Severance pay can be a critical financial cushion for employees who have been laid off or terminated. Based on this, many employees in New York wonder whether their severance payments will cease if they secure a new job. The answer depends on several factors, including the terms of the severance agreement, the type of severance pay structure, and any restrictive clauses within the agreement. Here are some key insights from our experienced NYC severance agreement lawyer at Levine & Blit.
👉Also Read: Understanding Severance Pay Rights in New York: How Much Can You Expect to Receive?
Is Severance Pay Required by Law in New York?
Unlike some employee benefits, severance pay is generally not mandated under New York or federal law. Instead, it is typically governed by:
- Employment Contracts – If a contract includes provisions for severance, those terms must be honored.
- Company Policies – Many employers offer severance as a goodwill gesture or as part of company policy.
- Collective Bargaining Agreements (CBAs) – If a unionized worker has a contract specifying severance, those terms apply.
- Negotiated Agreements – Employees may negotiate severance upon termination or as part of an exit package.
If an employer does not have a severance policy or contractually obligated agreement, they are not required to offer severance to a departing employee.
How Severance Pay is Structured in New York
A severance agreement typically includes one of the following two payment structures:
Lump-Sum Payment
A lump-sum severance payment is a one-time payout given upon termination. Employees who receive lump-sum severance typically do not have their payments revoked if they find new employment unless the severance agreement specifically states otherwise.
Installment or Salary Continuation Plan
Under this structure, severance is paid out over weeks or months in installments. Employers may condition these payments on continued unemployment, meaning they could stop if the employee secures a new job. This is often referred to as “salary continuation.” The terms of the severance agreement dictate whether payments cease upon reemployment.
Does Severance Pay Stop When You Get a New Job?
Whether severance pay stops when you obtain new employment depends on several key factors:
Terms of the Severance Agreement
The most critical factor is the language of your severance agreement. Some agreements explicitly state that severance will continue regardless of new employment, while others include clauses that terminate payments upon securing a new position. Employees should carefully review the agreement for:
- Reemployment Clauses – Some agreements state that severance payments end if the employee finds comparable employment.
- Non-Competition Clauses – If your severance agreement includes a non-compete clause, accepting new employment in a competing company could trigger the end of severance payments.
- Offset Provisions – Certain agreements reduce or eliminate severance pay if the employee earns a specified income from new employment.
Nature of the Severance Pay
If severance is provided in a lump sum, there is no risk of payments stopping upon new employment. Stemming from this, if payments are made in installments, an employer may legally include terms requiring the employee to remain unemployed.
Company Policy or Past Practices
Employers often follow established policies regarding severance payments. Employees should review their company’s policies or speak with a severance attorney NYC if there is ambiguity regarding whether severance ends upon new employment.
Collective Bargaining Agreements
Unionized workers covered by a collective bargaining agreement may have specific severance protections that prevent payments from being revoked due to new employment.
How Employers Enforce Severance Clauses
Verification Through Self-Reporting
Some severance agreements require employees to disclose new employment. If an employee fails to report reemployment and continues receiving severance payments, the employer may pursue legal action for breach of contract.
Monitoring Publicly Available Information
Employers may review LinkedIn updates, industry publications, or other public records to determine whether a former employee has accepted new employment.
Legal Action for Breach of Contract
If an employee violates a severance agreement by failing to report new employment, an employer may attempt to recoup severance payments through a lawsuit. However, this depends on the specific language of the agreement and the strength of the employer’s case.
👉Also Read: Your NYC Severance Agreement: How to Secure the Compensation You Deserve
Severance Pay vs. Unemployment Benefits in New York
Employees receiving severance must also consider the impact on unemployment benefits. The New York Department of Labor (NYDOL) considers severance payments when determining eligibility for unemployment compensation:
- Lump-Sum Severance – Generally does not affect unemployment benefits unless the employer has designated the severance period as a “continued employment” period.
- Installment Payments – If severance is paid as continued salary, it may delay or reduce unemployment benefits.
- New Employment – Once an employee secures new employment, they are no longer eligible for unemployment benefits, but severance payments may continue depending on the agreement.
Strategies to Maximize Your Severance Benefits
If you’ve been offered severance and are concerned about how new employment may impact your payments, consider the following legal strategies:
Negotiate Severance Terms
Before signing a severance agreement, consult with an employment attorney to:
- Remove or modify clauses that terminate severance upon new employment.
- Ensure severance is structured as a lump-sum payment instead of installments.
- Address any restrictive covenants that could impact future employment opportunities.
Delay Accepting New Employment
If you have an installment-based severance agreement, delaying new employment until severance payments are complete may be financially advantageous. Taking this into account, this must be weighed against long-term career goals.
Seek Legal Counsel to Challenge Unfair Severance Terms
If your employer attempts to enforce a provision that unfairly terminates severance, experienced New York severance lawyers can:
- Review the agreement for legal loopholes.
- Challenge the enforceability of restrictive covenants.
- Negotiate a better severance arrangement.
👉Also Read: New York Severance Agreement Lawyer Insights: When to Hold Off on Signing Your Severance Package
How Our New York Severance Attorneys at Levine & Blit Can Help
Severance agreements can significantly impact your financial stability and future career opportunities. At Levine & Blit, we specialize in employment law and severance negotiations, ensuring that employees in New York receive the maximum compensation and protections available. Our NYC severance lawyer is prepared to aggressively pursue potential legal claims on your behalf and ensure that you are not unfairly restricted by the terms of your severance package.
Review and Negotiate Severance Agreements
A severance agreement is a legally binding contract that outlines the compensation and benefits an employer offers upon termination. While many employees assume that these agreements are non-negotiable, our attorneys know otherwise. Employers often draft these agreements in their own favor, which can result in employees receiving less compensation than they deserve or unknowingly waiving important rights. Our severance attorneys will:
- Carefully review the terms of your severance package to identify any unfair provisions that limit your financial recovery.
- Negotiate on your behalf to secure better compensation, extended benefits, and the removal of any restrictive terms.
- Ensure that severance payments are structured to minimize tax liabilities.
- Protect your right to collect unemployment benefits if applicable.
- Prevent employers from inserting clauses that could prematurely terminate severance payments.
With our skills and experience in employment law, we ensure that severance agreements are fair, equitable, in accordance with the Employment Act, and beneficial to your employment relationship and your long-term interests.
Fight for Wrongful Termination Claims
In some cases, severance pay is offered as a way for employers to avoid liability for wrongful termination. If you believe you were terminated unfairly, our attorneys can assess your case and determine whether additional legal action is warranted. We can help by:
- Investigating whether your termination violated federal, state, or city employment laws.
- Determining whether your employer engaged in discrimination, retaliation, or other unlawful employment practices.
- Leveraging wrongful termination claims to negotiate a higher severance payout.
- Filing legal claims against your employer if they violated your rights under New York employment laws.
- Holding your employer accountable for any lost wages, emotional distress, and other damages resulting from unlawful termination.
If your termination was unlawful, severance may only be one part of the compensation you are entitled to. Our attorneys can help you explore all possible legal remedies to maximize your recovery.
Defend Against Unfair Restrictive Covenants
Many severance agreements contain restrictive covenants that can limit your ability to find future employment. Employers often include broad non-compete, non-solicitation, and confidentiality clauses that can hinder your career advancement. Our attorneys work to:
- Identify and challenge overly broad non-compete clauses that may unfairly restrict your ability to work in your field.
- Ensure that non-solicitation agreements do not prevent you from contacting former clients or colleagues.
- Negotiate modifications or eliminations of restrictive covenants that could negatively impact your employment opportunities.
- Protect your ability to work in your industry without legal repercussions from your former employer.
Restrictive covenants must be reasonable in scope, duration, and geographic reach. If an employer tries to impose unfair limitations on your future employment, we will aggressively challenge those provisions on your behalf.
👉Also Read: How to Secure Severance in New York When Termination is Looming: Levine & Blit’s Exclusive Approach
Why Choose Levine & Blit?
At Levine & Blit, we bring decades of employment law experience and a reputation for securing substantial severance benefits for our clients. Our attorneys are recognized for their aggressive negotiation tactics, deep knowledge of New York labor laws, and commitment to protecting employees’ rights. When you work with us, you benefit from:
- A personalized approach: We design our legal strategy to meet your specific needs and long-term career goals.
- Extensive experience: With over 30 years of employment law success in New York City and nationwide, we know how to achieve the desired results.
- Proven negotiation skills: Our New York employment lawyers have secured significant severance improvements for employees in various industries.
- Litigation readiness: If your employer refuses to offer fair severance terms, we are prepared to take the battle to the courtroom.
If you are facing job termination or have been offered a severance package, do not sign anything without consulting an experienced employment lawyer. Contact Levine & Blit today to schedule a consultation and ensure that your severance agreement protects your financial and professional future.