Before You Sign a Severance Agreement: What Wrongful Termination Lawyers in New York Tell Workers To Check First

A severance agreement is a sale. You are selling your right to sue, and the buyer wrote the contract. That framing is what wrongful termination lawyers in New York try to install before a client signs, because the review that matters is not whether the number looks fair in isolation but whether it is fair compared to what you are releasing. Someone with a documented retaliation claim and someone laid off in a routine reduction get the same paperwork, and only one of them is giving up something valuable.

Am I entitled to severance pay in New York?

No New York or federal law requires severance for a standard termination. The obligation has to come from somewhere specific: an employment contract, an offer letter, a written policy or handbook provision promising it, a collective bargaining agreement, or a formal severance plan governed by ERISA, which carries its own claims and appeal procedure. Separately, an employer covered by the state WARN Act that fails to give the required 90 days notice owes back pay and benefits for the notice period, and that liability is not severance even when it is folded into one document.

How long do I have to decide, and can I change my mind?

If you are 40 or older and the agreement releases age discrimination claims, federal law sets floors. The Older Workers Benefit Protection Act, 29 U.S.C. § 626(f), requires at least 21 days to consider an individual agreement and 45 days when the separation is part of a group program or exit incentive, plus a 7-day period after signing during which you may revoke. The revocation window cannot be shortened or waived. The release must also reference the Age Discrimination in Employment Act specifically, advise you in writing to consult an attorney, and, in group layoffs, disclose the job titles and ages of everyone selected and not selected from the decisional unit. That disclosure is often the most useful document you receive, since it shows who was cut.

Consideration periods are minimums, not fixed deadlines. Asking for an extension is routine and rarely costs anything.

What am I actually giving up when I sign the release?

Almost every legal claim you have against the employer as of the signing date, including wrongful termination, discrimination, harassment, retaliation, and unpaid wage claims, unless the agreement carves them out. Releases are drafted broadly on purpose. The consideration must be something you were not already owed, so accrued wages, earned commissions, or vacation payable under the employer’s own policy cannot serve as payment for your release. New York Labor Law § 198(1-a) allows liquidated damages of an additional 100 percent of unpaid wages, worth knowing before you trade a wage claim for money you were entitled to anyway.

Which rights cannot be signed away?

Some rights survive the broadest release ever drafted:

• Filing a charge with the Equal Employment Opportunity Commission or a state or city human rights agency, and cooperating in their investigations, though you can waive individual monetary recovery
• Unemployment insurance benefits, which are not the employer’s to bargain over
• Workers’ compensation claims, which require Workers’ Compensation Board approval through a Section 32 settlement
• Vested retirement and pension benefits
• The 7-day revocation right under the Older Workers Benefit Protection Act
• Claims that arise after you sign

Can the agreement stop me from discussing what happened?

Not the way it could a few years ago. General Obligations Law § 5-336 and CPLR 5003-b bar a nondisclosure provision covering the underlying facts of a discrimination, harassment, or retaliation claim unless confidentiality is the employee’s own preference, memorialized separately. Amendments effective November 17, 2023 went further and made a release unenforceable if it requires you to pay liquidated damages for breaching confidentiality, to forfeit any part of the consideration, or to state affirmatively that you were not subject to unlawful discrimination or retaliation. Those amendments also let you sign before the 21-day consideration period runs rather than waiting it out.

Two other developments matter. The federal Speak Out Act, effective December 7, 2022, makes pre-dispute nondisclosure and non-disparagement clauses unenforceable in sexual harassment and assault disputes. The National Labor Relations Board held in McLaren Macomb, 372 NLRB No. 58 (2023), that overly broad confidentiality and non-disparagement terms in severance agreements are unlawful as to non-supervisory employees.

Will accepting severance delay my unemployment benefits?

It can, and the trigger is the weekly amount and the payment date. Under New York Department of Labor rules, dismissal or severance pay reduces or blocks benefits when the weekly equivalent exceeds the state’s maximum weekly benefit rate and the first payment is made within 30 days of your last day of work. Payments beginning after that 30-day mark generally do not affect eligibility. Because the maximum weekly rate changes, confirm the current figure with the Department of Labor before agreeing to a payment schedule, since moving the start date is often easier to negotiate than raising the total.

What do wrongful termination lawyers in New York look for in a severance agreement?

The terms buried behind the payment figure. A first read focuses on the scope of the release and whether it reaches claims the employee does not yet know about. Next comes any new or expanded non-compete or non-solicit, since New York still has no statutory ban after Governor Hochul vetoed the 2023 bill and enforceability turns on common law reasonableness. An arbitration clause raises the question of whether the Ending Forced Arbitration of Sexual Assault and Sexual Harassment Act lets you opt out of it. After that: who pays for COBRA continuation and for how long, how the company will answer reference calls, and whether the payment is a lump sum or spread across months you might spend unemployed.

The offer on the table is a starting position, and its value depends entirely on the strength of what you would be releasing. Before the consideration period closes, have the agreement and the circumstances of your termination reviewed together by wrongful termination lawyers in New York at Mundaca Law.