Are stock option grants “wages” under California law? The recent case of Shaw v. Skillz, Inc. answers that question in the negative – i.e., holding that stock option grants are not “wages” under the CA Labor Code.
The CA Labor Code defines “wages” as “all amounts for labor performed by employees of every description, whether the amount is fixed or ascertained by the standard of time, task, piece, commission basis, or other method of calculation.” (Lab. Code, § 200(a).)
The Court held that stock options are not wages because they are not “amounts” and they cannot be “ascertained.” The Court held that stock options are merely rights to buy stock at a certain price, and there’s no way to know at the time of the grant if those rights will have any value at all, and if so, how much. The Court did recognize CA precedent holding that grants of stock (such as restricted stock grants) to employees are “wages” because they have immediate, ascertainable value, even if the grants are subject to conditions.