Musk, X Corp to Settle $ 500 Million Lawsuit
Elon Musk and his social media firm X Corp have come to a preliminary deal to resolve a lawsuit brought by ex-Twitter employees who claimed they were underpaid $500 million in severance.
Lawyers representing X Corp and the ex-Twitter workers disclosed the agreement in a court filing on Wednesday, where both parties requested a US appeals court to postpone an impending court hearing to finalize a settlement that would compensate the terminated employees and resolve the lawsuit. The financial aspects of the agreement were not revealed.
Musk terminated around 6,000 workers following his 2022 takeover of Twitter, which he renamed X. A number of employees filed lawsuits regarding their dismissals and severance packages, while additional cases remain active in courts in Delaware and California.
The agreement would settle a proposed class action initiated in California by Courtney McMillian, who formerly managed Twitter's employee benefits programs as its "head of total rewards," and Ronald Cooper, who served as an operations manager.
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In July 2024, a federal judge in San Francisco threw out the employees' lawsuit, prompting them to appeal to the Ninth Circuit Court of Appeals located in San Francisco. The Ninth Circuit was set to listen to oral arguments on September 17.
Lawyers for Musk and McMillian did not quickly reply to inquiries for comments on Thursday.
The lawsuit contended that a severance plan from 2019 assured that many Twitter employees would get two months of their base salary along with one week's pay for each complete year of employment if they were terminated. The lawsuit states that senior employees like McMillian were owed six months of their base salary.
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However, the lawsuit states that Twitter provided laid-off employees with a maximum of one month of severance pay, and many received nothing at all. After Musk purchased the company, Twitter reduced its workforce by over fifty percent as a cost-saving strategy.