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The only way I can see this being a valid contract is if the equity grant that they get to keep is a new grant offered the time of signing the exit contract. A
by jp57 2y ago
The only way I can see this being a valid contract is if the equity grant that they get to keep is a new grant offered the time of signing the exit contract. Any vested equity given as compensation for work could not then be offered again as consideration for signing a new agreement.
Maybe the agreement is "we will accelerate vesting of your unvested equity if you sign this new agreement"? If that's the case then it doesn't sound nearly so coercive to me.
- apsec112 2y agoIt's not. The earlier tweets explain: the initial agreement says the employee must sign a "general release" or forfeit the equity, and then the general release they are asked to sign includes a lifetime no-criticism clause.
- ethbr1 2y agoIOW, this is burying the illegal part in a tangential document, in hopes of avoiding legal scrutiny and/or judgement. They're really lending employees equity, subject to the company's later feelings as to whether the employee should be allowed to keep or sell it.
- deleted 2y ago[deleted]
- w10-1 2y agoBut a general release is not a non-criticism clause. They're not required to sign anything other than a general release of liability when they leave to preserve their rights. They don't have to sign a non-disparagement clause. But they'd need a very good lawyer to be confident at that time.
- User23 2y agoAnd they won’t have that equity available to borrow against to pay for that lawyer either.
- Melatonic 2y agoI'm no lawyer but this sounds like something that would not go well for OpenAI if strongly litigated
- mrj 2y agoYeah, courts have generally found that this is "under duress" and not enforceable.
- singleshot_ 2y agoUnder duress in the contractual world is generally interpreted as “you are about to be killed or maimed.” Economic duress is distinct.
- to11mtm 2y agoDuress can take other forms, unless we are really trying to differentiate general 'coercion' here. Perhaps as an example of the blurred line; Pre-nup agreements sprung the day of the wedding, will not hold up in a US court with a competent lawyer challenging them. You can try to call it 'economic' duress but any non-sociopath sees there are other factors at play.
- singleshot_ 2y agoThat’s a really good point. Was this a prenuptial agreement? If it wasn’t May take is section 174 would apply and we would be talking about physical compulsion — and not “it’s a preferable economic situation to sign.” Not a sociopath, just know the law.
- fuzztester 2y ago>I'm no lawyer Have any (startup or other) lawyers chimed in here?
- Animats 2y agoThat's when you need a lawyer. In general, an agreement to agree is not an agreement. A requirement for a "general release" to be signed at some time in the future is iffy. And that's before labor law issues. Someone with a copy of that contract should run it through OpenAI's contract analyzer.
- beastman82 2y agoITT: a bunch of laymen thinking their 2 second proposal will outlawyer the team of lawyers who drafted these.
- throwaway562if1 2y agoYou haven't worked with many contracts, have you? Unenforceable clauses are the norm, most people are willing to follow them rather than risk having to fight them in court.
- to11mtm 2y agoBingo. I have seen a lot of companies put unenforceable stuff into their employment agreements, separation agreements, etc.
- jprete 2y agoLawyers are 100% capable of knowingly crafting unenforceable agreements.
- riwsky 2y agoYou don’t need to out-litigate the bear,
- mminer237 2y agoI am a lawyer. This is not just a general release, and I have no idea how OpenAI's lawyers expect this to be legal.
- listenallyall 2y agoHave you read the actual document or contracts? Opining on stuff you haven't actually read seems premature. Read the contract, then tell us which clause violates which statute, that's useful.
- ethbr1 2y agoOut of curiosity, what are the penalties for putting unenforceable stuff in an employment contract? Are there any?
- bradleyjg 2y agoThe earlier tweets explain … What a horrific medium of communication. Why anyone uses it is beyond me.
- DesiLurker 2y agosomebody explained to me early on that you cannot have a contract to have a contract. either initial agreement must state this condition clearly or they are signing another contract at employment termination which is bringing these new terms. IDK why would anyone sign that at termination unless they dangle additional equity. I dont think this BS they are trying to pull would be enforceable at least in California. though IANAL obviously. all this said, in bigger picture I can understand not divulging trade secrets but not being allowed to discuss company culture towards AI safety essentially tells me that all the Sama talk about the 'for the good of humanity' is total BS. at the end of day its about market share and bottom line.
- hughesjj 2y agoCanceling my openai subscription as we speak, this is too much. I don't care how good it is relative to other offerings. Not worth it.
- lanstin 2y agoClaude is better anyways (at least for math classes.
- DesiLurker 2y agosame I cancelled mine months ago. Claude is much better for coding anyway.
- DebtDeflation 2y agoMy initial reaction was "Hold up - your RSUs vest, you sell the shares and pocket the cash, you quit OpenAI, a few years later you disparage them, and then when? They somehow try and claw back the equity? How? At what value? There's no way this can work." Then I remembered that OpenAI "equity" doesn't take the form of an RSU or option or anything else that can be converted into an actual share ever. What they call "equity" is a "Profit Participation Unit (PPU)" that once vested entitles you to a share of their profits. They don't share the equivalent of a Cap Table with employees, so there's no way to tell what sort of ownership interest a PPU represents. And of course, it's unlikely OpenAI will ever turn a profit (which if they did would be capped anyway). So this is all just play money anyway.
- cdchn 2y agoWow. Smart for them. Former employees are behooved to the company for an actual perpetuity. Sounds like a raw deal but when the potential gains are that big, I guess you'll agree to pretty much anything.
- deleted 2y ago[deleted]
- whimsicalism 2y agoThis is wrong on multiple levels. (to be clear I don't work at OAI) > They don't share the equivalent of a Cap Table with employees, so there's no way to tell what sort of ownership interest a PPU represents It is known - it represents 0 ownership share. They do not want to sell any ownership because their deal with MS gives MS 49% ownership and they don't want MS to be able to buy up additional stake and control the company. > And of course, it's unlikely OpenAI will ever turn a profit (which if they did would be capped anyway). So this is all just play money anyway. Putting aside your unreasonable confidence that OAI will never be profitable, the PPUs are tender offered so they can be sold to institutional investors up to a very high limit, OAIs current tender offer round values them at ~$80b iirc
- 2y ago