The New York legislature may soon pass the “No Severance Ultimatums Act,” which would require all employment severance agreements except those negotiated through collective bargaining to include (1) a 21-business day review period; (2) a seven-day revocation period after the employee signs; and (3) notice advising the employee's right to seek counsel. Any non-compliant severance offer would be deemed null and void.
Some states and federal statutes require similar provisions in limited circumstances (e.g., federal law requires a revocability clause for employees who are 40 or older). Given recent trends, other states may follow New York to impose similar restrictions. Employers should regularly review their severance offer templates to ensure compliance with federal, state, and local law.
New York employers may soon face a significant overhaul in how they manage employee separations. In March, the New York State Senate passed the No Severance Ultimatums Act, S.B. 372, which would substantially alter severance agreement practices across the state. If enacted, the law would require employers to advise departing employees of their right to consult an attorney regarding any severance or separation agreement. It would also impose a mandatory 21-business day period to consider any severance or separation agreement, along with a seven-day revocation period for all terminated employees, regardless of age or position. This marks a considerable departure from current law. Presently, employers are only obligated to provide a consideration period in limited circumstances, such as for employees who are 40 or older as federal law requires, or when certain confidentiality provisions are included in the agreement.
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