Startups by and large have held fast to this requirement.

A few, such as Pinterest, have agreed to extend the 90-day expiration period out for several years. This allows employees who hold vested options having potentially significant value to leave their employment and not have to face the choice of losing such options, on the one hand, or doing an immediate exercise that might trigger a large tax while being left with no near-term ability to liquidate the underlying stock so as to pay that tax (and further facing the risk that the underlying stock might decline in value, leaving them having paid a gratuitous tax on stock that may subsequently have little or no value).

This is an important and very good fix but it does destroy the ISO status of the options and converts them to NQOs.

If the 90-day restriction, therefore, is not built into default plan documents, the company cannot offer ISOs to its employees. It is thus not normally an option for startups to eliminate the restriction wholesale. Any discussion of this issue needs to take this into account because there are various trade-offs in doing it one way or the other, at least one of which may not be good for employees.