New York Assembly Considering Bill To Create Consideration and Revocation Periods for All Severance Agreements

New York employers should be aware of the potential need for changes to their separation agreements that would require consideration and revocation periods for all employees, regardless of age. The New York State Senate passed the No Severance Ultimatums Act (the "Act") on March 4, 2025. If enacted, the Act would amend New York Labor Law to prohibit "coercive ultimatums" in employment severance agreements and would require employers to give all New York employees time to review and revoke severance agreements.

Under current law, New York employers are already required to provide a 21-day review period and seven-day revocation period if:

• the employee is 40 or older and the waiver and release includes federal age discrimination claims; and/or
• the separation agreement with an employee or independent contractor resolves claims of discrimination, harassment, or retaliation and the employer wishes to include a nondisclosure provision regarding the factual foundation of the claims.

The Act would expand these requirements to all separation agreements. Although employees would have the option of waiving the 21-day review period if they choose to sign the severance agreement before it expires, the seven-day revocation period cannot be waived. Additionally, the Act would require employers to inform employees that they have a right to consult with an attorney before signing the agreement.

Importantly, the Act's review period requirement is 21 business days, which is longer than both the federal age discrimination review period and the state review period for nondisclosure provisions, both of which are 21 calendar days. It is unclear whether this was an intentional expansion or a drafting error which may be corrected before enactment.

Key Takeaways

The Act, which was introduced in January, is now in the Assembly. If the Act becomes law, it would become effective immediately, and severance agreements that do not comply with the Act will be deemed void and unenforceable. 

New York employers should be aware of the potential need to revise their standard severance agreement templates to incorporate the new review and revocation periods and to include language notifying employees of their right to consult with legal counsel. We will continue to track this bill and to report developments.

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If you have any questions about your company's compliance with the new requirements, please contact DWT's employment services attorneys, who are available to advise and assist.