The unthinkable just happened, you’ve been fired. Countless thoughts race through your head – What do I do now? How long will it take to find a new job? How will I pay this month’s bills? Navigating an unexpected job separation is stressful. Then, your employer offers you an olive branch: a severance agreement. Suddenly, the pressure of immediately finding a job or paying that mortgage payment is lessened. But, there’s a catch! You have only two days to consider the agreement. If you don’t sign, you lose the severance payment and walk away with nothing.
Is two days enough time to consult a lawyer? Is it enough time to understand what rights you may be waiving in exchange for the severance payment?
Such scenarios may soon look drastically different. With the recent passage of Senate Bill S372A, the No Severance Ultimatums Act, all recently terminated employees are on the verge of receiving protections against such seemingly coercive severance ultimatums.
Typically, under the Older Workers Benefit Protection Act (OWBPA), the 21-day review period and 7-day revocation period were reserved for workers aged 40 and older. The No Severance Ultimatums Act expands these protections to all employees, regardless of age and encompasses all waivable claims, not just age discrimination.
Under the No Severance Ultimatums Act, which amends the New York Labor Law to add a new section 215-d, any employer offering an employee or former employee a severance agreement must notify the employee that: (1) the employee has the right to consult an attorney; (2) the employee has a period of at least 21 calendar days to consider the agreement; (3) the employee may revoke the agreement within 7 calendar days from signing the agreement; and (4) the employee may sign the agreement prior to the end of the 21 day consideration period as long as such decision is knowing, voluntary, and not induced by the employer through fraud, misrepresentation, threat to withdraw the agreement or alter such consideration period, or by providing different terms to the employee if the employee signs the agreement prior to the end of the consideration period (i.e., higher severance payment for signing earlier).
If a severance agreement does not contain such notices, the agreement is void and unenforceable. If the agreement is void and unenforceable, the employer may lose certain protections provided under the agreement including, but not limited to, a release of claims or confidentiality.
S372A passed the New York State Legislature and is awaiting delivery to Governor Kathy Hochul for execution. If signed by Governor Hochul, it will take effect immediately.
For employees, you should monitor the status of the law and know your rights if you receive a separation agreement.
For employers, to avoid having separation agreements declared void and unenforceable, you should consider updating your severance agreement templates accordingly.