New York Severance Agreement Changes

What employers should know about key developments this week:

Severance Agreement Overhaul: The No Severance Ultimatums Act, awaiting Governor Kathy Hochul’s signature, would extend a 21-day review period plus a seven-day revocation period to all employees and require severance agreements to explicitly state that the employee has the right to consult counsel. The legislation would take effect immediately upon signature.
Trapped at Work Act Amendments: On December 19, 2026, New York’s ban on “stay or pay” promissory notes takes effect. The Trapped at Work Act carves out financial bonuses and wage advances and adds new conditions for tuition repayment agreements. New York joins California and Connecticut in banning certain promissory notes.
Earned Safe and Sick Time Act Update: Amended Earned Safe and Sick Time Act rules, now in effect for New York City employers, require 32 hours of unpaid protected time off immediately upon hire and set new obligations for employers that use electronic systems to track sick leave balances for departing employees.

In this episode of Employment Law This Week^®, Epstein Becker Green attorney Drew C. Ambrose discusses the No Severance Ultimatums Act and what employers should be doing now to prepare their severance agreements ahead of the governor’s signature.

New York Employers Face New Restrictions on Severance, Tuition Repayment, and Sick Time
Play
July 29, 2026

Transcript

[00:00:03] George Whipple: Welcome to Employment Law This Week. I’m George Whipple. Change is in the air in New York, as employers in the Empire State are facing several logistical changes in the near future. This week, we get you prepared. First up, potential new restrictions on severance agreements. Epstein Becker Green’s Drew Ambrose is here to tell us what employers should know about the No Severance Ultimatums Act, currently awaiting Governor Hochul’s signature.

[00:00:36] Drew Ambrose: The first is that it does not have an age restriction on it like the current law does. It does provide now for everyone a 21-day period to review a severance agreement and then a seven-day revocation period after it has been signed by the employee. The agreements also have to explicitly state that the employee has the right to consult counsel. Employers should be taking this time to work with their counsel to determine whether or not their severance agreements need to be updated, so that way they can hit the ground running once this bill does become law.

[00:01:17] George Whipple: Thanks, Drew. If the governor signs the No Severance Ultimatums Act, it will become effective immediately, so it’s important to take a look at those agreements now. Next, New York’s Trapped At Work Act is set to take effect December 19, following the amendments signed in February of this year. The amended law bans “stay or pay” employment promissory notes, but includes a broad carve-out for financial bonuses and advancement of wages.

[00:01:49] George Whipple: The Act also creates new restrictions on tuition repayment agreements. Similar to California’s “stay or pay” ban, there are specific repayment obligations, which must be in a separate written contract. New York joins California and Connecticut in bans on certain promissory notes. Finally, new rules for the Earned Safe and Sick Time Act went into effect last week for New York City employers.

[00:02:18] George Whipple: The rules reflect the Act’s requirement to provide 32 hours of unpaid protected time off to an employee immediately upon hire. Employers who use an electronic system to share sick leave balances will need to either make the system available to prior employees for six months or to prepare a sick leave balance statement to share upon termination. That’s it for this week. Thank you for watching. We’ll see you next time.

In Case You Missed It

Attention Connecticut Warehouse Employers: Deadline for New Quota Notices Approaching, Workforce Bulletin

New Jersey Department of Labor's Guidance Clarifies Expanded Job-Protected Leave Rights for Employees, Workforce Bulletin

New York City Publishes Final Rules Related to the Earned Safe and Sick Time Act, Workforce Bulletin

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