Elon Musk has successfully navigated one of several lawsuits stemming from his decision to terminate over 6,000 Twitter employees, including former CEO Parag Agrawal, following his 2022 acquisition of the social media giant. On Tuesday, a federal judge ruled that X Corp., Musk’s rebranded Twitter, does not owe additional severance pay to the former employees.
The lawsuit, initiated by Twitter’s former head of people experience and another ex-manager, accused X Corp. of providing less severance than contractually promised. The plaintiffs claimed that Musk’s company offered the dismissed employees a maximum of three months’ severance pay, whereas Twitter’s Severance Plan, effective since 2019, had guaranteed senior employees up to six months’ pay. They estimated Musk owed former employees over $500 million, citing protections under the federal Employee Retirement Income Security Act (ERISA).
U.S. District Judge Trina Thompson dismissed the class action lawsuit in San Francisco, stating that ERISA protections did not apply. Judge Thompson explained that because X Corp. notified employees soon after the October 2022 takeover that they would only receive cash payouts, the mass firings in November were not subject to Twitter’s previous severance plan.
“We are disappointed in the ruling and considering our options for moving forward,” said a spokesperson for Sanford Heisler Sharp, the law firm representing the plaintiffs, in an email to TechCrunch.
Since the mass layoffs in November 2022, X Corp. has operated with a significantly reduced workforce. Musk told the BBC in 2023 that he reduced Twitter’s staff from roughly 8,000 to 1,500 employees to cut costs. Despite these measures, the company continued to struggle financially, losing $456 million in the first quarter of 2023, according to documents obtained by Bloomberg.
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Elon Musk still faces other legal battles related to these mass firings. Another lawsuit involves Agrawal and three other former Twitter executives seeking $128 million in severance payments from X Corp. Additionally, former senior employees have filed a lawsuit for over $1 million in severance payments, which Musk disputes, claiming he never agreed to their benefit plans.
These ongoing lawsuits continue to challenge Musk as he navigates the complex aftermath of his high-profile takeover and subsequent cost-cutting measures.
