A lawsuit has been filed against Twitter, claiming the company owes thousands of terminated employees at least $500 million in severance pay due to the company’s acquisition by Elon Musk. Courtney McMillian, who was the head of total rewards at Twitter until she was terminated in January, filed the lawsuit. According to the complaint, Twitter’s 2019 severance plan guaranteed most employees two months’ base pay plus one week’s pay for each full year of service in the event of a layoff. The lawsuit claims that McMillian and other senior employees are owed six months of back pay.
However, Twitter provided no more than one month’s severance pay to its laid-off employees, and many of them received nothing at all. After Musk’s October acquisition of Twitter, the company announced massive layoffs, affecting more than half of the workforce. Disputes over Twitter’s severance policies are nothing new. As a result of Twitter’s insistence that ex-employees who had previously signed an arbitration agreement do so now, more than 1,500 former workers have filed arbitration claims.
Twitter and Musk are being sued for allegedly breaking a federal law that governs employee benefit plans. Twitter has been accused of not paying severance in the past, but those lawsuits have focused on breach of contract rather than the benefits law. The company claims that all former employees have been compensated in full. Twitter is being sued for allegedly owing millions of dollars in unpaid bonuses to its remaining staff, a lawsuit for which was filed last month. According to Twitter, the allegations are baseless.
Most Twitter employees were guaranteed two months’ worth of pay in the event of a layoff, plus one week’s pay for every full year of service, according to the company’s 2019 severance plan. According to the complaint, executives and other high-ranking employees would be entitled to six months’ worth of base pay. The strategy was developed to keep employees after Musk acquired full control of the business.
More than half of Twitter’s workforce was laid off as a cost-cutting measure after Musk acquired the company, but the company only offered severance packages of one month at most, and many employees received nothing at all. Former workers who were promised more in severance pay have filed lawsuits as a result of this.
Lawyer Kate Mueting said the case is based on the Employee Retirement Income Security Act, which the firm contends is not subject to Twitter’s arbitration agreement. Therefore, if the suit is granted class action status, former employees who did not sign the arbitration agreement may be able to participate.
Twitter’s former media relations team has disbanded. The business sent a poop emoji in response to a request for comment on the lawsuit. Several other lawsuits have been filed against the company because of the layoffs that started last year. These lawsuits allege that the company discriminated against women and people with disabilities. In all of the responses it has filed, Twitter has denied any wrongdoing.
Twitter is being sued by a number of parties, including vendors, landlords, and business partners who are claiming they have not been paid for services rendered or money owed by the company. Music publishers are also suing the company for copyright infringement on the service. Last week, the company’s attorney also threatened to sue Meta over Threads, a competing platform.
First reported on CNBC
Frequently Asked Questions
Q: What is the basis of the lawsuit against Twitter and Elon Musk?
A: The lawsuit against Twitter and Elon Musk claims that the company owes thousands of terminated employees at least $500 million in severance pay due to the company’s acquisition by Elon Musk. The complaint alleges that Twitter’s 2019 severance plan guaranteed most employees two months’ base pay plus one week’s pay for each full year of service in the event of a layoff, but the company provided no more than one month’s severance pay to its laid-off employees, and many received nothing at all. The lawsuit argues that senior employees, including Courtney McMillian, the former head of total rewards at Twitter, are owed six months of back pay.
Q: How did the acquisition by Elon Musk impact Twitter’s severance policies and workforce?
A: After Elon Musk’s acquisition of Twitter, the company announced massive layoffs, affecting more than half of its workforce. The severance policies came into question as many laid-off employees received less than what was guaranteed by Twitter’s 2019 severance plan. Some senior employees, including Courtney McMillian, claim they are owed six months of back pay, which Twitter disputes.
Q: What law is Twitter accused of breaking in the lawsuit?
A: Twitter and Elon Musk are being sued for allegedly breaking the Employee Retirement Income Security Act (ERISA), a federal law that governs employee benefit plans. The lawsuit claims that the company’s failure to provide the agreed-upon severance pay violates this law.
Q: How have former employees reacted to Twitter’s severance policies?
A: More than 1,500 former workers who did not receive the severance pay they were promised have filed arbitration claims against Twitter. Several lawsuits have been filed by former employees alleging breach of contract and discrimination based on gender and disability.
Q: How has Twitter responded to the lawsuits and allegations?
A: Twitter has denied any wrongdoing in response to the lawsuits. The company claims that all former employees have been compensated in full, but former employees argue otherwise and are seeking the severance pay they were promised.
Q: Are there any other legal issues Twitter is currently facing?
A: Apart from the severance-related lawsuits, Twitter is also being sued by vendors, landlords, business partners, and music publishers who claim they have not been paid for services rendered or money owed by the company. Additionally, Twitter’s attorney has threatened to sue Meta, another company, over a competing platform called Threads.
Q: How has the acquisition of Twitter by Elon Musk affected the company’s financial situation?
A: The acquisition of Twitter by Elon Musk has led to cost-cutting measures, including massive layoffs that affected more than half of Twitter’s workforce. The company’s decision to lower the prices of its F-150 Lightning pickup trucks is seen as an effort to gain more market share in the electric vehicle market, where Tesla currently dominates. However, the price war and ongoing legal issues, such as lawsuits over severance pay and unpaid bonuses, may have implications for the company’s financial stability and reputation.
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