Elon Musk does not owe ex-Twitter staffers $500 million in severance, court rules

Elon Musk faces several lawsuits for firing more than 6,000 Twitter employees, including then-CEO Parag Agrawal, following Musk’s 2022 takeover of the social media platform. On Tuesday, Musk defeated one of those lawsuits, as a federal judge ruled X Corp. doesn’t owe the ex-employees any more severance.

The lawsuit, filed by Twitter’s former head of people experience and another ex-manager, alleged that X Corp. paid fired Twitter employees less severance than they were contractually promised. The complaint stated Twitter offered these 6,000 fired employees, at most, three months of severance pay, which Musk confirmed in a tweet at the time. Twitter’s Severance Plan, which was in effect since 2019, had previously promised senior employees upwards of six months of severance pay, according to the complaint.

The plaintiff estimated Musk owed these former employees upwards of $500 million, citing protections under the federal Employee Retirement Income Security Act (ERISA).

U.S. District Judge Trina Thompson dismissed the class action lawsuit in San Francisco on Tuesday.

In a court filing, Judge Thompson said the ERISA protections did not apply because Musk’s company notified employees shortly after the October 2022 takeover that fired employees would only receive cash payouts. Because of this notice, the mass firings that occurred in November were not under Twitter’s previous severance plan, according to the judge.

“We are disappointed in the ruling and considering our options for moving forward,” said a spokesperson for Sanford Heisler Sharp, the law firm representing the plaintiffs in this case, in an email to TechCrunch.

Since the November 2022 firings, X Corp. has operated the social media platform with a bare-bones staff. Musk told the BBC in 2023 that he brought Twitter’s staff down to 1,500 employees, from roughly 8,000 before his takeover, citing major cost-cutting efforts. Despite the efforts, X has continued to struggle, as documents obtained by Bloomberg showed the company lost $456 million in the first quarter of 2023.

Musk is not out of the water yet for these mass firings. In another lawsuit, Agrawal and three other former Twitter Inc. executives are seeking $128 million in severance payments from X Corp. after they were let go in the mass firing. Another lawsuit from former senior employees at Twitter seeks more than $1 million in severance payments, but Musk says he never agreed to these former employees’ benefit plans.

This article was updated on July 10 at 12:48 PM PDT to include comments from Sanford Heisler Sharp.