Elon Musk has secured a legal victory as a federal judge dismissed a lawsuit alleging that X Corp., under Musk’s leadership, owed more than 6,000 former Twitter employees $500 million in severance pay following mass firings.
The lawsuit was filed by Twitter’s former head of people experience. Another ex-manager contended that X Corp. did not fulfil contractual obligations to provide severance payments as stipulated by Twitter’s severance plan, which had promised senior employees up to six months of severance pay.
U.S. District Judge Trina Thompson ruled in San Francisco that the Employee Retirement Income Security Act (ERISA) protections did not apply in this case. The judge cited that Musk’s company had promptly notified employees after the October 2022 takeover that they would only receive cash payouts, effectively altering the severance terms from those under Twitter’s previous plan.
In response to the ruling, a spokesperson for Sanford Heisler Sharp, the plaintiffs’ law firm, expressed disappointment and indicated they are considering their options moving forward.
Following the November 2022 firings, which reduced Twitter’s workforce from approximately 8,000 to 1,500 employees, X Corp. has grappled with financial challenges. Musk acknowledged significant cost-cutting efforts to stabilise the platform, which reported a substantial loss of $456 million in the first quarter of 2023.
Despite this legal win, Musk faces additional lawsuits related to severance payments from former Twitter executives, including Parag Agrawal, who is seeking $128 million, and senior employees who are seeking over $1 million. Musk has contested these claims, asserting he did not agree to the benefit plans claimed by the plaintiffs.
The outcomes of these ongoing legal battles will continue to shape perceptions of Musk’s management of Twitter following his high-profile acquisition and subsequent restructuring efforts.
