If you’re a New York employee facing the end of your employment—whether voluntarily or not—you may be presented with a severance agreement. While these documents may appear standard or routine, the truth is they often contain critical clauses that can significantly impact your rights, financial security, and future career opportunities.
Understanding what you’re agreeing to is not just advisable—it’s essential. In this updated 2025 guide, we break down the 10 most important clauses commonly found in New York severance agreements. Whether you’re negotiating your exit, anticipating a termination, or reviewing an agreement you’ve already received, this breakdown will help you identify what each clause means, why it matters, and when to seek legal advice before signing.
At Levine & Blit, our seasoned employment attorneys have spent decades guiding high-level employees through complex severance negotiations. This guide reflects the latest legal trends and real-world considerations we see affecting New York professionals today.
👉Also Read: Essential Employee Rights and Concerns When Signing a Severance Agreement in New York
Overview of Severance Agreements in New York
While not mandated by law, severance agreements are commonly utilized by New York employers as part of the offboarding process when ending an employment relationship. These agreements serve multiple purposes: they offer financial support and transitional benefits to departing employees while also shielding employers from potential legal claims. Severance packages often include components such as lump-sum cash payments, continued health insurance coverage, and, in some cases, outplacement services designed to assist employees in securing new employment.
Eligibility for severance may arise from various sources, including individual employment contracts, internal company policies, or collective bargaining agreements. To fully understand one’s severance rights, employees should review their employer’s Summary Plan Description (SPD), which outlines the scope of available benefits under applicable benefit plans.
It is important to note that New York’s legal framework governing employment and severance agreements is continually evolving. Recent actions by the New York State Legislature, including amendments impacting severance practices and employee protections, underscore the importance of remaining up to date. In particular, employees should be aware of provisions under the New York State WARN Act, which may impose additional severance obligations on employers in the event of mass layoffs or business closures.
👉Also Read: Understanding the Impact of the No Severance Ultimatums Act on New York Severance Packages
Review Periods and Revocation Rights
In New York, employees are generally entitled to a minimum of 21 days to review a severance agreement before deciding whether to sign. This period provides sufficient time to thoroughly examine the terms and conditions and to seek legal counsel if desired.
For employees aged 40 or older, federal law—specifically the Older Workers Benefit Protection Act (OWBPA)—requires that the agreement provide at least 21 days for review. In cases involving group terminations or reductions in force, the review period extends to 45 days. Employers must also provide additional disclosures regarding the layoff, including job titles and ages of both affected and unaffected employees.
Importantly, once a severance agreement is signed, employees have a non-waivable seven-day revocation period during which they may rescind their acceptance. This revocation right provides an added layer of protection to ensure employees are not coerced or rushed into waiving significant legal rights without fully understanding the consequences.
Non-Compete Clauses
Non-compete clauses are a common component of severance agreements and can impose significant limitations on an employee’s future career opportunities. These clauses are intended to protect the employer’s business interests, but may:
- Restrict the employee from working for a direct competitor for a defined period, often 12 months or more;
- Prohibit employment within the same industry or geographic area;
- Prevent the former employee from soliciting or contacting key clients or customers of the employer, sometimes for up to two years.
Given their potential impact on one’s professional trajectory, non-compete clauses should be approached with caution. Such restrictions may limit your ability to earn a living in your chosen field or delay your re-entry into the workforce.
Legal review is highly recommended when a severance agreement contains a non-compete clause. An employment attorney can assess enforceability under New York law, determine whether terms are overly broad or unreasonable, and assist in negotiating more favorable language to protect your future prospects.
Understanding the scope and implications of these clauses before signing is critical to safeguarding your long-term career and financial stability.
Non-Disclosure and Non-Disparagement Clauses
Non-disclosure clauses require employees to keep certain information confidential, including employment terms, termination circumstances, and often the severance agreement itself. While these provisions protect sensitive company information, they can disproportionately favor the employer if not carefully balanced.
Employees should verify that confidentiality obligations are mutual, binding both parties equally. Nondisclosure agreements (NDAs) may accompany or be incorporated into severance agreements to further define confidentiality expectations. Close attention should be paid to the scope of covered information and penalties for breaches.
Non-disparagement clauses prohibit employees from making negative or critical statements about the former employer. Although these clauses protect the employer’s reputation, they may restrict an employee’s ability to speak candidly about their experience or secure strong references.
Overly broad or one-sided non-disclosure and non-disparagement clauses may indicate a biased agreement favoring the employer at the employee’s expense. Careful legal review ensures these provisions are balanced, enforceable, and do not unduly restrict rights or future opportunities.
Severance Payment Terms
In New York, severance payments are typically classified as dismissal pay, a designation affecting unemployment benefit eligibility. Even if severance is placed in retirement accounts, such as IRAs, the classification generally remains. When severance payments exceed unemployment benefit thresholds, they may delay or reduce compensation.
While not legally required, many employers offer severance pay voluntarily to mitigate legal risks or maintain goodwill. Payment terms vary by company policy, service length, and termination circumstances.
Consulting a New York employment attorney before signing a severance agreement is advisable to assess fairness and negotiate enhanced compensation or benefits based on your situation.
Employees should stay informed of legislative developments such as the Severance Ultimatums Act, which expands protections and may alter severance timelines and conditions.
Health Insurance Continuation
Health insurance continuation is a vital severance component, particularly under federal COBRA (Consolidated Omnibus Budget Reconciliation Act) provisions.
Key points include:
- Employers with 20+ employees must offer qualified beneficiaries continuation coverage after termination.
- COBRA coverage generally lasts up to 18 months, with extensions for disabilities or other qualifying events.
- Beneficiaries may pay up to 102% of the full premium, including administrative fees.
For smaller employers, New York’s “Mini-COBRA” extends coverage up to 36 months, helping bridge care gaps during job transitions.
Employees must elect COBRA within 60 days of receiving notice; failure to do so forfeits coverage eligibility. Reviewing severance health insurance terms is essential to ensure uninterrupted coverage and negotiate for extended benefits or employer-paid premiums if needed.
Legal Waivers and Rights
Severance agreements often require waivers of legal claims against the employer. It is critical to understand which rights are waived and under what conditions.
Under New York law, confidentiality and non-disparagement clauses cannot prevent employees from discussing or reporting unlawful workplace conduct, including discrimination, harassment, or retaliation. Broad waivers may be unenforceable, especially if they circumvent employee rights without adequate consideration.
Legal counsel is essential to ensure waivers are lawful, balanced, and clearly understood.
Collective Bargaining Agreements
Collective Bargaining Agreements (CBAs) are legally binding contracts between employers and labor unions defining employment terms such as wages, benefits, and working conditions. CBAs significantly impact severance by setting minimum severance pay, benefits, and procedures that must be honored during layoffs or terminations.
Employers must ensure that severance agreements comply with applicable CBAs to avoid legal conflicts. Unionized employees often benefit from stronger protections and bargaining power in severance negotiations.
Typical CBA provisions include:
- Enhanced job security
- Formal grievance and arbitration processes
- Defined severance pay structures
- Health insurance continuation guidelines
- Fair treatment protocols during layoffs
CBA terms often override individual severance agreements; both employers and employees should review CBAs before finalizing severance terms.
Retirement and Other Benefits
Severance agreements often include provisions related to retirement and supplemental benefits, affecting unemployment benefits and long-term planning. These may include pensions, 401(k) contributions, stock options, and executive perks.
Executives frequently have clauses governing retirement asset handling, including continuation or modification of plan contributions. Understanding the severance impact on retirement income and tax implications is essential.
Stock options must be addressed—whether unvested options accelerate, are forfeited, or adhere to original vesting schedules.
Other benefits, like life insurance or vehicle allowances, require review to clarify continuation or termination upon separation.
Legal and financial guidance ensures these benefits align with your compensation and financial goals and informs unemployment insurance eligibility under New York law.
Cooperation Clauses
A cooperation clause requires the departing employee to assist the employer after the termination of their employment. While this might seem harmless, these provisions can create ongoing obligations that extend well beyond your last day at work, sometimes for months or even years.
Typical cooperation clauses ask employees to:
- Participate in internal investigations or audits
- Provide information or testimony in legal proceedings
- Assist with the transition of responsibilities or clients
- Be reasonably available to respond to questions related to projects handled during employment
While employers have legitimate interests in securing post-employment cooperation, the scope, duration, and compensation for such assistance must be clearly defined to prevent future misunderstandings or undue burdens.
Key considerations when reviewing a cooperation clause:
- Is there a time limit? Open-ended cooperation obligations can be unreasonable.
- Will you be compensated? If post-employment assistance takes significant time, fair compensation should be negotiated.
- Are there confidentiality or privilege concerns? Employees should not be compelled to disclose sensitive or legally protected information.
- What is considered “reasonable”? Ambiguous language could give employers broad discretion to demand your time without warning.
Legal counsel can help narrow overly broad cooperation language and ensure that your post-employment commitments are reasonable, time-bound, and compensated if necessary. This clause, though often overlooked, can significantly affect your time, privacy, and future employment flexibility.
Consultation with Legal Counsel
Recently, the New York State Senate passed Senate Bill S372, requiring severance agreements to include a written notice informing employees of their right to consult an attorney before signing. This notice must be provided before the agreement’s execution; failure to do so renders the agreement void and unenforceable.
This provision protects employees, especially where agreements contain complex clauses such as non-competes, waivers, or confidentiality obligations.
Consulting an experienced employment attorney helps employees:
- Understand the agreement terms and consequences
- Identify unfair or one-sided provisions
- Negotiate better terms
- Ensure compliance with labor laws and protections
Given the significant legal and financial impact of severance agreements, exercising the right to legal counsel is strongly advised.
👉Also Read: Top Severance Package Considerations for Executive and Senior Roles in New York
Protect Your Rights Before You Sign – Consult a Trusted Severance Attorney in New York City
At Levine & Blit, we understand the complexities hidden in severance agreements and the pressures employees face when navigating job transitions. Our experienced New York City severance agreement lawyers can thoroughly review your agreement, explain each clause in detail, and negotiate more favorable terms when necessary. If your agreement includes unlawful provisions—or if you have experienced workplace discrimination, harassment, or retaliation—we are prepared to advocate on your behalf for the maximum compensation you are entitled to under the law.
Do not let your employer take advantage of your circumstances. Before you sign anything, contact Levine & Blit at 646-461-6838 or reach out to us online to schedule a confidential case evaluation. Let us help you protect your rights, your career, and your future.