Imagine it’s Friday afternoon, and your manager calls you into their office. They hand you a 10-page separation agreement and only give you a few days to decide whether to sign away your legal rights.
Or maybe you’re a senior executive facing an unexpected corporate restructuring. Your complex severance package includes stock options and deferred compensation, and you’re not sure what to do. These situations happen every day in New York City, leaving employees confused about their next steps.
Negotiating a separation agreement is important. Even small mistakes can have lasting impacts on your professional future, like limiting job prospects or affecting unemployment benefits.
This guide will cover everything you need to know about New York separation agreements, from basic terms to how to negotiate better deals.
What Is a New York Separation Agreement?
A New York separation agreement, or severance agreement, is a legal contract between an employer and an employee that outlines the terms of ending their employment relationship.
The agreement usually includes key details like the severance pay amount, official termination date, and specific terms that protect both employee rights and employer interests. For example, the employee might waive certain legal rights, such as the right to pursue wrongful termination claims, and it may contain non-compete and non-solicitation provisions within a defined period of time.
Most employers are not legally required to provide severance pay or separation agreements unless it’s specified in an employment agreement or collective bargaining agreement.
Separation agreements are more common for executives and high-level employees, especially during layoffs, company restructuring, or other terminations unrelated to employee performance. However, employers rarely offer severance negotiations to employees terminated for misconduct or poor performance.
Why Does Your Employer Want You to Sign a Separation Agreement?
Severance packages may seem generous, but most former employers use them to protect their own interests. For instance, separation agreements often safeguard confidential information or trade secrets. These agreements are a trade—you get compensation and benefits, but you give up certain rights in return.
Before signing any severance negotiation, keep these tips in mind:
- Take the agreement home and read it carefully instead of signing at the office.
- Make sure you understand all terms and conditions.
- Consider consulting with employment law specialists if you’re unsure about your employee rights.
- Check how it impacts your employee benefits.
Some employers offer separation agreements as standard business practice or out of genuine fairness. Others may use them to avoid bad publicity or keep things quiet. Always review the terms closely before deciding.
Should You Sign a Separation Agreement?
A separation agreement can be beneficial for employees. Here’s why:
- Financial support: You get guaranteed severance pay and extended benefits beyond a standard employment contract.
- Documentation protection: The agreement serves as written proof of your departure terms, reference arrangements, and benefit continuation.
- Professional standing: Your reputation is protected through mutual non-disparagement clauses and agreed-upon reference terms. These written assurances help maintain your professional image during and after the transition.
- Legal peace of mind: By waiving certain rights to legal action, you receive guaranteed compensation and avoid potential disputes.
Common New York Separation Agreement Terms
Here are some terms you might see in New York separation/severance agreements.
- Severance pay: The amount of money you’ll get when you leave, how it’s paid (lump sum or installments), and any conditions. For example, it may be based on years worked, like one week of pay per year. Beware of requirements to pay back money or reduced payments if you get a new job within a specific time frame.
- Other payments: Any money owed besides the severance payment, including payout for unused vacation days, personal or sick time, commissions, bonuses, deferred compensation, or unreimbursed business expenses.
- Retirement and financial benefits: Details on 401(k), stock options, pensions, or profit sharing. For stock options, check deadlines for exercising them, typically within 90 days of leaving. The agreement should outline vesting and any possible extensions.
- Official date of termination: A clear statement of your last day of employment and the specific reason for the employment relationship ending.
- References: This clause should explain what type of reference the organization will provide. If they agree to write a letter, it should be attached to the agreement. If there isn’t a written letter, specify it in the terms of the separation agreement.
- Insurance: States if the company will continue paying for health insurance (including dental or vision) and group life insurance and for how long.
- Return of property: You’ll need to return company property like laptops or badges.
- Non-compete clause: This restricts your ability to work for competitors within specified geographic boundaries and time periods.
- Non-solicitation clause: Prevents you from contacting or trying to do business with the company’s clients, customers, or employees for a specified period.
- Confidentiality: You must keep company information and the terms of the separation agreement confidential.
- Unemployment benefits: Addresses how the employer will handle unemployment claims. Under current New York law, employees terminated without cause are generally eligible for unemployment benefits.
- Release of claims: A critical provision where you waive your legal rights to sue the employer for various claims, including potential wrongful termination or age discrimination. Be sure to read this carefully to understand the rights you’re giving up.
- Non-disparagement clause: Both you and the employer agree not to say negative things about each other. If this term is included, it should be mutual .
- Time to consider and revocation period: For employees age 40 or older, federal law requires 21 days to consider the severance agreement and 7 days to change your mind after signing.
Can You Negotiate Your Separation Agreement?
Yes, you can—and sometimes should—negotiate a severance package. Your ability to negotiate depends on your leverage with your former employer. Here are the key factors that determine your negotiating position.
- Value and performance: If you can show achievements, like successful projects or strong performance reviews, you have more negotiating power.
- How you were let go: If your termination was beyond your control and you have a positive work history, you’re in a better position to negotiate a New York separation agreement.
- Legal considerations: If you have potential legal claims (e.g., wrongful termination), you have stronger bargaining power.
- Employer financial status: If the company can’t offer more money, you can ask for other valuable terms such as extended employee benefits, outplacement services, or more favorable non-compete terms.
- Post-termination behavior: Staying professional during negotiations keeps things amicable and productive, especially if a separation agreement isn’t required.
What Terms Can You Negotiate in Your NY Separation Agreement?
Financial Compensation
You can always ask for more money. If your company uses a formula to determine severance pay, use that amount as a starting point. Also, get creative and think beyond negotiating severance payments. Consider bonuses, deferred compensation, and any other money owed. The agreement should include all payment deadlines.
Stock Options
Protecting your equity interests by asking to extend the standard 90-day exercise period for vested stock options. For unvested equity, negotiate acceleration of vesting so you don’t lose value you’ve earned.
Healthcare Coverage
If health insurance isn’t provided for in the agreement, you can continue coverage through the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). Under this federal law, companies with at least 20 employees must offer health insurance to terminated employees for 18 months. However, the employee must pay the full cost the employer paid, which can be expensive.
You may want to negotiate extended health benefits or ask your employer to cover COBRA payments. Health insurance coverage can be considered as valuable as cash in the severance payment amount.
Outplacement Services
If you do not need these services, ask for the cash value or have the money allotted to something else like health insurance.
References
Negotiate what your employer will say about you when contacted by future employers. Have them write a reference letter and attach it to the severance agreement, if possible.
Keeping Equipment
Request to keep work equipment like your phone or laptop or buy it at a discount.
Exit Message
Agree on how your departure will be communicated, such as framing it as your decision due to limited growth opportunities.
Negotiation Tips
- Start big: Begin with major requests, like more severance or extended health benefits, before moving to smaller items.
- Trade what you don’t need: If the separation agreement includes terms you don’t want, use them to negotiate for things you do want.
- Get help: If you’re unsure how to negotiate, contact a New York separation agreement lawyer to review your separation agreement and help you strategize.
Additional Factors to Consider About Your Separation Agreement
Before signing the agreement, consider these additional tips.
- Meet deadlines: If you’re under 40, you might not get a 21-day review period unless it’s a group layoff. Act quickly if you need advice and speak to a New York separation agreement lawyer right away.
- Evaluate offer thoroughly: Carefully review all aspects of the severance package. Compare what your employer offers (compensation, benefits, references) with what you’re giving up (legal claims, future opportunities). A hasty decision could mean overlooking key terms in your employment separation agreement.
- Assess legal position: Look at your employment history for potential claims you might be waiving, such as workplace discrimination, wrongful termination, or unpaid wages. Consider any documented incidents or patterns that could affect your severance negotiation. An employment lawyer can help evaluate the strength of these potential claims.
- Review career restrictions: We recommend that you think about how the agreement could affect your professional future. Examine non-compete clauses limiting where you can work, non-solicitation provisions restricting client contact, and confidentiality terms restricting your use of industry knowledge.
- Plan benefit timing: In New York, receiving severance pay can affect unemployment eligibility. However, structuring payments to start 30 days after termination instead of immediately could allow you to qualify for both.
What to Expect During a Consultation with New York Employment Separation Agreement Lawyers
Initial Contact
- Brief phone call to gather basic information
- Clear explanation of consultation fees or free consultation terms
- Basic documentation you’ll need to provide
Document Review
- Detailed review of your separation agreement
- Analysis of your employment history and circumstances
- Examination of supporting documents
- Employment contract
- Performance reviews
- Relevant emails or communications
Legal Assessment
- Evaluation of agreement terms by employment law attorneys
- Identification of potential legal claims
- Analysis of non-compete and restrictive covenants
- Review of severance package against industry standards
- Discussion of New York City specific employment laws and NYC severance guidelines
Strategy Discussion
- Clear explanation of your rights
- Proposed negotiation strategies
- Timeline for potential actions, including arbitration
Next Steps
- Clear outline of attorney-client relationship terms
- Proposed action plan, if you choose to proceed
- Timeline for response to employer
Contact New York Employment Separation Agreement Lawyers Today
As experienced severance agreement attorneys, Ottinger New York employment law attorneys provide legal advice for employees facing employment separation. Our focused consultation service helps you understand and improve your separation agreement terms.
Our consultation process includes:
- Thorough review of your separation agreement by experienced employment lawyers.
- One-on-one discussion (in person or virtual) with a severance agreement lawyer.
- Clear explanation of your rights and potential opportunities.
- Step-by-step action plan for moving forward.
For a flat fee of $750, our severance agreement attorneys will analyze your agreement and provide practical guidance on your best path forward. If we identify opportunities to enhance your agreement terms, we can either:
- Directly negotiate with your employer on your behalf.
- Provide behind-the-scenes coaching for your own negotiations.
Don’t face this critical career moment alone. Contact our law firm today to schedule your separation agreement consultation and protect your professional future.
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