Ask HN: Have an equity letter from a startup that forced me out. Hire a lawyer? | Hacker News Reader

Ask HN: Have an equity letter from a startup that forced me out. Hire a lawyer?

2 pointsGamemaster13795 comments

So this is a bit of a complicated situation, but I'll try to summarize.

I worked for a startup in the Sacramento area about 4 years ago. The employers were absolutely awful to their employees. I personally had several workplace violations (unpaid expenses, asked to clock out and work, lack of medical accommodations, etc). During this time, I was forced into working on a social media startup they founded.

I was given a preliminary equity letter in my time there -- but they hadn't setup all the actual legal for dispersing shares. The document clearly states I had 1 year vested in the startup, though.

Fast forward about a year after; I was put on indefinite unpaid suspension -- and I literally had no choice to quit. I was so underpaid, I couldn't even afford a week of no pay.

After quitting; I tried to hire a lawyer to sue for workplace violations; but explicitly did not pursue the equity because I thought the startup part of it had died out (I was one of two engineers; the other who quit shortly after I did).

Today, I found out that the project is still very much alive and has raised over $1 million in crowd sourced fundraising and is seeking another 4 million.

I never received any formal outreach from the company, company legal counsel, or any of the founders. In fact, I was quite intimidated from pursuing even my workplace violation at the time because the CEO and COO both, on separate occasions, called me after my employment ended with them and issued me death threats over the phone -- for which I filed police reports n.

Given that the CEO and COO used intimidation tactics and did not properly reach out any point on my ability to exercise my equity; do I have any leg to stand on in this situation -- or is the fact that this is from around 3 years ago going to have statues bite me in the ass?

I'd walk away. There is a point where health and sanity is more important than chasing some bad actors. You are also likely screwed on workplace issues, in CA I believe it is 1 year from the date of the alleged harassment, threat etc. This is pretty common across most states, you have to report it quickly.

As for the equity, even if you sue and get your small percentage of equity they would just have a board meeting and create a different share class which in the end will dilute you to nothing (if they haven't already). Only thing that might change my thinking here is if they put in writing you had > 10% or non-diluting or something similar, then maybe it might be worth a little time with an attorney.

Also, you said you tried to hire an attorney for workplace violations, if you spoke with an attorney and they didn't take it then likely you didn't have a provable case. Not saying it didn't happen etc, just that if they couldn't prove it or there were no pockets for them to dip into there is little reason to pursue it from their standpoint and really yours.

So I did speak with an attorney and they DID sign a retainer with me. But my former workplace hired the biggest defense firm in the state to stall it out. My firm was honestly really surprised and eventually released the case because they thought it'd take more to take it to court than would be won. That was strictly over workplace violations though, not the equity statement.

I have in writing that I would have vested 3%. I would have vested .75%

Ask your lawyer if it's wise to keep the letter stored in a drawer until they want to go public. There is chance that they will flop before that, but also a chance that they will be more "friendly" to make the due diligence happy.

That's my consideration. I'm not eager to get anything now. I don't need the money. Frankly, it's more on principle. I'll happily bide my time.

I'm more expecting them to try and get out on a private acquisition instead though. They run themselves as scammy con artists. They're really good at marketing and selling, not building or managing.

I'm not a lawyer, but _usually_ small participations or something that blocks signing a deal suddenly might become more valuable.

Just an email from your lawyer to the buyer telling about your case might stop the process and will make the founders do a lot of (unwanted) work.

If I wanted to be _really_ evil I would transfer my vesting rights to a third party that acts as a debt collector before the mail is sent removing my person from the process (If it is legal and feasible - remember: I am not a lawyer)

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