Key Highlights<\/p>\n
New York\u2019s \u201cNo Severance Ultimatums Act\u201d imposes new procedural requirements for separation agreements with all employees, expanding protections beyond those required under federal law.
\nNoncompliant separation agreements will be void and unenforceable, potentially leaving employers without an effective release of claims even after paying severance.
\nEmployers should update New York separation agreement templates now to comply with the Act\u2019s new timing and notice requirements before it takes effect.<\/p>\n
New York\u2019s legislature recently passed the \u201cNo Severance Ultimatums Act\u201d which imposes new procedural requirements on employers who offer separation agreements to departing employees.\u00a0 This Act, which we expect will be signed by Governor Hochul, requires immediate action from employers because it will render non-compliant separation agreements void and unenforceable.<\/p>\n
What the Act Requires Employers to Do<\/p>\n
The new Act requires that employers provide all employees with a 21-day period to consider the terms of a severance or separation agreement upon the termination of employment, and then a 7-day period to revoke their acceptance after signing the agreement.\u00a0 The Act also requires employers to provide notice to employees of certain rights, and prohibits fraudulent, misrepresenting or threatening actions by the employer to undermine the Act\u2019s protections.\u00a0<\/p>\n
How the New Law Differs From the OWBPA<\/p>\n
Many of these requirements are already in place in similar form with respect to agreements offered to employees who are over 40 years old under the federal Older Workers Benefit Protection Act (OWBPA).\u00a0 However, the New York law applies to all employees regardless of age and carries stricter consequences for non-compliance.<\/p>\n
Non-Compliance Can Void Separation Agreements<\/p>\n
The penalties for non-compliance with the new Act\u2019s requirements are steep.\u00a0 Agreements that do not include the required consideration and revocation periods and notices will be \u201cvoid and unenforceable.\u201d\u00a0 This means that the employer will not get the benefit of the agreement\u2019s release of claims even if the severance amount is paid to the employee.\u00a0 The Act also provides a basis for employees to seek to invalidate even compliant agreements by claiming that the employer engaged in fraud, misrepresentations or threats to undermine the Act\u2019s protections.<\/p>\n
Immediate Steps Employers Should Take<\/p>\n