New York Legislation Update: Severance Agreements
Employers who have employees in New York should take note of this new legislative action: on June 1, 2026, the New York State Legislature passed the No Severance Ultimatums Act (the “Act”), a bill preventing employers from giving coercive ultimatums to employees in severance agreements. Governor Kathy Hocul has not yet signed the bill, but if she does, it will likely take effect immediately.
The Act would provide departing employees with these new protections:
At least 21 days to consider the severance agreement before signing;
The right to review the agreement with an attorney;
7 days to revoke the agreement after signing, after which the agreement becomes enforceable (if not revoked);
The right to sign an agreement before the end of the 21-day consideration period if they choose, if they do so knowingly and voluntarily. Employers cannot induce employees to shorten the consideration period through fraud, misrepresentation, or threats to alter or withdraw the consideration period, or by providing different terms if the employee signs early.
If any of these provisions are violated, then the severance agreement is void and unenforceable.
The Act also contains an exception for severance agreements that: (1) specifically acknowledge the Act’s provisions; and (2) were negotiated pursuant to a collective bargaining agreement.
Current Federal and State Law
The Act aims to close a perceived policy gap left by the Older Workers Benefit Protection Act (OWBPA), a federal law that currently provides a 21-day attorney review period and seven-day revocation period to employees aged 40 or older. Neither New York law nor federal law currently offers these protections to younger workers. New York already provides a 21-day review period and seven-day revocation period for severance agreements resolving discrimination, harassment, and retaliation claims. The Act would apply to all New York-based employees, regardless of age and the claims involved.
If the bill passes, New York will join a growing number of states passing similar legislation. In 2020, Illinois passed a law providing for similar revocation and consideration periods, but only for severance agreements with confidentiality provisions concerning alleged unlawful employment practices. In 2022, California passed a law giving employees at least five business days to review severance agreements with attorneys, as well as preventing employers from prohibiting employees from disclosing alleged unlawful employment practices, with a few exceptions.
Employer Takeaways
The No Severance Ultimatums Act is not yet the law. However, employers with New York-based employees should prepare to comply with the Act once it is signed by the governor. The Act will take effect immediately once signed, and does not provide a grace period.
Employers should review existing separation agreements and templates for provisions that would be problematic under the Act. These agreements should contain the protections provided by the Act, including the 21-day attorney review period and 7-day revocation period. Because the Act does not address severance agreements already sent but not yet signed, or agreements signed before the Act takes effect but still within a revocation period, employers should consider revising and reissuing these agreements, to ensure compliance.
Even when dealing with collective bargaining agreements, employers should still review these agreements to make sure they specifically acknowledge the Act’s provisions, or risk that the agreement may be unenforceable.
Employers should review their organization’s separation procedures so that employees are not forced to sign these agreements before the end of the consideration period.
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