
Ask HN: Terminated two weeks before vesting cliff – thoughts? - terminatedguy
Details hidden to provide anonymity to both parties.<p>I am being terminated from a startup 2 weeks before reaching my one year cliff. The other day I was asked to sign a release form noting the date of termination and that I would receive no stake in the startup.<p>To provide some background, I was visiting the company at their new out of state location for a few weeks. Historically, the company started in SF and moved. We also worked remotely for a better part of a year. I was asked about my future with the company, and I mentioned that I would like to transition out of the company. My flight back home was scheduled for next week, but it was pushed up to two days after the discussion when a new ticket was purchased for me.<p>The following weeks progressed with my permissions to various websites were being revoked, and my receipt of a release form.<p>The company was bootstrapped, less than 5 people, and everyone worked for more than half a year without salary.<p>I saw a similar situation here on another Ask HN thread.
https:&#x2F;&#x2F;news.ycombinator.com&#x2F;item?id=3962292<p>What are your thoughts and advice about the situation above?<p>Thank you for taking the time
======
michael_storm
Don't listen to the people here telling you to just "move on". You worked for
half a year without salary; they don't get to screw you and get away with it.
There is no "high road" that benefits exclusively them.

Get a lawyer _now_ , do not sign anything, do not pass Go. Upvoted advice in
the other thread applies. The card you hold is the threat of a lawsuit, which
happens to be justified.

To be clear: you're still an idiot. They're jerks. Let this be a watershed
moment for you.

~~~
Throwaway23412
>more than half a year without salary

Pretty sure a lawyer would be salivating to take this case.

~~~
kzhahou
Why? Someone agrees to no salary, what claim do they then have?

~~~
beagle3
At the very least, there are hourly minimum wage laws that you cannot agree to
forfeit.

~~~
boulos
Lest someone think this is incorrect, California anyway has "you must pay
overtime exempt workers at least 2x minimum wage" (or they can sue). Start at
the overtime page:
[http://www.dir.ca.gov/dlse/faq_overtime.htm](http://www.dir.ca.gov/dlse/faq_overtime.htm)
and follow through on exemptions.

Source: have known founders who had to sign waivers agreeing not to sue.

------
dredmorbius
It's not clear what "write up your own response" means here, but:

1\. You're in lawyer territory now. Stop talking.

2\. Lawyers, the good ones anyhow, run about $350/hr minimum in the Bay Area.
Quite possibly more. This will likely cost you $5k - $10k to litigate. The
more you talk (and the more you tie up your lawyers time, quite probably
billed in 15 minute to one hour minimums _per contact_ \-- and email or phone
calls are contacts -- the more that will be.

3\. Let your lawyer talk for you.

4\. We've already established that you're an idiot and you were working for
assholes. That's no real insult, _most_ employees in the tech world are idiots
when it comes to dealing with employment stuff. I certainly am. There's far
too little training on this anywhere, and the law changes both quickly and
regionally.

5\. Just shut the fuck up already.

6\. The fact that most employers are assholes and the law is the shits (among
many other faults) are why I'm as far the fuck as I can get from tech these
days. Watching my garden grow is both more rewarding and remarkably less
stressful. Some plants are assholes, but I can burn them with fire, legally.

~~~
pc86
This is a side note but if your lawyer charges $350/hr _and_ bills you .25 or
1.0 hours for an email, they are a piece of shit and you should get a
different lawyer.

At that rate you should absolutely not be charged in increments larger than .1
hour (6 min).

Our attorney (Associate) charges $145/hr and his boss (Partner) charges
$285/hr and they both bill in increments of .1, and they typically won't bill
every single email either.

~~~
dredmorbius
Read your lawyer's billing terms and understand them clearly. My information
may differ from others, and it's not a field in which I'm an expert, though
I've paid for a certain level of education, and not through an academic
institution.

There may well be forums for discussing particulars of these terms and there
may be value in negotiating those as well.

The larger point is that lawer time is expensive.

------
jordanb
Obviously, the only genuine advice this forum can give is

1\. Don't sign anything. 2\. Don't say anything else to them. 3\. Quit
discussing it publicly. 4\. Go directly to a lawyer.

But honestly unless they're completely incompetent they probably hold all the
cards. Yet another reason not to trust employee equity.

~~~
andymoe
Don't underestimate how completely incompetent a five person startup can be.

~~~
debacle
Bootstrapped, no less.

------
dragonwriter
> The company was bootstrapped, less than 5 people, and everyone worked for
> more than half a year without salary.

This is almost certainly illegal, and may not even take a lawyer to address
(though that's usually going to be most effective, if not always most _cost_
effective): if you had a nominal salary [ _], most jurisdictions ' labor law
require it be paid with a minimum frequency, and this is often a violation
that state agencies will pursue on behalf of employees (e.g., in California,
wage claim can be filed with the Department of Industrial Relations, Division
of Labor Standards Enforcement [1]. Likewise, to the extent there are federal
wage-and-hour violations, these can be addressed by complaint to the federal
Department of Labor [2].)

[_] if you didn't, its probably a violation of minimum wage laws (potentially
both state and federal), and since you were probably otherwise treated as FLSA
exempt in other aspects of employment, and FLSA exemption includes a minimum
salary, its probably a violation of other labor laws. These, again, may be
things that can be addressed through complaint to government agencies without
pursuing a lawsuit; particularly, the Federal Department of Labor [2].

[1]
[http://www.dir.ca.gov/dlse/howtofilewageclaim.htm](http://www.dir.ca.gov/dlse/howtofilewageclaim.htm)

[2]
[http://www.dol.gov/wecanhelp/howtofilecomplaint.htm](http://www.dol.gov/wecanhelp/howtofilecomplaint.htm)

~~~
kzhahou
Ianal but tons of startups forego salary when times are tight (a month or two)
and a bootstrapped startup isnt paying anyone until money starts flowing.
What's illegal here?

~~~
nostrademons
Minimum wage laws. It's technically illegal, but it's a civil penalty, not
criminal, and so the employee has to sue to claim damages. And if the company
doesn't have money to pay salaries, they aren't going to have money to pay out
damages to a lawsuit - a victorious plaintiff just goes to the top of the
creditor list when it comes to fighting over the carcass.

[Edit: "Willful" violations may also be prosecuted criminally, although again,
this usually requires that somebody report it. [2]]

It's a calculated risk for many founders. They're one disgruntled employee
away from a company-ending lawsuit, but usually if they're not paying salaries
then they're a paycheck or two away from a company-ending bankruptcy. And once
money comes in, good founders will usually pay back all the back wages to
avoid that lawsuit.

(This is also why founders should pay themselves minimum wage - I've had a
(Massachusetts) lawyer tell me this, and YC's legal counsel also suggested it
in their "How to start a startup" lecture [1]. Yes, this also means you have
to pay taxes on the money you're paying yourself. This is one of the few good
arguments against incorporating before there's money coming in.)

[1]
[https://www.youtube.com/watch?v=EHzvmyMJEK4#t=1980](https://www.youtube.com/watch?v=EHzvmyMJEK4#t=1980)

[2]
[http://www.dol.gov/general/topic/youthlabor/enforcement](http://www.dol.gov/general/topic/youthlabor/enforcement)

~~~
dragonwriter
The employee may not have to sue themselves; both the federal and many state
governments have agencies that take wage and hour complaints and pursue
employers on behalf of employees. "Civil" does not imply "not pursued by the
government".

------
refulgentis
I think if you weren't ready to leave, you shouldn't have said you were
leaving. They would be derelict of duty if upon hearing you say it, they
didn't immediately stop any capital flow in your direction.

It's shitty as hell, and I'd like to think I'd never do that, but it's
rational, and people tend to choose rationality over morals.

~~~
dogecoinbase
It's going to seem less rational when the company is forced to give back the
stock+penalties, or a year's salary at a reasonable engineering rate (they're
either a founder or an employee, and either way the company is screwed).

~~~
kzhahou
What salary is someone owed when they agree to work for free?

~~~
URSpider94
In the USA, you can not agree to work for free. It's just not allowed. People
do it, yes -- but it's illegal, and governments do prosecute companies, and
it's one of the few violations that can "pierce the corporate veil" and go
directly after owners.

------
cleandreams
I've worked in lots of tech companies and my experience is that you don't give
notice in advance at all. That's because you get walked out the day you say
you want to / will be leaving. That's a no-brainer from the tech company point
of view. The longer you stay after announcing an intention to leave the more
IP they stand to lose. You should have expected to be walked out immediately.
Sorry. You may have a case because of the 6 mo without pay but that's not your
equity option. Live and learn.

~~~
encoderer
I'm sorry you've had so many bad experiences. It's not that way everywhere. In
my experience it's normal at Bay Area tech companies to have a happy hour and
send people off warmly.

~~~
kzhahou
Absolutely! But his point still stands: don't give notice until the day you're
ready to walk out. Don't give notice the week before yearly bonuses (and make
sure you have the dates correct!), don't give notice right before a big
vesting event, don't give notice until you transfer/clear out the gigs of
photos and personal crap you accumulated on your work machine over the years,
etc..

------
doctorpangloss
You can ask to amend the release to get 50/52 of your yearly reward of shares,
or 96.15%, and then you'll agree to the rest of the release.

Generally, a company is not allowed to push out employees in order to avoid
granting vesting options. This is a "breach of contract," in the sense that
you're only supposed to be terminated with cause. "Pushing out," in many
circumstances, includes making you miserable and making you want to leave.

Termination with cause is pretty tricky. If you received a "performance
improvement plan," then you'll have a weaker case. If your performance was
poor, then it was poor. They had to inform you at some point. Otherwise, it
doesn't really mean anything if you say you plan to transition out of the
company. That doesn't sound like cause, but it may in the state in which you
are employed.

You'll notice on the release that you're going to be agreeing that you can't
sue about anything that happened under your employment. That clause is there
to specifically prevent people from suing about being pushed out.

Absolutely don't sign the release, do not say anything to them. They do not
hold any cards, as others have said. Your lawyer will ask to perform discovery
on their e-mail. If they have but one text message or e-mail that says, "We
need to terminate this guy before he vests," or if any of the employees sign
an affidavit indicating anything to the effect of pushing out, they will incur
a significantly higher liability.

So what you're betting on is not whether or not they wanted to push you out,
or what you said (being unhappy doesn't make you less entitled to your
shares). It's whether or not you can prove that they pushed you out.

You're probably not used to being an aggressive person. Expect to pay a good
lawyer a $2,500 retainer for the first time in your life. My suggestion is to
talk to them first, see what they'll agree to, and then if you don't get 50/52
of a year's grant, talk to a lawyer. Note, if they so much as agree to even
0.01% of granting your shares, your life becomes immensely easier in court--
then the argument because not IF you should get a grant, but HOW MUCH. So if
you can get a piece of paper that says even 1 share on it, grab a copy and
don't sign it. Talk to a lawyer with it. You'll have everything you need.

------
peteforde
In practical terms, this company is on a path towards failure. You screwed up
by voicing your intentions prematurely, no question.

It's possible that you could attempt to use the law to get them to settle for
an amount that could cover part of your last six months. However, I am
strongly of the opinion that your equity is worth nothing because companies
that act like this never make it anywhere near profitability.

There's a huge difference between founder bootstrapping and exploiting people.

------
rubyfan
When you mentioned you wanted to transition out of the company it sounds to me
like you resigned.

Why would they allow you to stay past the vesting period if they know you are
intent on leaving? Generally the vesting period is to ensure you are going to
stay, and you stated your intent to leave.

~~~
AnimalMuppet
Disagree, twice.

First, when he mentioned that he wanted to transition out of the company, that
was giving notice, not resigning on the spot. You know, the kind of thing that
is considered reasonable, polite behavior when leaving a job.

Second, what's the point of the vesting? It's to give him an incentive to stay
for the year. _He was doing that._ You want him to stay longer than the year?
Give him a carrot that shows up at two years.

~~~
rubyfan
Yes good points. Technically he was giving notice however the reality of
working "at will" means the employer can say thank you very much for the
courtesy but please leave the building asap and don't let the door hit you on
the way out. The company I work at does this if you are leaving for a
competitor. They typically will pay you the two weeks you give notice for but
your badge, logon and email no longer works.

Great point about making the vesting period 2 years... But again being "at
will" means your courtesy was equivalent to a resignation. True there is a
common decency the company could be expected to uphold but it sounds like that
was too much for this company. The way I look at it though was at least they
bought him a plane ticket home.

Pro Tip: don't give notice a few days from vesting.

------
lancewiggs
Alternative advice: It's such a small team, and clearly money is tight, so
hiring a lawyer is going to waste a lot of money and you will all be
squabbling over scraps. Instead consider pointing them to this post,and sit
down with them to work out an outcome you can all live with. Don't be afraid
to get less than your 'fair share' in order to get a deal done,but they should
also know there is the credible threat of a lawyer. They just want you out of
there, you just want a trailing stake - but they will stay and keep working,
so they deserve much more.

However if the founders have gone feral and are not willing or able to be
rational, then consider writing a formal letter insisting on your rights to
the vast bulk of the stock owing to you and sign nothing they give you. This
way if the company ends up doing well then you have more evidence that you can
hand to a much more expensive lawyer. I've been done over a bunch of times,
and it's alost always better to just move on. You are playing a multi-round
game and the most valuable commodities are your time and mental health, not
money.

------
ImTalking
I am a firm believer in the military 'need-to-know' philosophy. Your managers
had no 'need-to-know' your future plans, especially since those plans were
seemingly not concrete. And more importantly, you should not have told them so
close to a vesting date. C'est la vie.

Question though: do they owe you a half year salary, or did you waive this?

~~~
terminatedguy
We all didn't take salaries

~~~
ImTalking
This would help out if you pursued a lawsuit. But remember: civil lawsuits
have nothing to do with right/wrong, only who has the deepest pockets.

~~~
CamatHN
This plainly is not true. Ignore this comment OP.

~~~
ImTalking
Fine. Ignore it. But the OP seems very young based on his decisions, so maybe,
just maybe it is worthwhile telling him that the world sometimes is not just.
Just because he may have a 'case', doesn't mean anything. It all depends on
how important this lawsuit would be to the company. They may be in a funding
phase or trying to sell company, and don't want the hassle so they will
settle, or they don't want to lose this lawsuit as all the other employees
(who may be as naive) would then claim against the company. So you don't know
anything about the company, and your statement that I am wrong, is wrong.

------
vinceguidry
So you don't get your lottery ticket. My advice is to just move on.

Maybe in the future don't telegraph your intentions so clearly. You
practically begged them to fire you.

------
bobbles
You told them you wanted to leave before they fired you? Is that right?

~~~
terminatedguy
Yes, I wanted to transition out with intention to stay longer than the time
given

~~~
emcrazyone
why would you tell them that? Did you have any personal guarantees to pay back
or something?

------
Animats
Do NOT sign the release form. Get a lawyer experienced with Silicon Valley
employment contracts. Now.

~~~
terminatedguy
No one in the company has an employment contract.

~~~
Animats
That may be to your advantage. Talk to a lawyer.

------
aniketpant
Something very similar had happened to me at my previous company. Our team was
not as small as yours, rather pretty big.

So the story goes something like this. I was given stocks after having worked
there for around six months. Their rationale behind it was that you need to
earn stocks at [company] and I totally get that.

After a total 17 months at the company I decided that I wanted to leave and
had a conversation with my manager regarding the same, they were ready to let
me go. But they did not let me decide my exit date. My first set of options
were set to mature in another week and they asked me to leave.

When I get my full and final settlement, I was given cash for my stocks. I
wanted to exercise my options and keep them, but instead they cashed them out
for me.

~~~
meric
Hey, at least you got cash for them. :)

------
oliwarner
> everyone worked for more than half a year without salary

WHY WOULD YOU DO THAT?!? Sorry, that's not fair... Why would you do that
without a _FIRM_ equity deal? Why would you get yourself into a situation that
allows somebody to yank your share away having already worked?

If you happily work for somebody without anything in return, I'm afraid to say
you deserve everything you get when they turn around at the eleventh hour and
take the cheap way out.

There may be laws attached to this (IANAL) but really, you've earned a very
valuable lesson here. Don't work unless you're contractually guaranteed
something in return.

------
ronreiter
Get a lawyer to draft a response asking them kindly to let you have the
options anyways for their own reputation's sake.

They will be pressured by the fact that you are not willing to signed
anything, you have the upper hand here.

Other than that, you deserve nothing. You stated your intent to leave,
therefore there is no reason for the company to give you equity even though
you worked very hard for it. They prefer to keep the equity for employees who
would continue to work in the company.

As a founder, I wouldn't act like that because it is not nice, but it is the
more rational decision.

~~~
mindcrime
_You stated your intent to leave, therefore there is no reason for the company
to give you equity even though you worked very hard for it._

WTF? An intention to leave isn't the same thing as handing in your
resignation. The guy worked for the equity he was promised and IF it turns out
that they terminated him for no other reason to than to avoid giving him that
equity, that's a clear violation of their agreement.

* They prefer to keep the equity for employees who would continue to work in the company.*

Sure and that's why vesting periods exist in the first place. But if they
agreed to a one year vesting period, they have no right to punish this guy for
not wanting to do more. You make an agreement, stick to it. FFS.

------
tranv94
I know you're looking for advice, but I hope it all works out! :)

------
partisan
Working for free for 6 months? Where can I find workers like you? I'll take a
pack of 5. Seriously.

That said, I am sorry you are going through this. I know what it is like to
believe in something. It's human to have hope for the future, but don't do
this again.

When you work for free, you are establishing that you don't value your time.
If your time is worth nothing, well then they don't owe you anything and that
is how they see it.

------
tedmiston
It hurt you to say that you were planning on transitioning out before hitting
your cliff. That was a mistake.

------
ibejoeb
You were based in SF and then relocated? Was the company acquired before the
relocation?

~~~
terminatedguy
They relocated to be closer to the target market, and we agreed I could work
remotely with visits every few weeks

------
terminatedguy
I haven't signed the release

------
bitshepherd
Congratulations, you have experience. No, really, chalk this one up to
experience and learn from it.

------
beachstartup
_> I mentioned that I would like to transition out of the company_

put simply, you shouldn't have done that.

------
horsecaptin
And this is why you should never agree to a cliff. Your shares, if valuable to
you, better start vesting from day one - especially if you have accepted lower
compensation in exchange for more shares. Either that, or you want to
negotiate some sort of a severance package BEFORE you join the company. Think
about it: the company will try their best to have you accept the lowest dollar
offer in exchange of equity in the distant future - what will you do to
protect against the downside of losing your job in the less distant future?

~~~
URSpider94
I have never heard of, nor worked for, a company that offers vesting from day
1.

~~~
kzhahou
Another reason why it's kinda plain dumb to work as a non-founder employee at
any startup except those on a clear exit path. Founders enjoy too many
benefits and advantages. If the company succeeds, they become megarich while
you cash in a nice bonus. If a founder underperforms, only rarely does a board
take immediate action -- in sharp contrast to employees.

And like you said, employees vest slowly, while founder is usually vested on
day 1.

~~~
greglindahl
I've been a founder twice, I had a vesting schedule for options and for
founder's shares. Our investors insisted on it, for obvious reasons. We
insisted on it because we wanted out founding team to play nice.

~~~
URSpider94
Thanks, I was going to say I thought this was the usual case, but I don't have
direct experience. It's only fair to have founders vest too, so a co-founder
who walks out after the first month doesn't walk away with a third of the
company!

------
edwhitesell
Well, what do you want out of the situation?

If you had the honest conversation that you weren't happy, it sounds like you
got what you wanted.

If you did/do still want equity, take the advice of others: Take all of your
paperwork to a lawyer and stop talking to anyone else.

Personally (having just resigned <4 weeks ago, 10 days before my vesting), I
think this sounds like the right thing to do. No reason to prolong an unhappy
situation just to end up with equity when you want out anyway.

