What Is a Severance Package? A New York Employee’s Guide

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Reviewed by Nicole Grunfeld, Esq.

You were just told your position is being eliminated, and someone handed you a stack of paperwork. The language inside feels formal and final: releases, nondisparagement clauses, deadlines. You are not sure what you are looking at, whether the offer is fair, or what happens if you do not sign.

Many employees notice something is wrong before they know how to put it into words. Understanding your rights begins with clarity, not a complete file.

A severance package is defined as compensation and benefits an employer offers when your employment ends. In exchange, you are typically asked to sign a release, an agreement not to pursue legal claims related to your job or termination. Those claims might include discrimination, retaliation, unpaid wages, or wrongful termination.

New York is an at-will employment state, meaning an employer can terminate an employee at any time for any lawful reason without providing severance. Most employees are not automatically entitled to severance unless a contract, policy, or union agreement requires it. See Sabetay v. Sterling Drug, Inc., 69 N.Y.2d 329 (1987) (recognizing New York’s at-will employment presumption). New York Labor Law § 191 governs the payment of wages but does not mandate severance pay. Whether you should sign depends on the strength of your potential legal claims, the amount being offered, and whether you understand what you are giving up.

What Is a Severance Package?

A severance package is defined as compensation and benefits an employer provides when your employment ends. It usually comes with a requirement that you sign an agreement with a release of claims, a contract stating you will not sue the employer for anything that arises from your employment or termination.

The package may include:

• Severance pay
• Continuation of health insurance
• Unused vacation payout
• Vesting of retirement benefits
• Outplacement services

No law requires an employer to offer severance unless they promised it in a contract, policy, or union agreement.

The release is the most important part. When you sign it, you generally give up the right to sue over claims under employment laws that arose before you signed, as well as claims like breach of contract or defamation. A release cannot waive claims that arise after you sign. It also generally cannot waive your right to unemployment insurance, workers’ compensation benefits, or vested retirement benefits, and federal minimum wage and overtime claims under the Fair Labor Standards Act generally cannot be released through a private agreement without court or U.S. Department of Labor approval.

Signs You Were Offered a Severance Package

You were offered a severance package if your employer gave you a written agreement at termination that offers money or benefits in exchange for signing an agreement. The agreement may be titled:

• “Separation Agreement”
• “Severance Agreement”
• “General Release”

You may have been told the offer is standard or nonnegotiable. You may have been given a deadline to sign. You may have been offered additional pay beyond your final paycheck, continued health insurance, or a neutral reference letter.

If you were terminated and received only your final paycheck and accrued vacation pay, you were not offered a severance package and should review anything they request you to sign so you do not give up any rights unknowingly.

What New York Employment Law Says About Severance

New York does not require employers to provide severance pay unless a contract, policy, or union agreement requires it. But if your contract or employee handbook includes a severance promise, the employer must provide it.

For employees aged 40 or older, a release of age discrimination claims must meet the requirements of the federal Older Workers Benefit Protection Act (OWBPA), 29 U.S.C. § 626(f). The agreement must:

1. Be written in plain language you can understand.
2. Specifically refer to rights or claims under the Age Discrimination in Employment Act.
3. Not waive claims that arise after you sign.
4. Give you something of value beyond what you are already entitled to receive.
5. Advise you in writing to consult an attorney before signing.
6. Give you at least 21 days to consider it, or 45 days if the offer is part of a group layoff or exit program. In a group layoff, the employer must also give you written information about who was and was not selected, including job titles and ages.
7. Give you 7 days after signing to revoke it.

If the agreement does not meet these requirements, the release of your age discrimination claims is not valid.

For a plain language explanation of these requirements, see the U.S. Equal Employment Opportunity Commission’s guidance on waivers of discrimination claims in severance agreements.

New York also limits confidentiality in agreements that resolve claims of discrimination, harassment, or retaliation. An employer cannot require you to keep the underlying facts confidential unless confidentiality is your own preference, that preference is put in writing, and you are given up to 21 days to consider it and 7 days to revoke it. Under New York General Obligations Law § 5-336, a release of these claims may also be unenforceable if it requires you to pay liquidated damages or give back your severance for breaking a nondisclosure or nondisparagement clause, or if it requires you to state that you were not subject to discrimination, harassment, or retaliation.

What Employers Cannot Do When Offering Severance

An employer cannot:

• Require you to sign immediately if you are 40 or older and the agreement releases age discrimination claims. You must receive at least 21 days to consider it under 29 U.S.C. § 626(f). If you are under 40, the company will often give you time to review the agreement. If it does not, you should ask for time and consult an attorney.
• Withhold wages you already earned to pressure you into signing. Your final paycheck, earned commissions, and any bonus you already earned under the terms of your pay plan must be paid whether or not you sign.
• Punish you for complaining about discrimination, harassment, unpaid wages, or other unlawful conduct. Retaliation for that kind of complaint is illegal. Keep in mind, though, that if you do not sign, you generally will not receive the severance pay or benefits.
• Prohibit you from filing a charge with a government agency or participating in an agency investigation. Any clause that tries to waive those rights is not enforceable, and the EEOC’s severance agreement guidance explains these protections.

What You Can Recover If You Sign a Severance Agreement

If you sign, you receive the compensation and benefits stated in the agreement.

The most common component is severance pay, often calculated as a number of weeks of base salary per year of service. Amounts vary widely by industry, seniority, and geography. Some employers offer one week of pay for every year of service, others offer a flat amount, and the figure is frequently negotiable.

You may also receive:

• COBRA premium coverage by the employer for a period of time
• Payment for unused vacation or PTO
• Outplacement services

The agreement may include nonfinancial benefits:

• A neutral reference
• Removal of negative reviews from your file
• Permission to keep company equipment

What you give up is the right to sue the employer over most legal claims related to your employment or termination that arose before you signed. This can include claims under antidiscrimination laws and retaliation statutes, some state wage claims, and claims like breach of contract or defamation. Federal minimum wage and overtime claims under the Fair Labor Standards Act generally cannot be released through a private agreement without court or U.S. Department of Labor approval. Once you sign and any revocation period expires, you generally cannot file a lawsuit over the claims you released, although you can still file a charge with the EEOC.

What to Do Right Now

Do not sign a severance agreement during the termination meeting. Take the agreement home and read it carefully. If you are 40 or older and the agreement releases age discrimination claims, you have at least 21 days to consider it under 29 U.S.C. § 626(f). If you are under 40, you should review the agreement to see if they have provided time to review it or ask for time to review it before signing.

You should not sign without consulting an attorney. You do not need perfect proof of discrimination or harassment to start asking questions.

1. Think About Whether You May Have Legal Claims

Ask yourself:

• Were you terminated because of your age, race, sex, disability, religion, national origin, pregnancy, sexual orientation, or another protected characteristic? You may have a discrimination claim.
• Did you complain about illegal conduct and were you terminated shortly after? You may have a retaliation claim.
• Were you not paid overtime or denied meal breaks? You may have a wage claim.

2. If You Believe Your Termination Was Unlawful, Document What Happened

If any of these situations sound familiar, start documenting what happened now, while the details are still fresh. Write down:

• The date, time, and location of the termination meeting
• Who was present
• What was said
• Whether you were given a reason and whether it changed over time

Save all emails, text messages, and other communications. What you write down now matters more than you realize later.

3. Request a Copy of Your Personnel File

Starting November 8, 2026, New York Labor Law § 210-b gives current and former employees the right to a free copy of their personnel records. You make the request in writing, and the employer must provide the copy within five business days. This can be especially useful if you think discrimination, harassment, or retaliation played a role in your termination. Review it for performance evaluations, warnings, and any documentation the employer may use later.

4. Contact an Employment Attorney

An employment attorney can review the agreement, identify problematic clauses, and negotiate better terms. One conversation can bring clarity to something that feels overwhelming.

Common Mistakes to Avoid

• Do not assume the severance offer is final. Many employers present the agreement as standard or nonnegotiable, but many offers are negotiable. The employer’s opening offer is often lower than what it is willing to pay, especially if you have potential legal claims.
• Do not sign without understanding what claims you are waiving or what other obligations are being imposed on you. If you do not understand the terms, ask an attorney to explain them.
• Do not rely on verbal promises. If the employer promises you a reference, continued health insurance, or any other benefit, it must be in writing in the severance agreement. Verbal promises are usually not enforceable.
• Do not fail to negotiate nonmonetary terms. You may be able to negotiate for the employer not to contest your unemployment claim, to remove negative reviews from your file, or to delay your termination date so you can continue to vest in retirement benefits. These terms can have real financial value.

How Long You Have to Act

If you are 40 or older and the agreement includes a release of age discrimination claims, the employer must give you at least 21 days to consider it under 29 U.S.C. § 626(f), or at least 45 days if the offer is part of a group layoff or exit program. After you sign, you have 7 days to revoke it. The agreement does not become effective until the 7 day revocation period expires.

If you are under 40, no federal law sets a specific review period. However, if the employer pressures you to sign on the spot or threatens to withdraw the offer, a court may consider that pressure when deciding whether you signed knowingly and voluntarily.

If you have potential legal claims, those claims are subject to deadlines. Many of them, such as the 300 days to file a charge of discrimination with the EEOC, start running from the date of your termination, not the date you sign or decline the severance agreement. Wage claims follow different timelines. Once you sign a valid severance agreement and release, you generally cannot pursue the claims you released, even if the deadline has not passed.

Frequently Asked Questions

What does a severance package mean?

A severance package is defined as a combination of compensation and benefits an employer offers to an employee upon termination in exchange for signing a release of legal claims. The package typically includes severance pay, payment of COBRA premiums for continuation of health insurance, and sometimes outplacement services, or other benefits. In exchange, the employee agrees to waive the right to sue the employer for claims related to the employment relationship.

Do you get a severance package if you get fired?

You do not automatically receive a severance package if you get fired. New York is an at will employment state, and most employees are not legally entitled to severance unless a contract, company policy, or union agreement requires it. Employers often offer severance to obtain a release of legal claims, but the offer is discretionary unless the employer has a contractual obligation to provide it.

Should I sign a severance agreement?

Before signing, consult an employment attorney who can review the agreement, assess whether you have potential claims, and negotiate better terms. If you have strong evidence of discrimination, retaliation, or unpaid wages, the value of your potential claims may exceed the severance offer, and signing could prevent you from pursuing many of those claims. For the specific red flags, see our guide on when you should not sign a NY severance agreement.

Can an employer take back a severance offer?

An employer can withdraw a severance offer before you sign the agreement. Once you sign the agreement, it becomes a binding contract, and the employer must provide the severance pay and benefits stated in it. If the employer withdraws the offer after you sign but before the revocation period expires, the withdrawal may not be valid and you may be entitled to enforce the agreement.

Conclusion

A severance package is compensation and benefits offered at termination in exchange for a release of legal claims, and whether to sign depends on the value of the offer weighed against the strength of the claims you would give up. Under New York law, an employer is not required to provide severance unless a contract, policy, or union agreement requires it, and once you sign a valid release you generally cannot pursue the claims you released.

Our firm represents employees in New York and New Jersey in severance negotiations, wrongful termination, and other employment disputes.

Call today at 212-460-0047 for a Free Confidential Case Evaluation.

This article is for general informational purposes only, is not legal advice and does not create an attorney client relationship. For more information see our full Disclaimer.