New York is considering new legislation, known as the “No Severance Ultimatums Act” (New York Senate Bill S.372) (“Act”), which seeks to amend the New York Labor Law to prohibit coercive severance agreements. The bill was successfully passed in the Senate.
If enacted, the Act would introduce several important protections for employees:
- Right to Legal Consultation and Consideration Period: Employers offering a severance agreement would be required to inform employees of their right to consult an attorney. Employees must also be given at least 21 business days to consider the agreement.
- Right to Revocation: Employees would be informed of their ability to revoke the agreement within seven (7) days of signing. The agreement will not become enforceable until this revocation period expires.
- Voluntary Early Signing: Any early signing of a severance agreement must be voluntary. Employers would be prohibited from inducing early acceptance through fraud, misrepresentation, or threats.
- Enforceability: Any severance agreement found to be in violation of these rules would be rendered void and unenforceable.
- Enhanced Protections: The bill explicitly permits stronger protections under other existing laws or regulations.
Notably, the proposed law would not apply to severance agreements that have been negotiated under a collective bargaining agreement (CBA).
Next Steps for Employers
While the bill has passed the Senate, it still requires passage in the Assembly and the Governor’s signature to become law. If enacted, the law would take effect immediately.
In the interim, it is recommended that employers:
- Stay informed of legislative developments regarding the Act in the New York Assembly and the Governor’s office.
- Proactively review existing severance agreement templates and negotiation practices to assess potential alignment with the proposed requirements.
- Seek advice from legal counsel to understand the potential implications of this bill for their severance processes and to prepare for any necessary adjustments should it become law.
HR Works will continue to monitor this topic and provide updates as needed.
