Employees everywhere in the United States have noticed an exponential rise in layoffs and workforce reductions. In fact, new data released just yesterday from the Bureau of Labor Statistics showed that the estimated number of job openings sank to 6.54 million at the end of December, the lowest level since September 2020. (CNN). From law and tech to media and service industries, the impact of the “Forever Layoffs Era” has indiscriminately left employees feeling unstable as companies deal with new economic pressures, restructurings, and shifts in remote work policies.

Despite being the Empire State, job growth slowed significantly in New York in 2025, reflecting national trends. (New York Economic Development Corporation). Following this trend, many employees assume that a layoff or job elimination automatically entitles them to severance; however, New York law provides no general severance requirement for at-will employees. As severance is usually discretionary, the more layoffs rise, the more employers are driven to reframe how they sever ties with employees in a way that does not require them to pay severance.

The importance of recognizing these employment trends and the tactics employers may use to avoid paying severance cannot be understated. This article examines how these dynamics play out in New York so that employees can ensure their rights and leverage are preserved after sensing an exit is being engineered.

The Legal Landscape: Why New York Is Ripe for Severance Avoidance

New York is an at-will employment state, meaning employers can fire employees at any time for any (or no) reason at all, without prior notice. However, this right goes both ways, meaning an employee can quit in the same manner. Given the recent trend of economic downsizing and restructuring, employers are exercising this right broadly.

It is important to note that, even in an at-will employment state, employers cannot terminate employees for an illegal reason. They may fire an employee for “bad” reasons, but not for reasons that violate anti-discrimination laws, constitute retaliation, breach employment contracts, or violate public policy.

New York state law does not require severance pay unless:

1. An employment or separation agreement provides for it
2. A union contract requires it
3. An employer has an established severance policy or consistent past practice
4. Federal or New York WARN Act obligations are triggered by a qualifying mass layoff or plant closing

This means that the law does not provide for automatic severance rights for workers who have been laid off or whose roles have been eliminated.

The Most Common Severance-Avoidance Tactics New York Employees Report

“Position Eliminated” Without a Layoff

To avoid triggering formal notice obligations and potential severance negotiations, employers will sometimes eliminate individual roles instead of conducting mass layoffs. They do this by redistributing job responsibilities to existing employees or independent contractors. Even though the work duties live on within the company, an employer can claim that the original position was “eliminated,” effectively keeping the work while losing the worker.

What about the WARN Act? The federal WARN Act requires businesses with 100+ employees to provide 60 days’ written notice before mass layoffs affecting at least 50 employees at a single site. New York’s WARN Act provides broader coverage requiring businesses with 50+ employees to provide 90 days’ notice before mass layoffs affecting 25+ employees. By eliminating roles one at a time, employers avoid WARN Act notice requirements and related severance package discussions.

While employees may feel this method of downsizing is unfair or dishonest, the law permits it so long as it does not violate contractual promises, anti-discrimination laws, or other statutory protections, similar to the limits on at-will firings.

Altering Performance Measures to “Manage Out” Employees

Lately, it has become more common to hear about employees who have never had problems suddenly having job performance issues and are perhaps in need of a performance improvement plan. Under New York law, performance-based terminations are generally lawful, unless the employer does so for reasons of unlawful discrimination or retaliation.

What this can look like:

1. Abrupt or inconsistent feedback
2. Unrealistic expectations and compressed timelines
3. Shifts in job responsibilities or metrics without adequate support

As an at-will state, New York employers again have the broad discretion to terminate for documented performance reasons without owing severance.

Pressuring Employees to Resign

Employers may also frame employee departures as “voluntary resignations” as opposed to terminations to avoid severance discussions, reduce unemployment claims, and diminish potential lawsuits. Examples of language companies use to push resignations:

1. “It will look better if you resign.”
2. “We will accept your resignation effective immediately.”

Employers avoid severance discussions by getting an employee to resign, and as a result, the employee loses their leverage in future negotiations, and their ability to claim unemployment benefits is affected.

Return to Office Shifts as a Quit Strategy

Recent trends show a rise in return to office mandates across the country, the Tri-State Area, and especially in New York City. In Spring 2025, employers reported that on an average workday more than half of Manhattan office workers were in-person, equivalent to 76% of pre-pandemic attendance. (Partnership for New York City). With plans to continue expanding this number, describing it as a “business need,” employers are revising their remote work policies or in-person office requirements which make the continued employment of certain employees impractical or impossible. This becomes particularly true if an employer does not offer relocation or commuter support.

In the state of New York, these changes are usually lawful, unless remote work was assured in a contract or by another written policy. Therefore, an employer may strategically use remote work revisions as another means of encouraging employees to voluntarily resign due to commuting or other logistical pressures, again avoiding the potential for severance discussions.

Staggered Cuts to Avoid WARN Obligations

As discussed above, New York’s WARN Act requires businesses with 50+ employees to provide 90 days’ notice before mass layoffs affecting 25+ employees. To avoid the WARN obligations that would accompany one large layoff, employers will use the methods discussed above (either individually or combined) or by simply downsizing their downsize by laying off a smaller group of people in waves.

This method limits severance and, because it technically complies with WARN, also accomplishes employers’ goal of limiting administrative reporting. By limiting this reporting, employers avoid certain penalties that are imposed by the Department of Labor in relation to mass layoffs. (U.S. Department of Labor).

What Makes These Tactics Legal vs When They Cross the Line

As this article has examined, not every unfair or dishonest action by employers is unlawful. However, if any of the discussed severance avoidance strategies are a pretext for discrimination, retaliation, or violating contract terms, an employer may face legal trouble.

What this can look like:

1. Termination shortly after engaging in a protected activity (e.g. making a leave request, a discrimination complaint, reporting safety violations, requesting reasonable accommodations, discussing wages, or participating in investigations)
2. Elimination of roles tied to protected characteristics (e.g. eliminating the role of an employee on medical leave or the only woman-held role)
3. Breach of written promises or policies (e.g. employment, severance, or separation agreements)

In an abundance of caution, or if a legal line was possibly crossed, an employer may use severance negotiations as a way of mitigating risk by reaching a settlement or by having the employee release potential claims. Once a legal risk is identified, an employee may similarly use the risk for leverage in severance negotiations.

Where New York Employees Still Have Leverage

Despite the tone that this article may suggest, employees are far from powerless. Even absent automatic severance rights, employees still have leverage.

What this can look like:

1. Company Policy and Past Practice: Documented severance policies or historical norms can create legally enforceable expectations.
2. Timing After Protected Activity: A termination following a protected activity may provide grounds for discriminatory or retaliatory claims, both give an employee powerful leverage in negotiation.
3. Pre-Exit Negotiation Window: An employee’s leverage is strongest while they are still employed. Before an employee voluntarily resigns or generally signs separation papers, it is imperative they negotiate to ensure their benefits and rights are preserved, the separation or severance terms are clear, that any non-disparagement or non-compete clauses are clear, and that they receive a reference. This may be best accomplished through the assistance of an attorney.

Why Legal Assistance Matters

Severance in New York is not guaranteed, but it is negotiable. With employers in New York constantly looking for ways to deal with economic pressures, avoid paying severance, and avoid penalties from the Department of Labor, employees are more uncertain about their job security and rights than ever.

However, this dynamic opens the door for employees to not only start early separation preparations, but to proactively negotiate themselves into a more powerful position. The key is to recognize the patterns of structured phase outs, document as much as possible to preserve leverage, and to seek legal advice early, not after the separation is final.

Consulting with an experienced employment law attorney before you or your employer takes action can significantly impact your outcome, and may be the difference between severance or no severance.

Please subscribe to this blog to receive email alerts when new posts go up.

DISCLAIMER: This blog post is for informational purposes only and does not constitute legal advice. The information provided is general in nature and may not apply to your specific situation. Severance and employment termination cases are highly fact-specific, and the laws governing such cases can be complex and subject to change. Nothing in this article creates an attorney-client relationship, and you should not rely on this information as a substitute for professional legal counsel. If you believe your employer is attempting to avoid severance obligations, forcing you to resign, or otherwise violating your rights under New York employment law, you should consult with a qualified employment attorney who can evaluate the specific facts of your case and provide personalized legal advice based on current law and your individual circumstances. Deadlines for filing claims can be extremely short, so prompt consultation with an attorney is critical to preserving your rights.