Severance Packages Under New York Law
With rare exceptions, New York employers are not required to provide severance to their departing employees. However, severance pay will very often be part of an executive package, particularly if the executive is let go against their will. Nonetheless, it is crucial to review a severance package before accepting it, lest you inadvertently sign away rights or benefits to which you are entitled.
Many Different Possible Benefits
While severance is not mandatory in New York, if it is granted, it will be based primarily on a person’s length of tenure at the job they are now leaving, as well as on the worker’s level of knowledge and expertise (for example, if they are privy to trade secrets). There are several different types of benefits that may be included in a separation package, some of which include:
- Severance pay, which may be granted as money over time or as one lump sum;
- Health insurance, usually under the federal Consolidated Omnibus Budget Reconciliation Act (COBRA). COBRA coverage is granted as a stopgap of sorts for those who would have no other healthcare coverage until they find a new job;
- Stock options, particularly if the former employee plans to retire; and
- Payment for any miscellaneous unused benefits like vacation time.
Agreements Must Be Honored
Most of the time, severance agreements are codified in writing, simply because of the amount of money involved, as well as the potential question marks for the business. This is most often seen when competition is an issue, and it is not uncommon for non-compete agreements to be part of a separation package, though a non-compete agreement must be drafted extremely carefully to not run afoul of New York law. Generally, having the agreement in writing is held to protect both employee and employer.
New York law also makes it explicitly clear that severance agreements must be honored. New York Labor Law 198(c)(1) states that the officials of any corporation that enters into an agreement to pay “benefits or wage supplements” to employees, but fails to do so within 30 days after the payment deadline, is guilty of a misdemeanor. If your former employer chooses not to honor your severance package, you may have a criminal case against them.
Contact A New York Employment Law Attorney
While state law does not require an employer to pay severance, it does require that if the employer chooses to pay, they must comply with state laws in doing so. If you have questions or concerns about a possible severance package, calling a New York City unpaid overtime attorney from Mansell Law, LLC can help to get them managed. Contact our office today at (646) 921-8900 for a free consultation.
Source:
ag.ny.gov/sites/default/files/non-competes.pdf
