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LawTalk, Attorney
Category: California Employment Law
Satisfied Customers: 37855
Experience:  I have 30 years of experience in the practice of law, including employment law and discrimination law.
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I live in California, I am an executive and have been

Customer Question

I live in California, I am an executive and have been notified that I will be terminated in 4 weeks. The company is about to merge with another company and I have options whose vesting accelerates upon change of control. I have been offered a severance agreement, but now the company wants me to recind the options as part of the severance agreement. Is this legal? Can the company terminate me early, if i don't agree to recind the option agreement?
Submitted: 1 year ago.
Category: California Employment Law
Expert:  LawTalk replied 1 year ago.

Good afternoon,

I'm Doug, and I'm very sorry to hear of your situation. My goal is to provide you with excellent service today.

In terms of severance, be aware that the state of CA has no mandatory severance pay law, and an employer may let an employee go without any pay or benefits other than that which has been earned up to the point of termination. On the other hand, if the company has a policy of paying severance pay to employees in your situation, then the employer must treat all employees equally in terms of the amount and nature of the severance pay based on their position in the company at the time of the lay-off.

The company may legally condition your receipt of a severance package based on your agreement to allow rescission of your options. You are not obligated to agree to that proposal, but refusing to agree may well mean that the severance agreement will not be offered.

Additionally, you asked whether refusing to agree to rescission of the options would be grounds for termination. As you may be aware, in California, employees are presumed to be "at will." Cal. Labor Code §2922 provides that at-will employees may be terminated for any reason—at any time, even a mistaken reason, they can have their hours or pay decreased and they can suffer a cut in their benefits, so long as it's not illegal or unlawfully discriminatory. Generally, employees who work under an employment contract can only be terminated, or have significant changes made in their work conditions, for reasons specified in the contract.

Unless you have a written contract of employment with your employer, which guarantees your position with the company for a set period of time and at a given wage, then you are considered an employee-at-will.

So, unfortunately, yes, the company could terminate you early if you refuse to rescind your options.

You may reply back to me using the Reply link and I will be happy to continue to assist you until I am able to address your concerns, to your satisfaction.

Kindly, remember to rate my service to you. That is how I am credited for assisting you.

I wish you and yours the best in 2015,