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Law Educator, Esq.
Law Educator, Esq., Attorney
Category: Employment Law
Satisfied Customers: 116759
Experience:  20+ Years of Employment Law Experience
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I have a 2 part question. Scenario 1: I was with X startup

Customer Question

I have a 2 part question.
Scenario 1: I was with X startup company for about 9 years, during which time the company had some financial troubles and asked employees to take a 10% pay cut. In return we were verbally promised we would get 2x that amount in stock. The company has sense been acquired and I have thus resigned from the new company. Meanwhile I assumed the entire time my money / stock was accounted for. The new company has sense sold a portion of the company for a tremendous gain. I went to collect and they have stated I forfeited my stock when I resigned due to legal verbiage in Question 2 which in my opinion should have nothing to do with Question 2 as they are completely different transactions.
Scenario 2: While I was employed with this new company I was offered X amount of common stock (Nonstatutory stock option).
Vesting Schedule
“Subject to the company’s 2011 stock option plan, so long as your employment or consulting relationship with the company continues, the shares underlying this option shall vest and become exercisable in accordance with the following schedule: 10% of the shares subject to the option shall vest and exercisable upon grant. The remaining 90% of the total number of shares subject to the option shall vest and become exercisable on a monthly basis thereafter (2.5% each month) beginning on the first anniversary of the vesting commencement date and ending on the fourth anniversary of the commencement date. If your relationship with the company is terminated for any reason, the option shall terminate with respect to all unvested shares underlying this option.”
Termination Period
This option may be exercised for 90 days after termination of your employment or consulting relationship, except as set out in section 5 of the stock option agreement (but in no event later than the expiration DATE). The optionee is responsible for keeping track of the exercise periods following termination for any reason of his or her service relationship with the company. The company will not provide further notice of such periods.
Exercise upon termination
Following the date of termination of optionee’s continuous service status for any reason, optionee may exercise the option only as set forth in the notice and this section 5. To the extent that optionee is not entitled to exercise the option as of the termination date, or if optionee does not exercise the option within the termination period set forth in the notice of the termination periods set forth in this section 5, the option shall terminate in its entirety. In no event may any option be exercised after the expiration date of the option as set forth in the notice.
Post my resignation I did consulting work on and off for about 4 months for them building up an invoice that was never paid. My argument is that Scenario 1 is in no way under the agreement for Scenario 2 as I paid for those options years before Scenario 2 existed. My argument for Scenario 2 is that my consulting was never terminated and per the agreement it continued to accrue. What are your thoughts? Do I have valid legal grounds here?
Submitted: 1 year ago.
Category: Employment Law
Expert:  Law Educator, Esq. replied 1 year ago.
Thank you for your question. I look forward to working with you to provide you the information you are seeking for educational purposes only.
The cashing in of your stock regardless of what the situation is in Scenario 1, has to comport with the written terms of the stock agreement. So when cashing in your shares for any reason, it had to be in accordance with the terms on those shares (it is not just a technicality, it is a contract that binds and controls those shares). If you did not comply with those terms of the shares above if this were to go to court, the court would have to follow what is written in the terms. So when you left you would have to follow those terms to claim your rights to the shares or they would be forfeited.
Now, aside from the share issue, if they owe you money for hours worked, you have 2 years from the date you worked those hours, to sue them for failure to pay wages due to you and you could seek to sue them over them not paying your wages when due.
Customer: replied 1 year ago.
There was no written contract for scenario 1, it was all verbal with no conditions. 10% pay cut for 2x the amount in stock.Scenario 2 had a contract but I am challenging the 90 day verbiage since I was a contractor. I never gave notice for terminating the contracting gig nor did they.
Expert:  Law Educator, Esq. replied 1 year ago.
Thank you for your reply.
The statute of frauds states that any contract of that nature must be in writing to be enforceable in court.
In order to challenge the 90 days, you have to prove that you never terminated your employment with them, it is not about giving notice, since you terminating your employment can be a constructive or implied notice.
Customer: replied 1 year ago.
for scenario 1 a verbal message to the entire company base indicating this is not enforeceaable? And I know for a factotal several employees were cashed out their original 10% instead of taking the stock when they left the company.I have an email from one of the vp's this time last year indicating he had no ceiling for my consulting and stated the rate per hour. I had also received. Consulting started in Nov of 2014, last invoice I sent was in March of 2015 but I have phone calls and texts messages through the summer that I did not bill for that was a 1 line response or a 5 minute conversation.
Expert:  Law Educator, Esq. replied 1 year ago.
Thank you for your reply.
A verbal promise is not enforceable in court pursuant to the statute of frauds unless there is some proof of partial performance in reliance on the verbal promise. IF you can prove the nature of the verbal agreement and prove you upheld your part of the agreement, you could try to enforce this in court, but it is not an open and shut case.

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