Elon Musk and his social media platform, X, reached a tentative settlement on Wednesday with former Twitter employees after a years-long legal battle over severance pay. Former staff had sought $500m in a proposed class action suit against the billionaire.
A court filing released on Wednesday stated that both parties had reached a settlement agreement in principle and requested that a scheduled 17 September hearing in the case be postponed while they worked to finalize a deal. The filing did not disclose any details of the tentative agreement and it is unclear what level of compensation that former employees may receive.
Former Twitter employees, led by Courtney McMillian and Ronald Cooper, alleged that the company failed to appropriately pay thousands of workers severance after conducting mass layoffs. When Musk acquired Twitter in 2022, he cut more than 6,000 employees in an overhaul of the company’s workforce, slashing almost the entirety of departments such as content moderation and communications. The layoffs led to several lawsuits, some ongoing, from staff and executives, and foreshadowed how Musk’s “department of government efficiency” would approach its gutting of government agencies earlier this year.
The lawsuit alleged that laid-off workers were owed at least two months of pay plus additional compensation depending on their time worked at the company, in accordance with a 2019 severance plan. Instead, Musk failed to honor the contract and in some cases paid workers no compensation at all, according to the suit.
The tentative settlement is a turnaround from last year, when a US district judge dismissed McMillian’s suit in a legal victory for Musk. Judge Trina Thompson ruled last July that the federal Employee Retirement Income Security Act (Erisa) governing benefit plans did not cover the former employees’ claims, forcing the plaintiffs to appeal the decision to a higher court.
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Musk’s $44bn acquisition of Twitter, which he subsequently rebranded to X, remains an incredibly contentious business deal. Twitter executives, including former CEO Parag Agrawal, are also suing Musk in a separate, still-pending case over allegations that he failed to pay them $128m in severance.