Elon Musk has successfully had a case rejected, alleging that he refused to pay at least $500 million in compensation. Former employees said that Musk failed to pay severance to hundreds of Twitter employees who were laid off following his acquisition of the social media firm, now known as X.
Plaintiffs Courtney McMillian, who manages Twitter’s salary and benefits, and Ronald Cooper, an operations manager, filed the complaint. According to the complaint, Twitter’s severance plan offered employees who remained after the buyout two to six months of salary, plus an extra week of pay for each year of service if they were laid go. They claimed, however, that Twitter provided only one month’s severance compensation and no other benefits to individuals who were sacked.
This lawsuit is one of numerous alleging that Musk failed to keep promises made to former Twitter workers, including ex-CEO Parag Agrawal, and other vendors following his $44 billion acquisition of the business in October 2022.
On Tuesday, July 9, United States District Judge Trina Thompson in San Francisco determined that the federal Employee Retirement Income Security Act (ERISA), which controls benefit plans, did not apply to the former employees’ claims, hence she lacked jurisdiction in the case.
Furthermore, the court determined that Twitter’s post-buyout severance plan did not fall under ERISA since there was no “ongoing administrative scheme” including case-by-case evaluation of claims or benefits such as extended health insurance and outplacement services.
The judge stated that while employees laid off in Twitter’s 2022 and 2023 mass layoffs may attempt to amend their complaint, this will only be allowed for claims not covered by ERISA.
