What Happens to Your Unvested Stock When Laid Off?

What Decides Whether You Keep Your Equity After a Layoff?

Your equity plan and grant agreement are the first place to look for what you keep, along with any employment or severance agreement that changes them. The Minnesota Supreme Court has held an employee to the terms of the stock option agreement he signed. The court reserved a different result for some terminations, described in the section on a layoff timed just before vesting.

The leading Minnesota case is Knudsen v. Northwest Airlines, Inc., 450 N.W.2d 131 (Minn. 1990). The court stated the rule this way: “We have held that where an employee enters into a stock option agreement that is granted on certain terms and conditions, he is bound by those conditions.” For a Minnesota business corporation, Minn. Stat. § 302A.409, subdivision 4, adds a writing requirement for options and similar rights. It provides: “The instrument evidencing the right to purchase or, if no instrument exists, a written agreement, shall set forth in full, summarize, or incorporate by reference all the terms, provisions, and conditions applicable to the right to purchase.” A company organized in Delaware or another state is outside chapter 302A, so its plan and grant documents are where you find your terms.

When an executive negotiating the contract for a new C-suite role with equity asked for my thoughts on it, I pointed out that these terms often sit in a separate plan or grant document. I also noted that the definitions of “cause” and “good reason,” any severance, and whether unvested equity is forfeited or accelerates decide how protected you are. I suggest gathering these documents before you decide anything, because each can change the answer:

1. The equity plan. It sets the rules for every award, including what happens on termination, death, disability, and a sale of the company.
2. Your grant or award agreement. It sets your vesting schedule, your exercise price, your exercise window after employment ends, and the option’s final expiration date.
3. Your employment agreement or offer letter. It may define “cause” and “good reason” and may promise acceleration on a termination without cause.
4. Any severance plan or agreement. It may change the equity terms in exchange for a release.
5. For a private company, the stockholder or buy-sell agreement. It may give the company a right to buy back shares you own.

If your equity was promised when you were hired but never documented, see equity promised in an offer letter.

What Happens to Unvested Stock, Options, and RSUs When You Are Laid Off?

Unvested awards end on the terms your plan sets. If vesting requires continued employment and no clause accelerates it for a layoff, a termination without cause, or a sale of the company, the unvested part is forfeited when your employment ends.

The three main forms of equity work differently:

• Stock options. An option is a right to buy shares at a set price. Your grant agreement says which part you can exercise and when.
• Restricted stock. You own the shares from the grant date, but they are subject to forfeiture or company repurchase until they vest.
• Restricted stock units (RSUs). An RSU is the company’s promise to deliver shares, or their cash value, when the unit vests. An unvested RSU gives you no shares.

What Does a Vested Balance Mean?

Your vested balance is the part of your award you have earned the right to keep under the vesting schedule. It covers the options you may now exercise, the restricted shares no longer subject to forfeiture, and the RSUs that have been or will be settled. The unvested balance is the rest, which you earn only by meeting the schedule’s remaining conditions, usually staying employed to each vesting date. A plan statement or brokerage account showing “vested” and “unvested” amounts is reporting that split as of the statement date.

Acceleration is the main exception to forfeiting unvested awards when your employment ends. A “single-trigger” clause accelerates vesting on one event, such as a sale of the company. A “double-trigger” clause requires two events, such as a sale followed by a termination without cause or a resignation for good reason. Unless the clause also covers former employees, acceleration helps you only if your award is still outstanding when the triggering event happens. In Knudsen, a merger agreement accelerated the vesting of outstanding options to the merger’s effective date. The employee was terminated before that date, his option agreement allowed exercise only before his termination, and the court enforced the agreement against him. For how these clauses are written, see termination clauses that forfeit unvested equity.

A clause that cancels equity if you later join a competitor raises a separate question under Minnesota’s noncompete statute. Minn. Stat. § 181.988, subdivision 2, provides: “Any covenant not to compete contained in a contract or agreement is void and unenforceable.” The statute applies to agreements entered into on or after July 1, 2023, and the questions below address an equity clause tied to competing.

Paragraph (b) of subdivision 2 makes an exception when the covenant “is agreed upon during the sale of a business” or “is agreed upon in anticipation of the dissolution of a business”. Subdivision 1 also limits the definition: “A covenant not to compete does not include a nondisclosure agreement, or agreement designed to protect trade secrets or confidential information. A covenant not to compete does not include a nonsolicitation agreement, or agreement restricting the ability to use client or contact lists, or solicit customers of the employer.”

For an agreement the statute does not reach, such as one entered into before July 1, 2023, the Minnesota Supreme Court wrote in Harris v. Bolin, 247 N.W.2d 600 (Minn. 1976), that “forfeitures under covenants against competition are not favored and those claiming them must show that the equities are on their side.” Harris involved a profit-sharing plan account rather than stock awards.

Who Decides Whether Accelerated Vesting Applies in a Layoff?

Accelerated vesting applies in a layoff only when a document says it does: your plan, your grant agreement, your employment or severance agreement, or the agreement for a sale of the company. Where those documents leave the company discretion, the people who exercise it are usually the board of directors or a committee the plan names as administrator.

What Role Do Investors and the Board Play in Vesting Acceleration?

Investors shape acceleration mostly before any layoff, through the terms they negotiate. Venture investors commonly prefer double-trigger acceleration over single-trigger, because an employee whose equity vests in full at a sale has less reason to stay with the buyer. Investors with board seats also take part in board decisions, including any discretionary choice to accelerate awards for laid-off employees. In a sale, the buyer and the merger agreement often decide how outstanding awards are treated, as the merger agreement did in Knudsen. If your documents give the board discretion, a request for acceleration is a request to the board, usually made through HR or the executive handling your departure.

How Does Equity Vesting Acceleration Affect Startup Funding Rounds?

A startup’s investors usually price a funding round on a fully diluted basis, counting granted options and RSUs whether or not they have vested. Acceleration changes when those awards vest, not how many exist, so it rarely changes the share count investors negotiate over. It matters to investors in two other ways: generous single-trigger terms can make the company harder to sell, and the company’s option pool may need to be refilled to hire replacements. For you as a laid-off employee, a pending funding round mainly matters because it can change what your vested shares are worth and whether the company is willing to spend equity on severance terms.

Can Accelerated Equity Vesting Impact Your Tax Obligations?

Yes. Acceleration can move taxable income into an earlier year. For restricted stock, 26 U.S.C. § 83(a) taxes the shares’ value, less anything you paid. The income counts “in the first taxable year in which the rights of the person having the beneficial interest in such property are transferable or are not subject to a substantial risk of forfeiture, whichever is applicable.” Section 83(c)(1) explains that rights are subject to a substantial risk of forfeiture “if such person’s rights to full enjoyment of such property are conditioned upon the future performance of substantial services by any individual.” Acceleration ends that condition early, so the income arrives early, unless you made an election under section 83(b) when the shares were granted. If your RSUs settle in shares when they vest, accelerated vesting brings the delivery forward, and with it the year the shares count as income. Options work differently, and incentive stock options have the separate employment test described in the section on your exercise window. I suggest asking a CPA to estimate the tax before you accept accelerated vesting late in a year, because the income may land in the same year as your severance pay.

How Do Equity Vesting Acceleration Clauses Differ Internationally?

This page covers U.S. federal and Minnesota law. Other countries’ employment and tax laws are outside it and may treat a layoff, vesting, and acceleration differently. Plans that grant equity across countries often attach a country appendix to the grant agreement for that reason. If you work outside the United States, I suggest reading any appendix for your country and asking a lawyer or tax adviser there.

How Long Do You Have to Exercise Vested Options After Your Job Ends?

You have as long as your option agreement allows, and that window can be short. The agreement in Knudsen allowed no time after termination at all. For incentive stock options, a federal tax rule adds its own employment test that can run out before your agreement’s window does.

The Knudsen agreement provided that “the ISO and SAR may be exercised by the Employee (to the extent that the Employee is then vested) at any time prior to such termination.” Your window also cannot run past the option’s final expiration date in the grant agreement. I suggest writing down your exercise deadline on the day your employment ends, because an unexercised option that expires is gone.

Incentive stock options carry a separate federal test. Under 26 U.S.C. § 422(a), incentive stock option tax treatment depends on several conditions, including a holding period for the shares. Paragraph (a)(2) requires that the holder was an employee “at all times during the period beginning on the date of the granting of the option and ending on the day 3 months before the date of such exercise.” The employer must be the granting corporation or a related corporation the statute names. Section 422(c)(6) provides: “For purposes of subsection (a)(2), in the case of an employee who is disabled (within the meaning of section 22(e)(3)), the 3-month period of subsection (a)(2) shall be 1 year.” Check the current text of the statute before relying on these periods.

Exercising means paying the exercise price, and the tax result depends on the type of option. I suggest asking a CPA to run the numbers before you exercise, and reading about the tax consequences of forfeited equity if you decide to let options lapse.

What Is a Typical Post-Termination Exercise Period?

Many option agreements give a departing employee 90 days, or three months, to exercise vested options. That length often tracks the three-month employment test for incentive stock options in section 422(a)(2). Plans also commonly allow a longer window after death, disability, or retirement, often a year or more. Some agreements give only 30 days. Others end the right to exercise on the termination date itself, as the Knudsen agreement did. A few companies offer windows of several years.

So a window under 90 days is on the short end of common practice. If yours is that short, a longer exercise window is worth asking for in any severance discussion, within the federal tax limit on extensions covered under How Can a Severance Agreement Change Your Equity?.

Do Executives, Employees, and Consultants Get Different Exercise Windows?

The equity plan usually sets one default window, and individual agreements can change it. Rank-and-file employees usually get the plan’s default. Executives more often negotiate a longer window or accelerated vesting in an employment or severance agreement, so I suggest reading those agreements alongside the plan.

A consultant or contractor who is not an employee cannot hold an incentive stock option. Under 26 U.S.C. § 422(b), an incentive stock option is “an option granted to an individual for any reason connected with his employment by a corporation,” among other conditions. Options granted to a consultant are nonqualified stock options. Their exercise window comes from the plan and the consultant’s grant agreement, and the three-month employment test in section 422(a)(2) does not apply to them.

How Does Being Fired for Cause Change What You Keep?

Under your documents, being fired for cause changes what you keep only if they treat cause differently from other terminations. A plan may shorten the exercise window or cancel vested options on a for-cause termination, so the plan’s definition of “cause” matters. Under a clause that ends the option on termination “for any reason,” cause may not matter at all.

That is what happened in Knudsen. The option expired when the employee stopped being a management employee “for any reason.” The court read that phrase to permit termination “with or without cause.” Because the clause did not distinguish between the two, the court held that whether he was fired for cause was not a material issue.

If you perform services for hire in Minnesota, you can ask your employer for the stated reason. Minn. Stat. § 181.933, subdivision 1, provides: “An employee who has been involuntarily terminated may, within 15 working days following such termination, request in writing that the employer inform the employee of the reason for the termination. Within ten working days following receipt of such request, an employer shall inform the terminated employee in writing of the truthful reason for the termination.” For this request, Minn. Stat. § 181.931, subdivision 2, defines an employee as “a person who performs services for hire in Minnesota for an employer.” Check the current text of the statute for those periods. Under subdivision 2, the employer’s statement cannot be the subject of a defamation action by the employee. I suggest making this request when your documents treat a layoff and a for-cause termination differently, because the written reason fixes which one the company says it was.

Cause protection can also be negotiated on the way out. In one transition agreement I negotiated for a departing executive, the employer agreed to limits on how it could use performance communications after a set date. It could not use them as grounds for discipline, for a Cause termination, or to reduce or withhold a payment.

When Can You Challenge a Layoff Timed Just Before Vesting?

A challenge based on timing alone faces the Minnesota Supreme Court’s decision in Knudsen, which enforced an option agreement that ended on termination “for any reason.” Knudsen left room for a different result when the termination ran against discrimination law or fell within a recognized exception to the at-will doctrine. If your unvested stock sits in an employee stock ownership plan or another employee benefit plan, 29 U.S.C. § 1140 also makes it unlawful for any person to discharge a participant “for the purpose of interfering with the attainment of any right to which such participant may become entitled under the plan.”

In Knudsen, the employee argued that his termination without fault prevented him from vesting. The court called that conclusion “erroneous in view of the facts of this case,” because his agreement allowed termination for any reason. In an earlier case, Hunt v. IBM Mid America Employees Federal Credit Union, 384 N.W.2d 853 (Minn. 1986), the court wrote a rule for employment contracts: “Moreover, we have not read an implied covenant of good faith and fair dealing into employment contracts.”

The Knudsen court did leave room for a different result. It wrote: “Our holding does not mean we would not recognize situations in which a broad termination provision in a stock option contract would be subject to a good faith finding of cause before the stock rights could be denied.” It named the clearest case as one “when termination was in contravention of discrimination law or for a reason similar to those already recognized by Minnesota law as an exception to the at-will doctrine.” In a footnote, the court wrote that “Minnesota has recognized four exceptions to the at-will doctrine,” among them that “at-will employment doctrine can be altered by job security provisions included in an employee handbook” and that “independent consideration beyond personal employment services can create a contract limiting discharge to good cause.” If you believe your termination fits one of those situations, the lost equity can be part of what that claim seeks. See wrongful termination for how those claims work.

A discrimination claim has its own filing deadlines. Under Minn. Stat. § 363A.28, subdivision 3, a Minnesota Human Rights Act claim “must be brought as a civil action pursuant to section 363A.33, subdivision 1, filed in a charge with a local commission pursuant to section 363A.07, subdivision 3,” or “filed in a charge with the commissioner within one year after the occurrence of the practice”. Paragraphs (b) and (c) describe when “the running of the one-year limitation period is suspended”. Check the current text of the statute before relying on that period.

A federal age claim starts with a charge: under 29 U.S.C. § 626(d)(1), “No civil action may be commenced by an individual under this section until 60 days after a charge alleging unlawful discrimination has been filed with the Equal Employment Opportunity Commission.” The same paragraph requires the charge to be filed “within 180 days after the alleged unlawful practice occurred” or, “in a case to which section 633(b) of this title applies, within 300 days after the alleged unlawful practice occurred, or within 30 days after receipt by the individual of notice of termination of proceedings under State law, whichever is earlier.” Under section 626(e), if a charge “is dismissed or the proceedings of the Commission are otherwise terminated by the Commission, the Commission shall notify the person aggrieved,” and “A civil action may be brought under this section by a person defined in section 630(a) of this title against the respondent named in the charge within 90 days after the date of the receipt of such notice.” Check the current text of each statute before relying on these periods.

What Can Happen to Shares You Already Bought by Exercising Options?

Shares you bought by exercising options can still carry conditions. In a Minnesota Supreme Court case, the court enforced a company’s right, after the employee left, to buy back his shares at the price he had paid.

In Pillsbury Co. v. Elston, 283 N.W.2d 370 (Minn. 1979), a former vice president had exercised options and then resigned. His option agreements provided: “The Company may repurchase within 190 days after the date of any exercise of this Option all shares of stock which have been purchased within six months prior to the employment termination date * * for the total amount paid by the Employee for such shares.” The court enforced that provision. It explained that Elston “did not have an indefeasibly vested right to the shares, although he did have the right to exercise the options.” Pillsbury involved a voluntary resignation, so whether a buyback reaches you after a layoff depends on the repurchase terms in your own documents.

Private companies in particular may hold buyback rights in the stockholder agreement, at fair value or at cost. I suggest reading the repurchase price before you exercise, because a buyback at your cost would return your money with no gain.

How Much Notice Do You Get Before a Layoff?

Most employees get only the notice their employer chooses to give, unless federal WARN Act notice applies. The federal Worker Adjustment and Retraining Notification Act (WARN Act) covers only larger employers. Under 29 U.S.C. § 2101(a)(1), a covered employer is “any business enterprise that employs” either “100 or more employees, excluding part-time employees” or “100 or more employees who in the aggregate work at least 4,000 hours per week (exclusive of hours of overtime).” For a covered employer, 29 U.S.C. § 2102(a) provides: “An employer shall not order a plant closing or mass layoff until the end of a 60-day period after the employer serves written notice of such an order”. The notice goes to each employee representative or, if there is none, “to each affected employee,” and to state and local officials. Section 2101(a) defines “plant closing” and “mass layoff” by the number of employees who lose their jobs at a single site, so a small layoff may not require WARN notice at all. Check the current text of the statute before relying on that notice period.

Minnesota’s early-warning statute encourages notice rather than setting a period. Under Minn. Stat. § 116L.976, subdivision 1, the commissioner “shall encourage” businesses considering a plant closing, substantial layoff, or relocation “to give notice of that decision as early as possible.” Subdivision 2 provides that an employer giving notice under the federal act or subdivision 1 “must report to the commissioner the names, addresses, and occupations of the employees who will be or have been terminated.” Check the current text of each statute before relying on it.

Section 2102(a) governs when notice of the layoff must come and does not address your equity. The clearest picture of your equity comes from your own documents and from asking HR, in writing, for your vested balance, your exercise deadline, and whether any acceleration applies. Notice matters for equity because the weeks between an announcement and your last day are when a vesting date may still pass and when severance terms are easiest to negotiate.

How Can a Severance Agreement Change Your Equity?

A severance agreement can accelerate unvested awards, extend your exercise window, or waive a company buyback right, and an employer may ask for your release of claims in exchange. Two sets of rules shape that trade: a federal tax rule on extending options, and federal and Minnesota rules on releases.

Equity terms worth asking for include accelerated vesting of the next tranche, a longer exercise window, waiver of a repurchase right, or a cash payment for unvested awards. Extending an option’s exercise window has a federal tax limit. The federal deferred compensation regulation, 26 C.F.R. § 1.409A-1, addresses extensions in paragraph (b)(5)(v)(C)(1). It defines an extension as “the provision to the holder of an additional period of time within which to exercise the stock right beyond the time originally prescribed under the terms of the stock right.” The same paragraph adds: “It is not an extension if the exercise period of a stock right is extended to a date no later than the earlier of the latest date upon which the stock right could have expired by its original terms under any circumstances or the 10th anniversary of the original date of grant of the stock right.” When there is an extension, paragraph (b)(5)(v)(A) treats the option as “having had an additional deferral feature from the original date of grant of the stock right, and therefore will be treated as a plan providing for the deferral of compensation from the original grant date for purposes of this paragraph (b).” The regulation treats an extension made while the exercise price equals or exceeds the stock’s fair market value differently: “Instead, in such a case, the original stock right is treated as modified rather than extended and a new stock right is treated as having been granted for purposes of this section.” The regulation has other rules as well. I suggest ending any extended window no later than the option’s latest possible original expiration date or the 10th anniversary of its grant, whichever comes first. That limit matters because the regulation says a window extended within it is not an extension. An extended window does not remove the employment test in section 422(a)(2). For an incentive stock option, 26 U.S.C. § 424(h)(1) adds: “For purposes of this part, if the terms of any option to purchase stock are modified, extended, or renewed, such modification, extension, or renewal shall be considered as the granting of a new option.” For an option “not immediately exercisable in full,” section 424(h)(3) excludes from “modification” a change “to accelerate the time at which the option may be exercised.”

A release of age claims has federal minimums. The federal Age Discrimination in Employment Act (ADEA) protects people 40 and older. Under 29 U.S.C. § 631(a), “The prohibitions in this chapter shall be limited to individuals who are at least 40 years of age.” The ADEA’s definition section, 29 U.S.C. § 630(b), defines an employer as “a person engaged in an industry affecting commerce who has twenty or more employees for each working day in each of twenty or more calendar weeks in the current or preceding calendar year”, and the definition goes on to include agents and public employers. Under 29 U.S.C. § 626(f)(1), among other requirements, a valid waiver of ADEA claims requires that the individual “waives rights or claims only in exchange for consideration in addition to anything of value to which the individual already is entitled.” So a promise to honor equity that has already vested does not count toward that requirement. For the waiver to count as knowing and voluntary, you must also have “at least 21 days within which to consider the agreement.” The period is at least 45 days when the waiver is requested “in connection with an exit incentive or other employment termination program offered to a group or class of employees.” The agreement must also give you “at least 7 days following the execution of such agreement” to revoke it. Under paragraph (f)(2), a waiver “in settlement of a charge filed with the Equal Employment Opportunity Commission, or an action filed in court by the individual or the individual’s representative, alleging age discrimination of a kind prohibited under section 623 or 633a of this title” instead requires that “subparagraphs (A) through (E) of paragraph (1) have been met” and that “the individual is given a reasonable period of time within which to consider the settlement agreement.” Check the current text of the statute before relying on these periods.

Minnesota adds its own rescission right. Under Minn. Stat. § 363A.31, subdivision 2, you may rescind a release of claims under the Minnesota Human Rights Act (MHRA) for past or concurrent acts. Such a release “may be rescinded within 15 calendar days of its execution,” unless it settles a claim already filed with an agency or court. The employer must inform you in writing of that right. The statute adds: “To be effective, the rescission must be in writing and delivered to the waived or released party by hand, electronically with the receiving party’s consent, or by mail within the 15-day period. If delivered by mail, the rescission must be: (1) postmarked within the 15-day period; (2) properly addressed to the waived or released party; and (3) sent by certified mail return receipt requested.” Check the current text of the statute before relying on that period. For how these agreements are built, see Minnesota severance agreements and what makes a severance agreement unenforceable.

What Is an Option Cancellation Agreement?

An option cancellation agreement is the document in which you give up stock options, usually in exchange for something: a cash payment, replacement awards, or other severance terms. Companies use one in a severance package to clear unexercised options off their books, and in a sale of the company to cash out options instead of converting them into the buyer’s awards. Before you sign one, I suggest checking which options it cancels (vested, unvested, or both) against your grant agreements, because a cancellation list can sweep in vested options you could still exercise. I also suggest comparing the payment with what those vested options would be worth if you exercised them within your window. If the agreement includes a release of claims, the age-waiver and Minnesota rescission rules in the severance section apply to it.

Other Questions Terminated Employees Ask About Their Stock Options

Can I Transfer My Stock Options to a Family Member After Termination?

Usually you cannot transfer your options to a family member, and you can never transfer an incentive stock option during your lifetime. Under 26 U.S.C. § 422(b)(5), an option qualifies as an incentive stock option only if it “by its terms is not transferable by such individual otherwise than by will or the laws of descent and distribution, and is exercisable, during his lifetime, only by him.” Nonqualified options are governed by your plan and grant agreement. Some plans permit gifts of nonqualified options to family members or family trusts with the company’s consent, and many prohibit any transfer. Termination does not loosen these limits. If you want a family member to benefit, the usual path is to exercise the options yourself and then transfer the shares, subject to any transfer restrictions on the shares.

Do Stock Options Affect Unemployment Benefits Eligibility?

Exercising a nonqualified option after you leave does not count as wages for Minnesota unemployment purposes. Minn. Stat. § 268.035, subdivision 29, defines wages broadly but excludes “the income to a former employee resulting from the exercise of a nonqualified stock option.” Cash paid because of your separation is treated differently. Under Minn. Stat. § 268.085, subdivision 3b, an applicant is “not eligible to receive unemployment benefits for any week the applicant is receiving, has received, or will receive separation pay, severance pay, bonus pay, or any other payments paid by an employer because of, upon, or after separation from employment,” if the payment is “considered wages under section 268.035, subdivision 29” or “subject to the Federal Insurance Contributions Act (FICA) tax imposed to fund Social Security and Medicare.” Under paragraph (e) of subdivision 3b, a payment smaller than your weekly benefit amount reduces that week’s benefit instead of eliminating it. A cash payment for canceled unvested awards in a severance agreement can fall within subdivision 3b if it meets either test, so I suggest asking how the payment will be reported before you apply. Check the current text of each statute before relying on it.

Can Terminated Employees Participate in Company Stock Buyback Programs?

Whether you may sell into a company buyback or tender offer depends on the offer’s own terms. Shares you own outright, such as shares you bought by exercising options, stay yours after you leave, so an offer made to all holders of those shares reaches you as it reaches any other stockholder. Private companies often run tender offers limited to current employees, or cap how much former employees may sell, so I suggest reading the eligibility section of the offer document. Unexercised options usually must be exercised before the shares can be sold, and the offer document says whether vested options may take part.

How Do Your Choices Compare After a Layoff, From a Conversation to a Claim?

Your choices run from reading the documents and talking with the company, through a written request and a negotiated severance term, to a breach-of-contract claim. I suggest starting with the documents and a conversation, because they cost the least and can show whether anything is worth negotiating.

• Read the documents and build a timeline. It fits every reader. List each vesting date, your exercise deadline, and each option’s expiration. It costs an evening. The risk is waiting so long that the exercise window closes.
• A conversation with HR or the executive who made the decision. It fits a layoff that had nothing to do with your performance, especially when the next vesting date is close. I suggest asking whether the company will accelerate the next tranche or extend your exercise window, because those terms are the company’s to change. It costs little. The risk is a spoken promise that never makes it into writing, so I suggest confirming any answer by email.
• A written request for the reason for your termination. It fits documents that treat a layoff and a for-cause termination differently. The section on cause above explains the request under Minn. Stat. § 181.933.
• Negotiating equity terms into a severance agreement. It fits a reader offered severance. It costs the release of claims you sign. The risk is giving up a claim worth more than the equity term, which is why the release rules above matter.
• Help from other professionals. A CPA can show the tax cost of exercising and selling. A financial adviser can help decide whether to exercise and how to pay for it.
• Your final paycheck. Minnesota’s final-pay statutes cover your “wages or commissions.” When “any employer employing labor within this state discharges an employee,” Minn. Stat. § 181.13(a) makes wages “actually earned and unpaid” immediately due on demand. It treats wages as unpaid if the employee “was not paid for all time worked at the employee’s regular rate of pay or at the rate required by law, including any applicable statute, regulation, rule, ordinance, government resolution or policy, contract, or other legal authority, whichever rate of pay is greater.” The demand “must be in writing but need not state the precise amount of unpaid wages or commissions.” If the wages are not paid “within 24 hours after demand,” the employer is in default. Under Minn. Stat. § 181.14, subdivision 4, when the employee was “entrusted with the collection, disbursement, or handling of money or property,” the employer “shall have ten calendar days after the termination of the employment to audit and adjust the accounts of the employee before the employee’s wages or commissions shall be paid as provided in this section, and the penalty herein provided shall apply in such case only from the date of demand made after the expiration of the period allowed for payment of the employee’s wages or commissions.” Check the current text of each statute before relying on these periods. If you resign instead, Minn. Stat. § 181.14, subdivision 1, sets the deadline at the first regularly scheduled payday after your last day, with some exceptions. See Minnesota final paycheck rules.
• A claim for breach of the equity agreement. It fits documents that promised you something the company refused, such as acceleration on a termination without cause. Knudsen was brought as a breach-of-contract action. It costs attorney fees and time. The risks are a loss on the plan’s own terms, as in Knudsen, and a plan clause that may require arbitration.

What Should You Do Next With Your Equity Documents?

After a layoff, your equity plan and grant agreement are the first place to look for what you keep, and the exercise deadline is the date to protect first. A severance agreement is the main chance to change those terms, and a release that comes with it has federal and Minnesota rules worth reading before you sign. For more on these issues, see my employment law practice.

If you have been laid off and want to know what your equity documents give you, email [email protected] with a brief description, and I can start an intake and conflict check before you send any confidential documents.