In California, stock options are not wages

Many companies, especially in the technology sphere, will provide their employees with options to buy stock at a predetermined exercise price. This is an opportunity to grow with the company and eventually sell the options for a significant profit if or when the company undergoes an initial public offering (IPO). Many employees sacrifice higher wages in exchange for stock options. However, a recent court decision has confirmed that stock options are not wages in the context of a retaliatory/wrongful termination claim.

Background

Gautam Shah began working for Skillz, Inc., in October 2015. Skillz is a mobile gaming company founded in 2012 that provides a platform for users to play video games and compete with others on their mobile devices. Shah was hired as a director of a new program the company was launching and was eventually given the title of Director of Finance and Strategy.

Upon hire, Shah signed both an employment contract and a notice of stock option grant, allowing him to buy stock options at a predetermined price. The stock options were set to vest on a four-year vesting schedule, with 25% of the 69,487 options vesting after one year, and 6.25% being vested every three months thereafter. The stock options that didn’t vest would be forfeited to the extent he left the company before they vested. Importantly, to the extent he was ever terminated for cause, his options expired on the date of his termination.