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Tina, Attorney
Category: California Employment Law
Satisfied Customers: 33167
Experience:  JD, 17 years experience & recognized by ABA for excellence in employment law.
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Is it legal for an employer to claw back already vested stock

Customer Question

Is it legal for an employer to claw back already vested stock options from an employee?
Submitted: 4 years ago.
Category: California Employment Law
Expert:  Tina replied 4 years ago.
Hello and welcome,

In which state do you work?

On what basis is the employer attempting to claw back vested stock options?
Customer: replied 4 years ago.

Hi Tina,


I am working in California.

The basis for the attempt is underperforming.



Expert:  Tina replied 4 years ago.

Hello again, Stephan, and thank you for the additional information.

No, this would not typically be legal and would normally constitute a breach of the stock option agreement, assuming there is such a document providing for the stock options as part of your compensation package.

If you still work for the employer, it would normally be best to take the diplomatic course of action and retain a local employment law attorney to explain your right to the benefit of your agreement with them, rather than pursuing legal action.

Of course, if the employer refuses to adhere to the terms of your agreement with them, it may become necessary to file a lawsuit.

If the amount of compensation you would be seeking is $10k or less, then you could pursue a cause of action in small claims court without an attorney. Otherwise, it would be best for an attorney to represent you in the Superior Court.

The state and local bar associations can provide attorney referrals for you.

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