Under some stock plans, if you are temporarily disabled and your employment is not terminated, you will continue to be treated as an active employee. This means that you will continue to vest in your stock options and/or restricted stock, and you will not trigger the post-termination option-exercise rules. However, other plans may stop vesting while you are not working and are instead receiving disability benefits. In this situation, your company may ask you to sign a document when you leave on disability that confirms your understanding of how disability affects vesting.
Look at your stock plan documents to see whether they explain the impact of short-term and/or long-term disability on vesting and on termination, and to see how the plan defines disability. Some plans are silent on these issues, do not address all of them, or are ambiguous. When in doubt, consult the appropriate person in HR, benefits, or stock plan administration.
Alert: The treatment of disability and the process for claiming benefits under other company benefit and compensation plans do not automatically apply to stock grants. While the benefit-claims procedures for disability changed on April 1, 2018, for certain ERISA-regulated benefit plans (including retirement, severance, and "top hat" plans), that does not directly apply to employee stock plans. For more information on this, see commentaries from the law firms Groom Law Group and Cooley.
