> There is likely no such thing as a "bad faith" termination
Sorry but this is simply not true regarding vesting specifically. There are laws that prevent someone from being fired 1 day before vesting for the purpose of clawback.
EX:
This source is about retirement vesting. Not exactly the same, but close.
This source says the following "assuming this termination is made for good-faith reasons, such as business downsizing or poor work performance.", implying that if it is not for good faith reasons, and just for getting back the shares, that this is illegal.
Also from this source: " In general, to avoid costly lawsuits, companies consider future vesting dates when terminating employees. They may delay the termination date, extend it by using "paid time off" days, or accelerate the upcoming vesting to avoid appearing to terminate an employee merely to forfeit soon-to-be vested shares."
So companies specifically try to avoid this situation, because they know it is illegal.
"These cases provide very powerful ammunition to employees who are either negotiating for additional severance or engaged in litigation with their employer.
First, Kelly and Newberger provide an employee who was wrongfully terminated with a legal basis to become fully vested in any options that were previously granted."
And here are a bunch of lawyers agreeing with me that this is illegal:
"AT will is one thing, this is quite another. This is an obvious scam by the employer to avoid having your stock vest, which is not only not fair, its illegal in my view"
"In Mass., if an employer terminates an employee for the purpose of preventing a right to compensation to vest, the employee has a claim for the compensation. "
"There are certain kinds of showings that you need to make in order to be able to collect in this circumstance. The short answer is that you may very well be entitled to the stock."
Thats why I am saying that this threat needs to be documented. It is quite clear, that there are many cases where terminating someone, for the purpose of getting back shares or retirement or bonuses, is very illegal.
Some of these cases are based on unlawful terminations --- for instance, Kelly was pregnant when she was fired. If this person is a member of a protected class or has other reasons to believe that they've been fired for a statutorily invalid reason, by all means, pursue that.
Here's a Santa Clara Law Review article (take that for whatever it's worth) on almost exactly this scenario, in the context of Zynga, citing Newberger, and suggesting that "company determines employee is not worth the equity they were originally allocated" is a valid reason to terminate an at-will employee (even if it is, as I'm sure we all agree, bad business):
But look, I'm not saying that this person shouldn't talk to a lawyer; in fact, I'm saying the opposite. Find out if the termination is valid. But be clear-eyed: when you get a straightforward answer to whether you can be terminated, and it confirms that the termination is valid, stop there, and don't spend a fortune in money and time fighting a foregone conclusion.
Sorry but this is simply not true regarding vesting specifically. There are laws that prevent someone from being fired 1 day before vesting for the purpose of clawback.
EX: This source is about retirement vesting. Not exactly the same, but close.
https://jimgarrityonline.com/2014/10/08/fired-just-before-ve....
This source says the following "assuming this termination is made for good-faith reasons, such as business downsizing or poor work performance.", implying that if it is not for good faith reasons, and just for getting back the shares, that this is illegal.
Also from this source: " In general, to avoid costly lawsuits, companies consider future vesting dates when terminating employees. They may delay the termination date, extend it by using "paid time off" days, or accelerate the upcoming vesting to avoid appearing to terminate an employee merely to forfeit soon-to-be vested shares."
So companies specifically try to avoid this situation, because they know it is illegal.
https://www.mystockoptions.com/content/can-company-fire-me-o...
Here is a source that says the following:
"These cases provide very powerful ammunition to employees who are either negotiating for additional severance or engaged in litigation with their employer.
First, Kelly and Newberger provide an employee who was wrongfully terminated with a legal basis to become fully vested in any options that were previously granted."
https://sebastianmillerlaw.com/fired-employee-entitled-accel...
And here are a bunch of lawyers agreeing with me that this is illegal:
"AT will is one thing, this is quite another. This is an obvious scam by the employer to avoid having your stock vest, which is not only not fair, its illegal in my view"
"In Mass., if an employer terminates an employee for the purpose of preventing a right to compensation to vest, the employee has a claim for the compensation. "
"There are certain kinds of showings that you need to make in order to be able to collect in this circumstance. The short answer is that you may very well be entitled to the stock."
https://www.avvo.com/legal-answers/i-was-terminated-one-day-...
Thats why I am saying that this threat needs to be documented. It is quite clear, that there are many cases where terminating someone, for the purpose of getting back shares or retirement or bonuses, is very illegal.