Elon Musk’s Broken Promise of Severance Pay to Former Twitter Employees Could Cost Him Up to $500 Million
A tentative court settlement would resolve claims from 6,000 employees who received reduced or no severance pay.
Elon Musk appears ready to settle a class action under which he will provide severance pay to hundreds of laid off Twitter employees who accused him of stiffing them out of $500 million.
The undisclosed payout would be split among approximately 6,000 former workers whom the world’s richest man cut from the social media giant. The lawsuit claimed that Mr. Musk broke promises on severance packages after he purchased the platform in 2022 and rebranded it as X.
The class action was filed in California by Twitter’s former head of employee benefits, Courtney McMillian, and a former operations manager, Ronald Cooper, according to Reuters.
The suit was dismissed last year by a federal judge at San Francisco but was brought forward to the Ninth U.S. Court of Appeals, which was scheduled to hear oral arguments next month. The parties this week asked the court to postpone that hearing while they finalize a tentative agreement.
According to the lawsuit, Twitter’s 2019 severance plan promised most employees two months of base pay plus an additional week for every year of service if they were terminated. Senior staff like Ms. McMillian were entitled to six months of base pay under the plan.
Instead, Twitter provided laid-off workers with just one month of severance at most — and many received nothing at all, the suit alleges. The cuts eliminated more than half of the company’s workforce as Mr. Musk slashed costs following his acquisition.
Additional lawsuits are pending, including one filed by a former CEO, Parag Agrawal, and other former executives seeking more than $128 million.
Mr. Musk’s aggressive downsizing of Twitter became a blueprint for his brief role leading President Trump’s Department of Government Efficiency, which eliminated tens of thousands of federal positions earlier this year.
An email messages to federal employees offering “deferred resignation” with pay through September — without work requirements — bore the subject line “Fork in the Road,” mirroring a message Mr. Musk had sent to Twitter staff in 2022.
