Musk Defeats $500m Mass Twitter Layoff Lawsuit

A court in San Francisco has delivered some bad news to thousands of Twitter staff seeking severance payments after the mass firings in 2020 and 2021.

Reuters reported that Elon Musk won dismissal in a California courtroom of a lawsuit claiming he refused to pay at least $500 million of severance.

In July 2023 a former Twitter executive had alleged that Twitter had seriously short-changed staff members fired by Elon Musk since his takeover.

Court dismissal

The class action lawsuit had been filed in a San Francisco federal court against Twitter by its former head of employee benefits, Courtney McMillian.

McMillian in the lawsuit alleged that Twitter owed ex-employees $500m in severance, after Elon Musk fired 80 percent of its staff since he took control of the firm in October 2022.

But on Tuesday this week, US District Judge Trina Thompson in San Francisco reportedly ruled that the federal Employee Retirement Income Security Act (ERISA) governing benefit plans did not cover the former employees’ claims, and therefore she lacked jurisdiction.

An outside spokeswoman for Sanford Heisler Sharp, which represents the former employees, was quoted by Reuters as saying that the law firm was disappointed and considering its legal options.

Lawyers for Musk and X did not immediately respond to requests for comment, Reuters noted.

According to this particular complaint, Twitter’s severance plan called for employees who stayed on after the buyout to receive two or six months of pay, plus one week of pay for each year of employment, if they were laid off.

The plaintiffs Courtney McMillian and Ronald Cooper (an operations manager), said Twitter instead offered fired employees just one month of pay as severance, with no benefits.

Judge Thompson said ERISA did not apply to Twitter’s post-buyout plan because there was no “ongoing administrative scheme” where the company reviewed claims case-by-case, or offered benefits such as continued health insurance and out placement services.

“There were only cash payments promised,” she reportedly wrote.

The judge said employees fired in Twitter’s 2022 and 2023 mass layoffs can try amending their complaint, but only for claims not governed by ERISA.

Other lawsuits

It should be noted that this is just one of many lawsuits alleging that Musk reneged on severance promises to former Twitter employees, including former CEO Parag Agrawal, and vendors after Musk finally followed through and purchased Twitter (now known as X) for $44 billion in late October 2022.

In May 2023 a lawsuit was filed that accused Twitter of failing to pay millions of dollars in bonuses it owes to remaining employees.

The Elon Musk company is also facing a slew of other lawsuits stemming from the mass layoffs, including claims that Twitter targeted women and workers with disabilities.

Twitter/X is also facing numerous lawsuits from contractors seeking payments for outstanding bills.

But there has been some victories for former staff.

In February 2024 former Twitter staff in Ghana reached a settlement with X for payment more than a year after they were laid off.

The Ghana-based staff had alleged they received no notice period and no severance pay, after many had relocated from neighbouring countries such as Nigeria with their families and became trapped in Accra.