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On June 1, 2026, both chambers of the New York Legislature passed the No Severance Ultimatums Act (the Act) (S372A), which would add a new Section 215-d to the New York Labor Law to provide employees with expanded rights and protections with respect to severance agreements that include a release of claims against their employer. Although the bill has yet to be sent to the governor’s office, the law will take effect immediately if signed.
If enacted, the Act would impose the following conditions on employers that offer severance to departing New York-based employees, including former employees, in exchange for a release of claims:
- Employees must be notified of their right to consult an attorney regarding the severance agreement.
- Employees must be provided with at least 21 calendar days to consider the agreement.
- Employees may revoke the agreement within seven calendar days following the execution of the agreement, meaning the agreement will not become effective or enforceable until the expiration of such revocation period.
Agreements that fail to comply with the above-listed conditions will be deemed void and unenforceable.
Under the Act, employees may elect to sign the severance agreement prior to the expiration of the consideration period provided the decision is knowing, voluntary, and not induced by the employer through any of the following:
- Fraud
- Misrepresentation
- A threat to withdraw or alter the severance offered under the agreement prior to the expiration of the consideration period
- An offer of different terms under the agreement if the employee signs prior to the expiration of the consideration period
Notwithstanding the above, unionized employees may be exempt from these conditions provided the severance agreement (i) specifically acknowledges the provisions of the Act and (ii) is negotiated pursuant to a collective bargaining agreement.
If enacted, the Act will go into effect immediately. While employers would need to revise their severance agreement templates accordingly, compliance with such conditions should be fairly straightforward, as the obligation to provide employees with a 21-day review period in a severance agreement with a release of claims, coupled with a seven-day revocation period following such acceptance, already exists under certain federal and New York state statutes. For example, employers that offer severance to departing employees aged 40 or older in exchange for a release of claims arising under the Age Discrimination in Employment Act will be familiar with the guardrails proposed under the Act. Similarly, Section 5-336 of the N.Y. General Obligations Law already imposes notice, consideration, and revocation requirements (among other requirements) with respect to agreements entered in the context of resolving employee allegations of discrimination, harassment, and retaliation that include nondisclosure provisions.
We will continue to monitor the bill’s progress through the New York Legislature and track any further amendments prior to enactment.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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