Elon Musk Wins In Court, Ex-Twitter Staff Will Not Receive $500M
Elon Musk has been embroiled in multiple lawsuits following his 2022 acquisition of Twitter, which resulted in the termination of over 6,000 employees, including former CEO Parag Agrawal. On Tuesday, a federal judge ruled in favour of Musk, stating that X Corp. does not owe additional severance to these ex-employees.
U.S. District Judge Trina Thompson dismissed the class action lawsuit in San Francisco. The lawsuit was filed by Twitter's former head of people experience and another ex-manager. They claimed that X Corp. provided less severance than promised under Twitter's Severance Plan, which had been effective since 2019.
Severance Dispute
The plaintiffs argued that the fired employees were entitled to more severance pay than what was offered. According to the complaint, Twitter's Severance Plan had promised senior employees up to six months of severance pay. However, Musk confirmed on Twitter that the company offered a maximum of three months' severance.
The plaintiffs estimated that Musk owed these former employees upwards of $500 million, citing protections under the federal Employee Retirement Income Security Act (ERISA). However, Judge Thompson ruled that ERISA protections did not apply because X Corp. had notified employees shortly after the takeover that they would only receive cash payouts.
Impact on Employees
Since the mass firings in November 2022, X Corp. has operated with a significantly reduced workforce. Musk informed the BBC in 2023 that he had reduced Twitter's staff from approximately 8,000 to 1,500 employees as part of major cost-cutting measures.
Despite these efforts, X Corp. continues to face financial challenges. Documents obtained by Bloomberg revealed that the company lost $456 million in the first quarter of 2023.
Ongoing Legal Battles
Musk is still facing other lawsuits related to these mass terminations. In one case, Parag Agrawal and three other former executives are seeking $128 million in severance payments from X Corp. Additionally, another lawsuit from former senior employees at Twitter demands more than $1 million in severance payments.
A spokesperson for Sanford Heisler Sharp, the law firm representing the plaintiffs in this case, expressed disappointment with Judge Thompson's ruling and mentioned they are considering their options for moving forward.
"We are disappointed in the ruling and considering our options for moving forward," said a spokesperson for Sanford Heisler Sharp in an email to TechCrunch.
Musk maintains that he never agreed to the benefit plans claimed by these former employees. The legal battles continue as both sides seek resolution over the disputed severance payments.
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