Musk Gets His Way in $500M Severance Lawsuit

UPDATE Jul 11, 2024 5:51 AM CDT

The lawsuit accusing Elon Musk of owing at least $500 million in severance pay to former Twitter employees has been dismissed. A judge ruled Tuesday that she lacked jurisdiction in the case because the federal Employee Retirement Income Security Act (ERISA) that governs benefit plans does not cover the situation at Twitter after Musk bought it, because "there were only cash payments promised" rather than an "ongoing administrative scheme" like Twitter offering continued benefits. The plaintiffs have the option to attempt to amend their complaint for any claims not governed by ERISA, CNN reports. Musk still faces lawsuits from other former Twitter employees.

Jul 13, 2023 1:09 AM CDT

A new class-action lawsuit accuses Twitter of failing to pay $500 million or more in severance it owes to laid-off employees. According to the class-action lawsuit proposed in a San Francisco federal court by Courtney McMillian, a former human resources employee at Twitter who was let go in January, a 2019 severance plan promised most workers two months of base pay (six months for more senior workers) plus a week of pay per full year of employment in the event of a layoff, and other benefits. When mass layoffs did take place after Elon Musk took over the company, however, workers received at most one month's severance pay, Reuters reports. In addition to the month of severance, they received an additional two months' pay to comply with state and federal mandates, CNN reports.

The complaint accuses Musk of knowing about the severance plan, but not wanting to take on the "expense," and of only paying out a "fraction" of what employees were due. It also accuses the company of misleading workers about whether the 2019 plan would be followed, the BBC reports. "Musk initially represented to employees that under his leadership Twitter would continue to abide by the severance plan," says the attorney representing McMillian. "He apparently made these promises knowing that they were necessary to prevent mass resignations that would have threatened the viability of the merger and the vitality of Twitter itself." (Twitter is also being sued over alleged gender bias in its layoffs.)