Articles Tagged with Employee Benefits

AdobeStock_414456803-300x118Both employees and employers need to understand how stock options work. Employers who issue stock options without understanding them can lose significant value or control of their businesses. Employees who do not understand their stock options could miss out on a significant part of the compensation they are owed for their employment. The experienced California stock option lawyers at Structure Law Group help employers and employees understand their legal rights and obligations regarding stock options.

A Timeline Of the Stock Option Life Cycle

Like other financial assets, stock options have a life cycle. Understanding this life cycle can help you understand the true value of the asset. There are three general phases in the life cycle of stock options:

AdobeStock_125549643-300x200Employee benefits can be goods, services, or deferred compensation provided to employees in addition to wages. Federal law governs certain mandatory employee benefits, such as sick leave under the Family and Medical Leave Act (“FMLA”), while other benefits are voluntary perks of employment. In addition to the minimum requirements required by federal law, many states, including California require additional benefits.

For example, California requires employers to pay into or carry short-term disability insurance. Understanding mandatory employee benefits and the laws governing the same are crucial to starting a business in California. Business of all sizes that fail to adhere to federal and state employee benefits regulations may face costly litigation and/or tax penalties.

Types of Employee Benefits  

Fotolia_180008799_Subscription_Monthly_M-300x200Startup companies often use stock options to attract new quality talent. If you have decided to do so, there are some special considerations when deciding the best approach to compensate your employees. Two common approaches include restricted stock and stock options.

What is Restricted Stock?

Restricted stock is a stock plan that gives particular employees a right to purchase stock shares. These restricted shares may be at a discounted value, fair market value, or even at no cost. Despite the right to buy the restricted stock, the shares are not actually owned by the employee until a particular triggering event occurs. For example, a company may restrict the transfer of the stock until a particular amount of time has elapsed (e.g., three years from the date of hire). Another example would be a condition regarding company performance (e.g., $1m in gross revenue). The employee then takes possession after the triggering event occurs, thereby lifting the “restriction” on the stock.