. Second, the Act protects all employees, regardless of age. The bill initially required employers to provide employees 21 business days to review the agreement. However, the bill was later amended to require 21 calendar days, aligning with the OWBPA’s review period.
At this time, New York law only requires employers to provide the aforementioned review and revocation period when entering into an agreement with nondisclosure provisions to settle claims of discrimination, harassment, or retaliation. (Employers should note that confidentiality must be the preference of the complainant and the agreement must contain terms to that effect).
The Bottom Line
The Bill is pending review by the New York Assembly and is expected to be signed into law by Governor Hochul. Because the Act will take effect immediately upon its enactment, employers are encouraged to review their separation policies and severance agreements for ease of revisions. We will monitor the legislation for any updates.
