Offering Severance in New York? A Bill Awaiting Hochul Adds a 21-Day Review, 7-Day Undo Window

New York lawmakers have passed a bill that would change how employers hand out severance agreements, and it takes effect the moment Governor Kathy Hochul signs it. If you ask a departing worker to release legal claims in exchange for severance, you would have to give that person at least 21 days to think it over and a 7-day window to change their mind. The Governor's signature is still pending, so now is the time to prepare.

What the No Severance Ultimatums Act Requires

The bill, S372A, is called the No Severance Ultimatums Act. It would amend the New York Labor Law to set minimum review protections for severance agreements. A covered agreement is one offered on separation that requires the employee to release waivable claims against the employer. Employers offering these agreements would have to tell the employee that they:

• May consult an attorney about the agreement.
• Have at least 21 calendar days to consider it.
• May revoke within 7 calendar days after signing, and the agreement is not effective or enforceable until that revocation period ends.
• May sign before the 21 days run out, but only if the decision is knowing, voluntary and not induced by fraud, misrepresentation, threats or an offer of different terms for signing early.

Where the Bill Stands Today

The Legislature has passed the bill. It is awaiting delivery to and action by Governor Hochul, and legal commentators expect a decision by year-end. If she signs it, it takes effect immediately. There would be no grace period to rewrite your forms, which is why preparing now matters.

Who Is Covered

The protections would apply to current and former employees offered a covered severance agreement, regardless of age. That is the big shift for small employers. Federal law already requires similar review and revocation periods under the Older Workers Benefit Protection Act (OWBPA), but only for employees 40 and older who release age discrimination claims. The New York bill is modeled on those OWBPA protections and extends comparable ones to everyone.

What Happens If You Get It Wrong

The bill does not set a dollar fine. Instead, the practical consequence is that a noncompliant agreement, including its release of claims, would be void and unenforceable. For a business, that is the real risk. You could pay severance and still have no protection from a later lawsuit, because the release you were counting on would not hold up. The bill also does not address whether severance already paid would have to be returned.

How It Fits With Federal Law

The bill does not replace stronger protections elsewhere. If a federal rule gives an employee more time, the longer period still applies. The standard example is OWBPA's 45-day consideration period for group termination programs, which still governs employees 40 and older. Agreements negotiated under a collective bargaining agreement are excepted if they specifically acknowledge the law's provisions.

Three Ways This Changes Your Process

1. Layoffs Get Slower

Many small employers present a severance offer on the day of a layoff and ask for a signature that afternoon. Under the bill, that approach would be risky. You would need to build in the 21-day consideration window and the 7-day revocation period, which means severance cannot be considered final for about four weeks.

2. You Cannot Reward Early Signing

Employees may sign early, but the decision must be knowing and voluntary, and you cannot offer different terms to induce a faster signature. A "sign today and get an extra week of pay" offer would be a problem.

3. Your Cash Flow Planning Changes

If you pay severance in a lump sum on signing, the revocation period means you should not release money until the agreement becomes effective. Talk to your attorney and your payroll provider about timing.

A Timeline Example

Imagine a New York shop with eight employees lays off a bookkeeper on a Monday and offers eight weeks of pay for a signed release. Under the bill, the written offer would need to tell her she may consult an attorney and has at least 21 calendar days to decide. If she signs on day 10, she would still have 7 calendar days to revoke, so the agreement would not be effective until day 17 at the earliest. If she waits the full 21 days and signs, the revocation window runs another week. In practical terms, the owner should expect the release to be final about four weeks after the offer. This example is illustrative only.

Common Questions

Does this apply to a small employer?

The summaries of the bill do not describe a size exemption. Assume it applies to any New York employer that offers a covered severance agreement.

What if I offer severance without asking for a release?

The bill covers agreements that require the employee to release waivable claims. Severance paid with no release is outside that definition, but talk to your attorney before changing how you structure payments.

Can I still negotiate the amount?

Nothing in the bill stops negotiation over the amount or terms. The restriction is on the procedural protections around the release and on offering different terms to induce early signing.

Why is the effective date a concern?

Because the law would take effect on signature, you cannot count on a transition period. A template that is ready in advance is the best protection.

A Preparation Checklist

• Find your current template. Look at every severance or separation agreement you use, including ones from a payroll or HR vendor.
• Add the required notices. Draft language telling employees they may consult an attorney, have 21 days to consider, and have 7 days to revoke.
• State when the agreement takes effect. Make clear it is not effective or enforceable until the revocation period ends.
• Train whoever delivers the news. Managers should not pressure anyone to sign quickly or hint at better terms for fast signatures.
• Watch for the signature. Because the law would apply immediately, ask your employment attorney to alert you when the Governor acts.
• Keep records. Document the date each offer was delivered and signed.

Should You Wait for the Signature?

Even if Governor Hochul has not acted, updating your template now costs little and protects you if the signature arrives the same week you let someone go. A 21-day, 7-day structure also fits within federal OWBPA standards, so it is unlikely to hurt you elsewhere. If you are restructuring your company at the same time, our guides on LLC formation and business insurance may help you think through related risks, including coverage for employment claims.

Why Employers Should Care About More Than the Law

A fair, unhurried severance process also tends to reduce disputes. Employees who have time to review an agreement and ask questions are less likely to feel pressured, and a clear paper trail of dates and notices helps if a claim is ever raised. Even before the Governor acts, treating departing workers with transparency is good practice.

The Bottom Line

The No Severance Ultimatums Act is not law yet, but it has cleared the Legislature and would take effect immediately on signature. If you employ people in New York and ever offer severance in exchange for a release, assume a 21-day review period and a 7-day revocation period are coming. Update your forms, slow down your process, and talk to an employment attorney. This article is general information, not legal advice.

Photo by Redd Francisco on Unsplash