WARN Act and Stock Options: What Happens to Your RSUs and Options After a Layoff

A WARN notice tells you that a layoff is planned. It does not, by itself, tell you what happens to your stock options or restricted stock units (RSUs). Those answers usually live in your equity plan, your grant agreement, and your separation agreement. Because the deadlines can be short, equity is one of the first things to check after a notice arrives.

The WARN Act is a notice law. It generally requires covered employers to give 60 days' advance notice of a qualifying plant closing or mass layoff. It does not set rules for vesting, exercise windows, or forfeiture, so two workers in the same layoff can face different equity outcomes.

Start with the documents, not the headlines

Before you assume anything about your equity, find these documents:

• Your equity plan and grant agreements, which state the vesting schedule and what happens on termination.
• Your offer letter and any severance or separation agreement, which may change the standard rules.
• Your company's stock plan administrator portal, which usually shows vested, unvested, and exercisable amounts.

If a separation agreement offers extra vesting or a longer exercise window, get that promise in writing. When documents conflict, the plan document usually controls, unless a signed agreement expressly changes it.

RSUs: vested shares are yours, unvested shares usually are not

RSUs are a promise to deliver shares once they vest. Once RSUs have vested and the shares have been delivered to you, they are generally yours, even if you are later laid off. You still need to consider taxes and any company trading-window or holding rules that apply, but the layoff itself does not normally take vested, delivered shares away.

Unvested RSUs are a different story. In most plans, unvested RSUs are forfeited when employment ends, including in a layoff. Vesting usually stops on your last day of employment, not on the date you received the WARN notice. If you work through a 60-day notice period, you may vest in awards that come due during that period; if your last day falls before the next vesting date, those units may be lost. Some employers accelerate vesting or continue it during a severance period, but that is an exception, not the default, and it should be stated clearly in writing.

Stock options: the exercise window is the deadline that matters

Stock options give you the right to buy shares at a set price, called the exercise or strike price, before an expiration date. After a layoff, the most urgent question is usually how long you have to exercise vested options.

Many plans give former employees 90 days after termination to exercise vested options. Some give 30 days. Others give longer, especially for retirement-eligible employees or in a negotiated separation. The window is set by the plan, and once it closes, vested options that were not exercised typically expire and become worthless.

Unvested options are usually forfeited on termination, just like unvested RSUs. Exercising requires cash or a cashless method allowed by the plan, and you may owe taxes at exercise; the rules differ for incentive and non-qualified stock options, so check the tax treatment before you exercise. Do not assume a vested option is valuable: if the share price is below your exercise price, the option is underwater, but if the shares are valuable, missing the exercise window can be an expensive mistake.

What to check in the first week after a notice

A short checklist can prevent the most common equity losses:

1. Confirm your last day of employment and whether vesting continues through any notice or severance period.
2. List every grant, its vesting dates, and how much is vested and unvested.
3. Find the post-termination exercise period for each option grant.
4. Check whether any award accelerates, continues vesting, or is forfeited under the plan.
5. Ask whether signing a separation agreement changes any equity term, and what you give up in return.
6. Put the earliest deadline on your calendar, with a reminder well before it.

Why this matters right now

Layoff filings are not abstract. In the current 90-day window on Layoff Atlas, there are 686 notices covering 66,703 reported workers, with 29 counts unavailable. California leads the state ranking with 17,715 reported workers, followed by Washington with 17,361, Illinois with 4,385, Texas with 3,280, and Georgia with 2,492. The upcoming effective weeks include 4,017 workers in the week of November 1, 5,311 in the week of November 8, 7,830 in the week of November 15, 6,614 in the week of November 22, 5,922 in the week of November 29, and 721 in the week of December 6.

These are reported plans, not confirmed job losses. Coverage varies by state, and totals exclude unavailable counts. Still, many workers will face equity deadlines in the same weeks their employment ends, and an exercise window can close quickly once it starts.

The bottom line

The WARN Act gives you time to prepare. Your equity plan decides what that preparation is worth. Vested, delivered RSU shares are generally yours; unvested RSUs and options are usually forfeited. Vested options survive only until the post-termination exercise deadline. Read the plan, confirm your deadlines in writing, and do not let a short exercise window pass.

Data source: Layoff Atlas