Severance Agreement Attorney

A severance agreement is rarely the generous gesture it appears to be. In exchange for a lump sum or salary continuation, your employer is asking you to permanently release legal claims — including claims you may not even know you have. Because New York is an at-will employment state with no statute requiring severance pay, everything in the document is negotiable, and everything you sign away is likely gone for good. Our New York City severance agreement attorneys review, negotiate, and, where necessary, litigate around severance packages for executives, professionals, founders, and rank-and-file employees throughout the five boroughs.

What a Severance Agreement Actually Does

Most New York severance agreements contain the same core architecture, and each component deserves independent scrutiny:

• The release of claims. This is the heart of the deal. You waive claims under the New York State Human Rights Law (Executive Law § 296), the New York City Human Rights Law (N.Y.C. Admin. Code § 8-107), the New York Labor Law, and their federal counterparts. A properly drafted release should carve out claims that cannot legally be waived — such as unemployment insurance and workers' compensation rights.
• Confidentiality and non-disparagement clauses. These are heavily regulated in New York, as discussed below, and employers frequently draft them in ways that violate General Obligations Law § 5-336.
• Restrictive covenants. Non-competes, customer non-solicits, and employee no-hire provisions are sometimes introduced for the first time in the severance agreement — meaning you would be accepting new restrictions on your livelihood in exchange for the payment.
• Treatment of equity, bonuses, and commissions. Unvested RSUs, options, carried interest, and earned-but-unpaid commissions are often quietly forfeited. Under New York Labor Law § 191 and § 193, earned wages — including earned commissions — generally cannot be forfeited, and Labor Law § 198(3) gives you six years to sue for unpaid wages. If your equity rights arise from a founder or member arrangement rather than a standard grant, the analysis runs through your underlying documents; our founder agreement attorneys and LLC operating agreement attorneys regularly coordinate on these exits.

The Deadlines That Control Your Severance Review

Timing is where most people make irreversible mistakes. Several distinct clocks may be running simultaneously:

The 21-Day and 45-Day Consideration Periods (Age 40 and Over)

If you are 40 or older and the release covers age discrimination claims, the Older Workers Benefit Protection Act requires the employer to give you at least 21 days to consider the agreement — or 45 days if the termination is part of a group layoff, in which case you must also receive a disclosure listing the job titles and ages of those selected and not selected. You then have 7 days after signing to revoke, and the agreement is not effective until that revocation period expires.

Worked example: You are 52 and receive a severance agreement on March 1 as part of a reduction in force affecting your department. You are entitled to review it until April 15 (45 days). If you sign on April 10, you may revoke in writing through April 17, and no payment obligation becomes final until April 18. An employer that pressures you to sign "by Friday" is either misinformed or hoping you are.

New York General Obligations Law § 5-336: Confidentiality of Discrimination Claims

New York law imposes its own procedural requirements when a severance agreement resolves discrimination, harassment, or retaliation claims and includes a nondisclosure provision. Under GOL § 5-336, confidentiality of the underlying facts must be the employee's preference, memorialized in a separate writing, with up to 21 days to consider that term and a 7-day revocation period. Following the November 2023 amendments, the statute also provides that a release is unenforceable if the agreement (1) imposes liquidated damages on the employee for violating a nondisclosure or non-disparagement clause, (2) requires the employee to forfeit all consideration for such a violation, or (3) contains an affirmative statement that the employee was not subjected to unlawful discrimination or retaliation. We routinely find one or more of these prohibited terms in agreements drafted from stale templates — leverage that can be used to renegotiate the entire package.

Statutes of Limitations Preserved or Lost

Signing a release extinguishes claims that would otherwise survive for years: three years for discrimination claims under both the NYSHRL and NYCHRL, six years for unpaid wage claims under Labor Law § 198(3), and two years (extendable) for retaliation claims under the expanded whistleblower statute, Labor Law § 740. Before advising you to sign, we quantify what you are giving up — a release of a strong six-figure wage claim in exchange for four weeks of pay is not a deal; it is a mistake.

Severance Pay and New York Unemployment Insurance

Under New York Labor Law § 591(6), severance payments that exceed the maximum weekly unemployment benefit rate will disqualify you from unemployment insurance for the weeks they cover — but only if the initial payment is made more than 30 days after your last day of employment is avoided; that is, severance first paid within 30 days of separation triggers the offset, while severance whose first payment begins more than 30 days after your final day of work generally does not affect eligibility. Structuring the payment schedule correctly can be worth thousands of dollars in preserved benefits, and it costs the employer nothing. This is a negotiation point most employees never think to raise.

What Can Be Negotiated

Employers expect counteroffers, particularly from represented employees. Common improvements we secure include:

1. More money — additional weeks or months of pay, payment of a pro-rated bonus, or a lump sum in lieu of salary continuation (which frees you to start new work without offset).
2. Equity treatment — accelerated vesting, extended option exercise windows, or preservation of rights under shareholder or buy-sell arrangements where you hold an ownership stake.
3. Narrowed restrictive covenants — shortening a non-compete, limiting a non-solicit to clients you personally serviced, or eliminating covenants entirely where the consideration doesn't justify them.
4. COBRA subsidies and benefits continuation — employer-paid health premiums for the severance period.
5. Mutual non-disparagement and an agreed reference — a neutral reference letter and a designated contact person protect your job search.
6. Post-separation consulting arrangements — where the employer needs transition help, converting part of the relationship into a paid engagement can extend income and vesting; our independent contractor agreement attorneys paper these arrangements to protect your classification and payment rights.

Red Flags We Look For

• Releases purporting to waive non-waivable rights, such as unemployment benefits or the right to file an administrative charge.
• New non-compete obligations buried in the "restrictive covenants" section.
• Clawback or forfeiture provisions tied to vague "cooperation" or confidentiality duties — often unenforceable under GOL § 5-336 but dangerous if unchallenged.
• Missing OWBPA group-layoff disclosures, which can render an age discrimination waiver invalid.
• Silence on earned commissions, accrued vacation payable under company policy, or expense reimbursements.
• Broad assignment of inventions or intellectual property created before or after employment.

How Our Review Process Works

We move on your deadline. In an initial consultation, we review the agreement line by line, identify unlawful or unusually aggressive terms, and value the claims you would be releasing against the consideration offered. We then advise you to sign as-is, negotiate specific improvements, or — in cases involving serious discrimination, retaliation, or unpaid wages — reject the offer and pursue the underlying claims. Where negotiation is warranted, we can advise you behind the scenes or negotiate directly with the employer's counsel, whichever posture best serves your goals and your ongoing relationships in your industry.

You can contact us by phone at 212-233-1233 or by email at [email protected].