Elon Musk has successfully had a lawsuit dismissed that claimed he refused to pay at least $500 million in severance. The claim was made by former employees that Musk refused severance to thousands of Twitter employees laid off after his acquisition of the social- media company, now known as X.
The complaint was filed by plaintiffs Courtney McMillian,who managed Twitter’s compensation and benefits, and Ronald Cooper, an operations manager. The complaint stated that Twitter’s severance plan promised employees who remained post-buyout two to six months of pay, plus an additional week of pay for each year of service if they were laid off. However, they alleged that Twitter offered just one month of severance pay without additional benefits to those who were fired.
This lawsuit is among several alleging that Musk failed to honour commitments to former Twitter employees, including ex-CEO Parag Agrawal, and various vendors following his $44 billion purchase of the company in October 2022.
On Tuesday, 9 July, United States District Judge Trina Thompson in San Francisco ruled that the federal Employee Retirement Income Security Act (ERISA), which governs benefit plans, did not apply to the former employees’ claims, and therefore, she lacked jurisdiction over the case.
Furthermore, the court concluded that ERISA did not cover Twitter’s severance plan post-buyout because there was no “ongoing administrative scheme” involving case-by-case review of claims or benefits such as continued health insurance and outplacement services.
The judge noted that while employees laid off in Twitter’s 2022 and 2023 mass layoffs can attempt to amend their complaint, it would only be valid for claims not governed by ERISA.
