Ontario Court of Appeal: Meta Must Pay $4.7M in RSUs During Notice Period

• The Ontario Court of Appeal ruled that Meta must pay a former employee $4.7 million in RSUs that should have vested during his termination notice period.
• Meta's policies for RSUs were found to violate the Employment Standards Act, specifically by stopping continued vesting of RSUs during the notice period.
• The decision highlights the importance of compliance with ESA regulations regarding RSU vesting and termination notice periods.
• Companies with similar equity plans must review their compensation schemes to ensure compliance with Ontario employment laws.

The OCA's ruling has significant implications for companies with similar equity plans, emphasizing the need for lawyers to review their clients' compensation schemes to ensure compliance with Ontario employment laws.

The Ontario Court of Appeal has ruled that Meta must pay a former employee $4.7 million in restricted stock units (RSUs) that should have vested during his termination notice period. The decision highlights the importance of compliance with the Employment Standards Act (ESA) regarding RSU vesting and termination notice periods. Daniel Wigdor, a University of Toronto professor, was fired by Meta at the end of 2023 after working as a research director for Facebook Canada since 2020. A lower court had previously found that Wigdor was not entitled to the RSUs, but the appellate court reversed this decision, citing ESA violations. The OCA's ruling has significant implications for companies with similar equity plans, emphasizing the need for lawyers to review their clients' compensation schemes to ensure compliance with Ontario employment laws.

The Employment Standards Act (ESA) sets minimum standards for how employers must treat employees during termination notice periods. One key provision, s. 60, prohibits employers from altering employees' terms of employment, including wages and benefits, during this time. Another section, s. 61, allows employers to terminate an employee with less notice if they pay out a lump sum equal to the amount the employee would have earned during the notice period. However, the OCA found that Meta's policies for RSUs violate these regulations by stopping continued vesting of RSUs during the notice period. This decision underscores the importance of understanding and complying with ESA standards when implementing equity plans.

The OCA's ruling serves as a warning to companies with similar equity plans, highlighting the potential consequences of non-compliance. Alysha Shore, one of Wigdor's litigators, noted that the decision clarifies that employers cannot alter terms or conditions of employment, including employee equity plans, during the statutory notice period. A failure to comply with ESA regulations can result in provisions being struck and employees continuing to participate in the equity plan during the reasonable notice period. This has significant implications for companies like Meta, which must now review their policies and ensure compliance with Ontario employment laws.

Lawyers should review their clients' equity plans to ensure compliance with the ESA, particularly regarding RSU vesting during termination notice periods, and advise them on potential exposure if they fail to comply.

Source: Original reporting via Law Times