Any employers operating in New York need to be familiar with the state-specific New York employee separation process. Employee termination laws and employer obligations can vary significantly from state to state.
This helpful employee separation checklist and guide offers an overview of New York’s final paycheck requirements, separation notices, severance agreements, reporting employee termination, and withdrawing registration to do business in the state.
New York Employee Separation Checklist
- Provide final paycheck
- Issue separation notice
- Execute severance agreement
- Report termination
- Withdraw registration to do business
1. Final Paycheck Requirements in New York
New York state law requires that employees receive their final wages on the next scheduled payday, whether they were terminated or resigned. Commissions owed to sales representatives must be paid within five business days after the contract ends or when the commissions become due. All due wages, including bonuses for certain medical workers as outlined by the Department of Health, must be paid at this time.
Accrued vacation time must also be paid upon separation, unless an employer’s policy or contract states otherwise. Employees can receive their final paycheck through the usual payment methods or by mail, upon request.
Employers who fail to pay wages may face civil fines of $500 per violation, along with the unpaid wages, and attorney’s fees, if the matter goes to court. Knowing failure to pay wages is a misdemeanor that can result in fines up to $20,000, imprisonment for up to 366 days—or both, for repeat offenders.
2. Firing Employees in New York
Although New York is an at-will employment state, firing employees in New York is subject to certain rules. First, all employees who separate from employment, are subject to reduction in hours, temporary separation, and any other interruption of employment must be informed of their right to apply for unemployment benefits. Employers must provide them with completed Form IA12.3 – Record of Employment.
Next, New York State Labor Law §195(6) requires employers to notify any terminated employee, in writing, of the exact date of such termination. They must include the exact date of cancellation of employee benefits connected with such termination, including accident or health insurance, accrued time off, and any others.
This notice must be provided within five days after separation. New York also requires employers that provide a group health insurance plan and have fewer than 20 employees to notify separated employees of their right to continue coverage under New York’s state-level COBRA law. This notice should be given within 14 days of separation.
Finally, certain employers are affected by New York’s WARN Act. Covered employers must provide 90 days’ notice before significant employment changes, such as plant closings, mass layoffs, or relocations that impact 25 or more employees. This law applies to employers with 50 or more employees in New York. An “employment loss” includes termination not related to cause, extended layoffs, or significant reductions in work hours. Triggering events include the closure of a site, a mass layoff, or a relocation of business operations more than 50 miles away. Notice must be delivered to affected employees, employee representatives, the New York Department of Labor, and relevant local authorities.
Exceptions to the 90-day notice requirement exist under specific circumstances. Employers are required to provide detailed information in their notices, including the names of affected employees, the nature of the employment changes, and any available support services, such as unemployment insurance or job retraining.
Failure to comply with the WARN Act can result in penalties and legal action against the employer.
3. Severance Agreements in New York
If you’re planning to execute a severance agreement in New York, be aware of these restrictions. First, employers may include non-compete provisions in severance agreements, but they are only enforceable if the employee was terminated for cause. Furthermore, non-disparagement clauses can’t restrict employees from disclosing or discussing facts related to a sexual harassment dispute or sexual assault dispute. They also may not prevent an employee from speaking with law enforcement, human rights agencies, or an attorney retained by an employee.
Second, employers must list any claims the employee is releasing under federal and state law. In New York, the state law claims that may be released are those under the New York State Human Rights Law, the equal pay provisions of New York Labor Law, New York’s leave laws, the Stop Hacks and Improve Electronic Data Security Act, the New York State Wage Theft Prevention Act, and New York’s minimum wage and overtime laws.
Be sure any release of claims only waives claims that may have arisen prior to the effective date of the agreement.
Finally, remember to review applicable federal guidelines. For example, the NLRB’s 2023 McLaren decision suggests a restriction in the use of non-disparagement and confidentiality provisions in severance agreements.
4. Reporting Employee Termination in New York
If your employee has an Income Withholding for Support Order (“IWO”), report the employee’s termination in a timely manner to the child support agency, court, or attorney that issued the IWO. You may register for online reporting with the Federal Office of Child Support Enforcement here.
You also may report an employee’s termination by completing the Notification of Employment Termination or Income Status section of the IWO. Then fax or mail it to the child support agency that issued it. Have the following information:
- Employee Name
- Employee Case Identifier
- Last Known Home Address
- New Employer Address (if known)
- Date of Employee Separation
5. Withdraw Registration to do Business in New York
If your business dealings in New York have ended upon separation from your last New York employee, you may withdraw your registration to do business in the state. The type of form your organization will need to submit to the New York Secretary of State depends on its legal structure.
For-Profit Corporations must file this Certificate of Surrender of Authority. For-Profit Corporations must also obtain consent to withdraw from the New York State Tax Commission by calling the Commission at (518) 485-2639. Non-Profit Corporations should file this Certificate of Surrender of Authority, and obtain consent to withdraw from the New York State Tax Commission (available at the same phone number). Limited Liability Companies (LLCs) should file a Certificate of Surrender of Authority.
Stay Compliant with New York Employee Separation Requirements
Understanding New York’s Employee Separation Agreement helps employers ensure regulatory compliance while honoring employee rights, and mitigating potential liability.
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Looking for employee separation laws for a different state? Our interactive map makes it easy to find all employee termination requirements by state.
