Former Twitter employees sue Elon Musk over unfulfilled severance

Elon Musk and his successor corporation to Twitter, X Corp., are embroiled in a major legal battle as former employees file a lawsuit alleging the denial of promised severance packages. 

The lawsuit, seeking damages of at least $500 million, accuses Musk and Twitter of breaching fiduciary duties and misleading terminated employees regarding their eligibility for severance pay. 

The lawsuit highlights the failure of Twitter and Musk to honour the severance plan that was in place prior to Musk's takeover. Despite assurances made by Musk himself, thousands of terminated employees were allegedly denied the benefits they were promised under US law. The lawsuit claims that Musk and Twitter diverted the funds earmarked for severance payments to support the company after the mass layoffs.

Christopher Owens, a litigation fellow at Sanford Heisler Sharp, said, "We believe that these defendants were not loyal to Twitter employees as participants in the Plan, and they knowingly participated in and enabled each other’s disloyal conduct." The lead counsel for the terminated Twitter employees, Kate Mueting, highlights Musk's involvement, saying that he made promises to prevent mass resignations that could have jeopardised the merger and the company itself.

In addition to seeking financial damages, the lawsuit aims to compel Twitter and Musk to fulfill their obligations by paying the terminated employees according to the severance plan. The case revolves around violations of the Employee Retirement Income Security Act (ERISA), which governs employee benefit plans.

This lawsuit adds to the legal challenges faced by Twitter, including a $250 million copyright infringement lawsuit filed by music publishers. Furthermore, Musk's involvement with Twitter has led his company to threaten legal action against Meta, accusing them of stealing trade secrets related to the Threads initiative.

As the legal battle unfolds, Twitter and Musk will need to address the allegations and provide clarity on their commitment to upholding employee welfare. The outcome of the lawsuit could result in significant financial implications for both parties and underscores the importance of honoring contractual obligations in the business world.

Twitter's history of lawsuits related to mass layoffs, including claims of gender and disability discrimination, further complicates the situation. The company faces a range of legal challenges, which could impact its reputation and financial stability moving forward.