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Writer's pictureBy The Financial District

Musk "Beats" $500-M Severance Lawsuit By Fired Twitter Workers On Technicality

Elon Musk won the dismissal of a lawsuit claiming he refused to pay at least $500 million of severance to thousands of Twitter employees he fired in mass layoffs after buying the social media company now known as X, Jonathan Stempel reported for Reuters.


The case is one of many accusing Musk of reneging on promises to former Twitter employees. I Photo: Steve Jurvetson Flickr



US District Judge Trina Thompson in San Francisco ruled on a technicality, saying that the federal Employee Retirement Income Security Act (ERISA) governing benefit plans did not cover the former employees' claims and that she therefore lacked jurisdiction.


The case is one of many accusing Musk of reneging on promises to former Twitter employees, including former Chief Executive Parag Agrawal, and vendors after buying the company for $44 billion in October 2022.



A spokeswoman for Sanford Heisler Sharp, which represents the former employees, said the law firm was disappointed and considering its legal options.


Twitter's severance plan called for employees who stayed on after the buyout to receive two or six months of pay, plus one week of pay for each year of employment if they were laid off.



Courtney McMillian, who oversaw Twitter's compensation and benefits, and Ronald Cooper, an operations manager, said Twitter offered fired employees just one month of pay as severance, with no benefits.


Thompson said ERISA did not apply to Twitter's post-buyout plan because there was no "ongoing administrative scheme" where the company reviewed claims case-by-case or offered benefits such as continued health insurance and outplacement services.



"There were only cash payments promised," she wrote.


The judge said employees fired in Twitter's 2022 and 2023 mass layoffs can try amending their complaint, but only for claims not governed by ERISA. The case is McMillian et al v. Musk et al, U.S. District Court, Northern District of California, No. 23-03461.




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