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Severance

Severance Agreements in New York: What You Are Signing Away

Most severance agreements require you to waive your legal claims. Before you sign, understand what you are giving up — and whether the severance offered is fair compensation for those claims.

6 min read
·Written by Sean O'Hara, Employment Attorney

What Is a Severance Agreement?

A severance agreement is a contract between you and your employer in which you agree to release legal claims in exchange for severance pay or other benefits. Employers are not required to offer severance — when they do, it is almost always in exchange for a release of claims.

The release typically covers all claims arising out of your employment, including discrimination, harassment, retaliation, wage theft, and breach of contract claims. Once you sign and the revocation period expires, you generally cannot pursue those claims in court or before an agency.

The Consideration Period and Revocation Right

If you are 40 or older, the Older Workers Benefit Protection Act (OWBPA) requires your employer to give you at least 21 days to consider a severance agreement that includes a waiver of age discrimination claims (45 days if the termination is part of a group layoff). You also have 7 days after signing to revoke the agreement.

For employees under 40, New York law requires a reasonable period to consider the agreement. Courts have found that agreements signed under pressure or without adequate time to review may be unenforceable.

What to Look for Before Signing

Before signing a severance agreement, consider: Is the severance amount fair compensation for the claims you are releasing? Does the agreement include a non-disparagement clause that restricts what you can say about your employer? Does it include a non-compete or non-solicitation clause that restricts your future employment? Does it require you to cooperate in future litigation?

New York law limits the enforceability of non-compete agreements — they must be reasonable in scope, duration, and geographic area, and must protect a legitimate business interest. An overly broad non-compete may be unenforceable even if you sign it.

Why You Should Consult an Attorney Before Signing

The value of a severance agreement depends entirely on the strength of the claims you are releasing. An employment attorney can evaluate your potential claims, assess whether the severance offered is fair compensation for those claims, and negotiate for better terms.

Many employment attorneys offer free consultations and work on contingency for discrimination and retaliation claims — meaning you pay nothing unless you recover. The cost of a consultation is almost always worth it before you sign away your legal rights.

Disclaimer: This guide is for general informational purposes only and does not constitute legal advice. Reading this material does not create an attorney-client relationship. Laws change; consult an attorney about your specific situation.

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