I’ve intentionally made it difficult for myself to log into twitter. For the benefit of others who avoid Twitter, here is the text of Kelsey’s tweet thread:
I’m getting two reactions to my piece about OpenAI’s departure agreements: “that’s normal!” (it is not; the other leading AI labs do not have similar policies) and “how is that legal?” It may not hold up in court, but here’s how it works:
OpenAI like most tech companies does salaries as a mix of equity and base salary. The equity is in the form of PPUs, ‘Profit Participation Units’. You can look at a recent OpenAI offer and an explanation of PPUs here: https://t.co/t2J78V8ee4
Many people at OpenAI get more of their compensation from PPUs than from base salary. PPUs can only be sold at tender offers hosted by the company. When you join OpenAI, you sign onboarding paperwork laying all of this out.
And that onboarding paperwork says you have to sign termination paperwork with a ‘general release’ within sixty days of departing the company. If you don’t do it within 60 days, your units are cancelled. No one I spoke to at OpenAI gave this little line much thought.
And yes this is talking about vested units, because a separate clause clarifies that unvested units just transfer back to the control of OpenAI when an employee undergoes a termination event (which is normal).
There’s a common legal definition of a general release, and it’s just a waiver of claims against each other. Even someone who read the contract closely might be assuming they will only have to sign such a waiver of claims.
But when you actually quit, the ‘general release’? It’s a long, hardnosed, legally aggressive contract that includes a confidentiality agreement which covers the release itself, as well as arbitration, nonsolicitation and nondisparagement and broad ‘noninterference’ agreement.
And if you don’t sign within sixty days your units are gone. And it gets worse—because OpenAI can also deny you access to the annual events that are the only way to sell your vested PPUs at their discretion, making ex-employees constantly worried they’ll be shut out.
Finally, I want to make it clear that I contacted OpenAI in the course of reporting this story. So did my colleague SigalSamuel They had every opportunity to reach out to the ex-employees they’d pressured into silence and say this was a misunderstanding. I hope they do.
Thanks, but this doesn’t really give insight on whether this is normal or enforceable. So I wanted to point out, we don’t know if it’s enforcible, and have not seen a single legal opinion.
I am not a lawyer, and my only knowledge of this agreement comes from the quote above, but...if the onboarding paperwork says you need to sign “a” general release, but doesn’t describe the actual terms of that general release, then it’s hard for me to see an interpretation that isn’t either toothless or crazy:
If you interpret it to mean that OpenAI can write up a “general release” with absolutely any terms they like, and you have to sign that or lose your PPUs, then that seems like it effectively means you only keep your PPUs at their sufferance, because they could simply make the terms unconscionable. (In general, any clause that requires you to agree to “something” in the future without specifying the terms of that future agreement is a blank check.)
If you interpret it to mean either that the employee can choose the exact terms, or that the terms must be the bare minimum that would meet the legal definition of “a general release”, then that sounds like OpenAI has no actual power to force the non-disclosure or non-disparagement terms—although they could very plausibly trick employees into thinking they do, and threaten them with costly legal action if they resist. (And once the employee has fallen for the trick and signed the NDA, the NDA itself might be enforceable?)
Where else are the exact terms of the “general release” going to come from, if they weren’t specified in advance and neither party has the right to choose them?
This sticks out pretty sharply to me.
Was this explained to the employees during the hiring process? What kind of precedent is there for this kind of NDA?
See Kelsey’s follow-up reporting on this.
Thanks for the source.
I’ve intentionally made it difficult for myself to log into twitter. For the benefit of others who avoid Twitter, here is the text of Kelsey’s tweet thread:
Thanks, but this doesn’t really give insight on whether this is normal or enforceable. So I wanted to point out, we don’t know if it’s enforcible, and have not seen a single legal opinion.
I am not a lawyer, and my only knowledge of this agreement comes from the quote above, but...if the onboarding paperwork says you need to sign “a” general release, but doesn’t describe the actual terms of that general release, then it’s hard for me to see an interpretation that isn’t either toothless or crazy:
If you interpret it to mean that OpenAI can write up a “general release” with absolutely any terms they like, and you have to sign that or lose your PPUs, then that seems like it effectively means you only keep your PPUs at their sufferance, because they could simply make the terms unconscionable. (In general, any clause that requires you to agree to “something” in the future without specifying the terms of that future agreement is a blank check.)
If you interpret it to mean either that the employee can choose the exact terms, or that the terms must be the bare minimum that would meet the legal definition of “a general release”, then that sounds like OpenAI has no actual power to force the non-disclosure or non-disparagement terms—although they could very plausibly trick employees into thinking they do, and threaten them with costly legal action if they resist. (And once the employee has fallen for the trick and signed the NDA, the NDA itself might be enforceable?)
Where else are the exact terms of the “general release” going to come from, if they weren’t specified in advance and neither party has the right to choose them?