The New York State Legislature recently passed the No Severance Ultimatums Act, Senate Bill S372/Assembly Bill A6480A. If enacted, the Act would amend the New York Labor Law to add § 215-d and impose new minimum requirements on severance agreements used by employers in New York.
The Act would apply to all employers, including governmental agencies, that seek a release of waivable claims as part of a “severance agreement,” defined as an “an agreement offered by an employer to an employee upon separation of employment,” and require employers to provide:
- a statement advising that the employee has the right to consult with an attorney regarding the agreement;
- a consideration period of not less than 21 calendar days within which to review such agreement; and
- a seven-calendar day non-waivable revocation period within which to revoke such agreement.
Severance agreements that violate the Act are void and unenforceable.
21-Day Consideration Period is Waivable, but 7-Day Revocation is Not
Under the Act, an employee may sign the severance agreement before the expiration of the 21-day review period, provided the employee’s decision to do so is ”knowing” and “voluntary.” Further, the employer may not induce the employee to sign prior to the expiration of the consideration period through fraud, misrepresentation, a threat to withdraw or alter the consideration period before it expires, or an offer of different terms if the employee signs earlier.
Conversely, the seven-calendar-day revocation period is non-waivable.
CBA Waiver
The Act may be waived in any severance agreement that specifically acknowledges the provisions of new § 215-d and is negotiated pursuant to a collective bargaining agreement. The Act is intended to be a floor and not a ceiling, and it does not limit or impair any law, rule, or regulation providing greater rights.
The Act Expands Similar ADEA Protections
The Act is modeled after the federal Older Workers Benefit Protection Act (“OWBPA”), an amendment to the Age Discrimination in Employment Act (“ADEA”), which prohibits age-based discrimination against employees age 40 and older. Since 1990, US employers with 20 or more employees have had to include similar provisions in order to secure releases of ADEA claims with additional disclosure requirements and a longer review period in a group termination context. Although the Act does not address group terminations, if enacted, the Act’s protections would apply to all New York employers and employees, regardless of employer size or employee age. The Act also is not limited to the waiver of age discrimination claims.
Next Steps
Governor Hochul has yet to take a public position on the Act. Bills that pass both the Senate and Assembly typically are transmitted to the governor in batches, often near calendar year-end. Nevertheless, given that the Act would become effective immediately if it becomes law, New York employers should review their existing separation agreement templates now and be prepared to use updated versions that comply with the Act.
