There are two extremes in the equity situation. The first is where the early employee is essentially a founder. There is no security, no salary, no office. In this case, I'd think 2% is far too low.

The second is where the employee isn't a founder at all. This usually happens once the company is stable enough to be around at least for a year or two. The job comes with a normal, market salary. In this case 2% probably wouldn't be too objectionable - the equity is a nice perk, but really you're hired to do a job.

It sounds like these guys are trying to pay a category 1 salary and a category 2 equity package. If that's the case, I'd walk. Not only are these guys being unfair, they sound pretty clueless.