New York Legislature Passes "No Severance Ultimatums Act"

New York employers should prepare for another potential change to employee separation practices. The New York Legislature has passed Senate Bill S372A, titled the "No Severance Ultimatums Act," which would amend the New York Labor Law to require employers to provide employees and former employees with specific notice, review, and revocation rights when offering severance agreements. The bill, which has an "immediate" effective date, passed the State Senate and Assembly and could be soon signed by the Governor.

The stated purpose of the bill is to ensure that New Yorkers receive protections when reviewing severance agreements, including sufficient time to consider the agreement before signing.

The Specifics

Covered Agreements

The bill would add a new Section 215-d to the New York Labor Law prohibiting "coercive severance ultimatums." It defines severance agreements as any agreement offered by an employer to an employee upon separation from employment, related to that separation, that requires the employee to release waivable claims against the employer.

Required Notice, Consideration Period, and Revocation Period

Under the bill, any employer offering an employee or former employee a severance agreement must notify the individual that:

• they have the right to consult an attorney before signing;
• they have at least 21 calendar days to review the agreement;
• they can revoke the agreement within seven calendar days after signing; and
• the agreement will not take effect until the seven-day revocation window closes without revocation.

The bill provides that any severance agreement that violates the notice, consideration-period, or revocation-period requirements will be deemed void and unenforceable.

Importantly, the bill does not appear to require employees to wait the full 21 days before signing. Employees may sign before the end of the consideration period, provided that the decision to shorten the review period is knowing and voluntary and is not induced by the employer through conduct like fraud or misrepresentation, or by incentivizing the employee to sign before the review period expires.

Accordingly, the proposed new law would create substantially similar provisions to the well‑known requirements to obtain a release of federal age discrimination claims under the Age Discrimination in Employment Act.

Intersection With New York General Obligations Law Section 5-336

Employers are likely familiar with New York General Obligations Law Section 5-336, which focuses primarily on nondisclosure, confidentiality, and non-disparagement provisions in agreements resolving discrimination, harassment, or retaliation claims. Unlike S372A, Section 5‑336 generally restricts employers from including confidentiality terms concerning the factual foundation of such claims unless confidentiality is the complainant's preference, and requires a written agreement and plain-language disclosure. However, like S372A, it also requires a 21-day consideration period and a 7-day revocation period to successfully effectuate the release.

By contrast, the new law would apply more broadly to severance agreements offered at separation that require employees to release any waivable claims against the employer, not just those related to harassment, discrimination, or retaliation. Thus, the new law would impose baseline restrictions for all covered severance agreements generally.

Collective Bargaining Agreement Exception

The bill also includes a waiver provision for severance agreements negotiated pursuant to a collective bargaining agreement, provided that the agreement specifically acknowledges the provisions of the new Section 215-d.

Practical Guidance

If enacted, the No Severance Ultimatums Act would require employers to revisit their separation templates and procedures. Employers should consider taking the following steps:

• Update severance templates and coordinate with existing federal and state-law templates, particularly agreements already using 21-day and seven-day periods in connection with age-discrimination releases or other statutory claims. Be sure to include notice of the employee's right to consult with an attorney, the 21-day consideration period, and the seven-day revocation period in the standard agreement.
• Review internal separation protocols to ensure employees and former employees are not pressured to sign before the expiration of the consideration period.
• Train HR and managers not to suggest that severance terms will be withdrawn, reduced, or altered if the employee uses the full review period.
• Assess unionized-workforce procedures to determine whether severance agreements negotiated pursuant to collective bargaining agreements should include an express acknowledgment of Section 215-d.

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Godfre Blackman is an associate and Roy Salins is a partner, both located in DWT's New York office. For any questions or more insights, please contact the authors or another member of our employment services team and sign up for our alerts.