What Happens to Your RSUs When You Get Laid Off in 2026

Many times, layoff calls can happen too quickly for you to process all of the questions that you have in the moment.

What is my severance going to be? When is my last day? Am I still going to have health insurance?

But one of the biggest questions on someone’s mind is going to be if they have vested or unvested RSUs in their name.

In some cases, that is a lot of money that is potentially going to evaporate now that your company has decided your time with the organization is at an end.

And companies that know you are going to be upset about that going up in smoke are more than likely to say as little as possible about that equity unless forced to. They are hoping you will sign that separation agreement quickly without ever opening the documents until you can no longer negotiate.

Restricted stock units (RSUs) are not a bonus and they are not a gift, which makes many think they should be entitled to those upon a layoff. They are deferred compensation that you already earned during your employment, so you should get them no matter what, right? Sadly, you might be wrong.

Understanding exactly what you own, what you are about to forfeit, and where the leverage sits can be the difference between walking away with nothing and walking away with several thousand dollars (or, in some cases, considerably more).

What an RSU Actually Is

An RSU is a promise from your employer to give you shares of company stock at a future date, provided you are still employed when that date arrives. You do not own the shares when the grant is made. You own a claim on them, and that claim only converts into real property when it vests.

That distinction matters more than almost anything else in this article. Three things are worth separating in your head:

●     Grant date. The day the company promised you the units. Nothing is yours yet, and nothing is taxable yet.

●     Vesting date. The day a portion of the promise converts into actual shares. This is when the units become yours and when they become taxable as ordinary income.

●     Settlement or delivery. The day the shares actually land in your brokerage account. For public companies this usually happens at vest or within a few days. For private companies it can be years later, or never.

The typical vesting schedule

The most common structure in tech and in large corporates is four year vesting with a one year cliff. Nothing vests for the first twelve months, then twenty five percent vests all at once on your first anniversary, and the remainder vests in quarterly or monthly slices over the following three years.

Other structures you may run into include backloaded schedules (five percent, fifteen percent, thirty percent, fifty percent, which are common at large public tech companies and heavily penalize an early exit), annual cliffs, and performance based units (PSUs) that only vest if the company hits revenue or stock price targets.

Pull this number first

Open your equity portal (Fidelity, E*TRADE, Schwab, Shareworks, Carta) and write down two figures: the number of units already vested, and the number unvested with each future vest date next to it. That second list is the money on the table. You cannot negotiate for something you have not quantified.

RSUs Versus Stock Options: What Is the Difference

People use "equity" as if it were one thing, but the two most common forms behave very differently, and the difference is at its most important when you are laid off. If your grant documents say "options" rather than "units," most of the negotiation advice below still applies, but the mechanics and the risks change.

An RSU is a promise of actual shares once you vest. It always has value at vest as long as the stock is worth anything at all, because you paid nothing to receive it.

A stock option is the right to buy shares at a fixed price (the strike or exercise price) that was set on your grant date. An option only has value if the stock is worth more than your strike price. If the market price sits below your strike, the option is "underwater" and buying at your strike price would mean paying more than the shares are worth, so the option is effectively worthless until the price recovers.

That single difference drives everything else.

Restricted Stock Units (RSUs)	Stock Options (ISOs / NSOs)
A grant of shares that convert to real stock at vest.	The right to buy shares at a fixed strike price.
Cost to you: nothing. You receive the shares outright.	Cost to you: you must pay the strike price to exercise, and possibly tax on top.
Value at vest: always positive if the stock has any value.	Value: only if the stock trades above your strike price.
Taxed as ordinary income at vest, on the full share value.	ISOs can avoid ordinary income at exercise but can trigger AMT; NSOs are taxed as ordinary income on the spread at exercise.
Cannot go underwater.	Can go underwater and stay there.
At layoff: unvested units are simply forfeited.	At layoff: vested options must usually be exercised within a short window (often 90 days) or they expire.
No decision required at exit beyond whether to hold or sell.	You must decide whether to spend real cash to exercise, often quickly and under pressure.

The layoff difference that catches option holders

With RSUs, a layoff is painful but passive: your unvested units disappear and there is nothing further to do. With options, a layoff starts a clock. Your vested options typically must be exercised within a post termination window, commonly 90 days, or you lose them. Exercising means writing a check for the strike price on every share, plus any tax due, right after your income stopped.

Many people are forced to walk away from valuable vested options simply because they cannot or will not put up the cash during a period of unemployment. This is why the extended exercise window mentioned later in this article is one of the most valuable things an option holder can negotiate into a severance package.

Which companies tend to offer which

The type of equity you hold is a strong signal of where a company sits in its life cycle.

●     Early stage startups (pre seed through Series A or B) almost always grant options. The strike price can be set very low when the company is young, giving early employees enormous upside if the company succeeds. This is the classic "get rich if it works" equity, and it is also the riskiest, because most startups do not reach a liquidity event and the options can end up worthless.

●     Late stage private companies and unicorns increasingly grant RSUs. Once a company is valued in the billions, a low strike price is no longer possible, so options lose their appeal, and companies switch to double trigger RSUs that vest on both time and a future liquidity event (an IPO or acquisition).

●     Large public technology companies (Google, Microsoft, Amazon, Meta, and similar) grant RSUs almost exclusively. The stock is already liquid, so RSUs behave almost like a deferred cash bonus paid in shares, which is why they became the standard for public tech compensation.

●     Public companies outside tech often use a mix, granting RSUs to broad employee populations and reserving options or performance shares for executives.

The practical translation: if you were laid off from an early stage startup, your equity is probably options with a ticking exercise window and uncertain value, and your first call may be to a tax professional about whether exercising is even worth it. If you were laid off from a large public company or a late stage private one, your equity is probably RSUs, and the advice in the rest of this article applies directly.

If you hold options, not RSUs

Two questions decide your next move. First, are your vested options in the money (is the current or last known share price above your strike price)? If not, there may be nothing to exercise. Second, how long is your post termination exercise window, and can you negotiate to extend it? Ask this in writing before you sign anything, because once the standard window closes, the options are gone for good.

What Happens to Your RSUs When You Are Laid Off

This is probably what brought you to this article (because you are hoping for a different outcome): vested units are yours, unvested units are forfeited on your termination date, and you get nothing for them.

But "termination date" is doing a lot of work in that sentence, and so is the fine print underneath it.

Vested RSUs	Unvested RSUs
You already own these shares. Taxes were withheld at vest.	Forfeited on your last day under the standard plan language.
They do not disappear when you leave. They sit in your brokerage account.	You receive no payment and no credit for partial progress toward the next vest date.
You can hold or sell them (subject to trading windows and any lockup if the company is private or recently public).	The one exception is if your plan, your offer letter, or your severance agreement provides for acceleration.
Check whether the company has a right of repurchase on private shares.	Timing of your termination date can move units from this column to the left column.

Public company versus private company

At a public company, vested RSUs become shares you can generally sell (subject to blackout windows and any insider trading policy that still applies to you for a period after departure).

At a private company, the picture is much worse. Most private RSUs are double trigger, meaning two conditions have to be met before you own anything: a time based vesting condition (you stayed long enough) and a liquidity condition (an IPO or an acquisition). If you satisfied the time condition but the company never goes public, your "vested" RSUs are worth exactly zero, and many grants expire after seven years regardless. Being laid off from a private company usually means you keep the time based credit only if the liquidity event happens before your units expire, and plenty of plans wipe out even that credit on termination.

The clauses that change the answer

Read your equity plan document and grant agreement looking specifically for these terms. They are the ones that create leverage:

●     Change in control acceleration. If your layoff is happening around a merger, acquisition, or take private transaction, single trigger or double trigger acceleration provisions may vest some or all of your units automatically. This is the single most valuable clause to check.

●     Termination without cause. Some plans distinguish between resignation, termination for cause, and termination without cause. A layoff is almost always without cause, and a minority of plans grant partial credit in that scenario.

●     Retirement or rule of 65 provisions. Many large employers allow continued vesting if your age plus years of service crosses a threshold. People miss this constantly.

●     Garden leave and notice periods. If your termination date is pushed out by a notice period, WARN Act pay, or unused paid leave that extends employment, units vesting inside that window may still vest.

●     Disability, death, and reduction in force carve outs. Some plans name reduction in force explicitly as a category that receives pro rata vesting. If yours does, you do not need to negotiate at all, you just need to invoke it.

The documents you need, in order

1. The equity incentive plan document (the master rules, often 30 or more pages).

2. Your individual grant agreement or award notice for each grant.

3. Your offer letter and any promotion or retention letters.

4. The severance agreement you are being asked to sign.

5. Your equity portal statement showing vested and unvested balances.

Download all of these before your company email and system access is cut off. Many people lose access within hours of the notification call.

How to Fight for Unvested RSUs

I am going to be honest here even though I wish this wasn’t the case: you are unlikely to win by arguing that forfeiture is unfair (even though it might be).

The plan document says what it says. You win by finding a provision that supports you, by making an equivalence argument the company can actually process, or by making the cost of saying no higher than the cost of saying yes.

Here is the sequence that tends to work.

1. Check the calendar before you check anything else

Find your next vest date. If it falls within a few weeks of your proposed separation date, that is your opening ask, and it is the easiest one for a company to grant because it requires no new money, only a date change. Asking to move a termination date from March 10 to April 2 so that a scheduled vest lands is a small administrative favor from HR that can be worth tens of thousands of dollars to you.

This is also why you should be alert if your layoff was timed suspiciously close to a cliff. Terminating employees specifically to avoid paying compensation they were about to earn has supported legal claims in some jurisdictions (theories include breach of the implied covenant of good faith and fair dealing, and state wage payment claims where equity is treated as earned wages). It is not a guaranteed argument, and it varies significantly by state, but it is a real one and worth raising with an employment attorney if the timing looks deliberate.

2. Ask for acceleration in writing, with a specific number

Vague requests get vague answers. Instead of asking whether anything can be done about your equity, say precisely what you want:

Sample ask

"My next vest date is May 15 for 1,250 units. My proposed separation date is April 30. I am asking that my separation date be extended to May 16, or alternatively that those 1,250 units be accelerated as part of the separation package. Both options are administratively straightforward and would allow me to sign promptly."

Note the structure. You gave them two paths, you quantified the ask, you kept it narrow (one tranche rather than all four years), and you signaled that agreement gets you to a signature quickly. That last part matters, because the thing the company wants from you is a signed release of claims.

3. Convert equity into cash if acceleration is impossible

Some plans genuinely cannot accelerate without board approval, and legal will not touch it. When you hit that wall, pivot. Ask for the cash value of the next tranche as additional severance instead. Companies that cannot amend an equity plan can very often add two or four weeks to a severance number, because that comes out of a different budget and requires far less approval.

4. Use the release of claims as leverage

Severance is not charity. You are being paid to waive your right to sue. That means the negotiation is real, and it means anything that raises your perceived claim value raises your leverage. If you were part of a group layoff, you are entitled under the Older Workers Benefit Protection Act (if you are 40 or over) to a disclosure listing the job titles and ages of everyone selected and not selected, plus at least 45 days to consider the agreement. That disclosure is genuinely useful information, and requesting it also signals that you are reading carefully.

Other points of leverage worth naming, if they apply honestly to your situation:

●     You raised a compliance, safety, or discrimination concern in the months before selection.

●     You were on protected leave (FMLA, parental, medical) recently.

●     You received strong performance reviews right up to the layoff, undercutting any performance rationale.

●     You have a written promise (offer letter, retention email, promotion letter) that conflicts with the plan document. Written promises from a recruiter or manager are not nothing.

5. Negotiate the other equity terms, not just the units

Even when unvested units are truly gone, several adjacent items are still negotiable and still worth money:

●     Extended exercise window if you also hold stock options (the standard 90 day post termination window is a common source of large avoidable losses).

●     Blackout and trading window flexibility so you can actually sell vested shares.

●     Waiver of any right of repurchase on private company shares.

●     Continued participation in a future tender offer for private company holders.

●     Tax withholding elections on the final vest, which can matter if you are moving into a much lower income year.

6. Get a second set of eyes

An employment attorney will typically review a severance agreement for a flat fee in the low hundreds of dollars, and many offer a free initial consultation. If your unvested equity is worth more than about ten thousand dollars, that review has a strong expected value. Bring the plan document, not just the severance agreement, because the plan document is where the answer usually lives.

Do not sign on the call

You are almost never required to sign a separation agreement the day it is presented. If you are 40 or over and part of a group layoff, federal law generally gives you 45 days plus a 7 day revocation period. Even outside that, asking for a few days to review is normal and is not treated as hostile. Signing immediately gives away every piece of leverage you have for no benefit.

The Tax Trap Nobody Warns You About

RSUs are taxed as ordinary income at vest, based on the share price that day, and that income shows up on your W-2. Most companies withhold shares to cover it (sell to cover), typically at a flat supplemental rate of 22 percent for federal purposes on amounts up to one million dollars.

If your marginal rate is higher than 22 percent, and for many people it is, you may owe more at filing on equity that vested earlier in the year. That bill arrives in April, well after your income stopped. Two practical consequences:

1.     Set aside cash for the shortfall on any RSUs that vested this year before you spend your severance.

2.     A layoff can also create an opportunity. If your total income for the year drops sharply, you may be in a lower bracket than usual, which can make it a reasonable year to sell concentrated vested shares or to consider a Roth conversion. Run the numbers with a tax professional before acting.

One more item that catches people: if you sell vested shares, your cost basis is the price at vest, not zero. Brokerages have historically reported this incorrectly on the 1099-B, causing people to pay tax twice on the same money. Check the basis on every sale.

Why RSUs Are a Bigger Risk in Today’s Corporate Landscape

RSUs were sold to a generation of workers as the safe version of equity. Unlike options, they cannot go underwater, and they carry no exercise cost. That is true, but that also doesn't paint the whole picture. Several forces have made RSU heavy compensation meaningfully riskier than it looked during the 2015 to 2021 stretch.

Your paycheck and your portfolio depend on the same company

This is the core problem. If the company struggles, your stock falls and your job disappears at the same moment, which is exactly when you need liquidity most. No financial advisor would recommend putting a third of your net worth in a single stock, yet RSU compensation does this to people automatically and by default. Concentration risk is not theoretical here, it is correlated risk, and correlated risk is the dangerous kind.

I had tons of friends at a big enterprise software company (or I did, before the constant layoffs there). They were all getting hit with the same double whammy: lose your job and your unvested RSUs, or keep your job and watch the stock price tank. Everyone was learning an expensive lesson in having all their eggs in one basket.

The vesting cliff is a retention device, not a reward

Backloaded schedules exist to make leaving expensive. That works fine when the relationship is stable. When layoffs arrive, the same structure means the employee who stayed loyal for three years and eleven months forfeits the largest tranche of their package, while the company keeps the labor it already received. The mechanism that was framed as alignment turns out to be asymmetric, and the asymmetry only becomes visible at the exit.

Grant value is set at grant, but your bills are in dollars

A package quoted as 200,000 dollars of stock over four years is quoted using the share price on the grant date. If the stock falls 40 percent, you did not receive 200,000 dollars, you received 120,000 dollars, and there is no adjustment. Meanwhile the company reported the original figure in your compensation statement and counted it as market rate pay.

Refresh grants have quietly shrunk

The four year model assumed annual refresh grants stacking on top of each other, so that steady state compensation stayed flat. Across many sectors, refresh grants have been reduced, delayed, or made contingent on performance ratings. The result is a growing number of employees who are three years into a package, seeing their income scheduled to fall, and holding little leverage to fix it.

Private company RSUs may never be worth anything

The IPO window narrowed considerably after 2021, staying private longer became the norm, and secondary markets are thin and often restricted. A double trigger RSU at a company that never has a liquidity event is a compensation line item that converts to zero, and the seven year expiration on many grants means the clock is running even for people who stay.

Layoffs stopped tracking company performance

Cuts now arrive at profitable companies with rising share prices, often framed as efficiency, restructuring, or reallocation toward new priorities. That breaks the old intuition that good performance protects your equity. If your unvested balance is large, you are exposed to a decision that has nothing to do with your work.

The practical takeaway

Treat vested RSUs as a bonus that has already been paid, not as an investment thesis. Many people default into holding company stock simply because selling feels disloyal or because they expect a rebound. Ask yourself directly: if you received the cash equivalent today, would you buy this specific stock with all of it? If the answer is no, the shares are being held out of inertia rather than conviction. A scheduled sell down (for example, selling a fixed percentage at each vest) removes the decision from the emotional moment.

Your Action Checklist

If you were laid off in the last few days, work through this in order.

1.     Download everything now. Plan document, grant agreements, offer letter, equity portal statements, recent performance reviews, and any written promises about equity. Send them to a personal email address (or see different methods here if that is blocked) before access is revoked.

2.     Build a one page equity map. Every grant, vested units, unvested units, each future vest date, and the current share price.

3.     Search your plan document for these words: acceleration, change in control, without cause, reduction in force, retirement, forfeiture, and expiration.

4.     Identify the near miss. Any tranche vesting within roughly 60 days of your separation date is your primary negotiation target.

5.     Do not sign anything on the notification call. Ask for the agreement in writing and for the review period you are entitled to.

6.     Make one specific, quantified, written ask. Date extension first, acceleration second, cash equivalent third.

7.     Have an employment attorney review the package if the unvested value is meaningful or if the timing of your selection looks targeted.

8.     Plan for the tax bill on units that already vested this year, and decide deliberately whether to keep holding the vested shares you own.

Being laid off strips away most of your control, which is precisely why the pieces you can still influence deserve attention. Equity is one of them. The company has already decided about your job. It has not necessarily decided about your stock, and that conversation is one you are allowed to open.

This article is for general information and is not legal, tax, or financial advice. Equity plans differ significantly between companies, and employment law varies by state and country. Consult a qualified employment attorney and a tax professional about your specific grant documents and situation.

About the Author

Corporate Kate has spent nearly 15 years inside corporate tech, managing large teams and making the hiring decisions most job seekers never get to see. She holds a bachelor's degree in Finance and writes about layoffs, careers, and money.