In Arzola v. Name Intelligence, Inc. (pdf), the Washington Court of Appeals concluded that payments due to employees under a stock right cancellation agreement did not constitute “wages” as that term is used in Washington’s wage-withholding statute (RCW 49.52.070) because the payments were not for the employees’ services but rather for relinquishment of shares.  It so held even though the underlying stock was expressly provided to the employees based on job performance.  The court’s holding allows employers to convert consideration paid to employees in lieu of cash wages into a separate and distinct contractual right and thereby avoid liability under the wage-withholding statute.
Continue Reading Wash. Ct. of Appeals: Employee Wages Do Not Include Contractual Rights to Company Stock