Musk, Twitter Hit With $500 Million Lawsuit Over Severance Payments – Variety

Elon Musk and Twitter are being sued by former employees of the social-media network who accuse the company of failing to pay their promised severance packages.

The lawsuit was filed Wednesday in the US District Court for the Northern District of California for a class of employees who have been terminated since Musk took over the company in late October 2022. The suit seeks damages of at least $500 million as well as orders forcing Twitter and Musk “to comply with all terms of the severance plan by paying all terminated employees what they are owed,” according to the plaintiff’s lawyers.

The lead plaintiff in the case is Courtney McMillian, who was an employee of Twitter’s HR department from August 2020 until the date of her separation on January 4, 2023, according to the complaint. Law firm Sanford Heisler Sharp filed the lawsuit on McMillian’s behalf, naming X Corp. (Twitter’s successor company) and Musk as defendants. A copy of the complaint is available at this link.

An email to Twitter’s PR account asking for information returned an autoreply with a poop emoji. different also reached out to Alex Spiro, a partner at Quinn Emanuel Urquhart & Sullivan, the law firm that represents Twitter in various legal matters.

Before Musk’s takeover, Twitter had a severance plan, which was an employee benefit plan under the Employee Retirement Income Security Act of 1974 (ERISA), the lawsuit said. Before the tech mogul closed the deal, Musk and Twitter provided numerous assurances to employees that Twitter would continue to pay benefits under the severance plan, according to the complaint. However, after his hiring, Twitter and Musk failed to pay promised benefits to thousands of terminated employees, the lawsuit said.

“Musk initially represented to employees that under his leadership Twitter would continue to follow the layoff plan,” said Kate Mueting, the firm’s managing partner at Sanford Heisler Sharp in Washington, DC, in a statement. “He apparently made these promises knowing they were necessary to prevent mass layoffs that would threaten the viability of the merger and the viability of Twitter itself.”

Twitter has been the target of several lawsuits related to its mass deletions. In May, a federal judge dismissed a proposed class-action lawsuit against Twitter that alleged the company targeted female employees for layoffs, saying the complaint lacked specificity. details. Also in May, the court dismissed a lawsuit alleging that Twitter discriminated against workers with disabilities by requiring employees to report to work in person and commit to an “extremely rigid” work culture. Reuters reported that Shannon Liss-Riordan, the labor lawyer who represented the plaintiffs in the two dismissed cases, plans to file amended complaints that add new facts.

After Musk took control of Twitter in October 2022, he removed Twitter’s executive leadership and disbanded its board. Twitter then conducted four rounds of extensive layoffs, cutting the number by about 80%, from an estimated 7,800 to 1,500.

According to the latest lawsuit, Musk and Twitter terminated employees without providing them with information about expected changes to the severance plan and without paying employees the benefits they were due. entitled under the plan. Twitter employees were offered a maximum of three months’ pay, the complaint said. Under Twitter’s severance plan, many senior employees are entitled to six months of base pay plus one week for each full year of service. Employees with less time with the company are entitled to two months’ base pay plus one week for each full year of service. All employees are also entitled to their vested restricted stock units, bonuses, a cash contribution for health insurance, and three to six months of outplacement service, according to the complaint.

The lawsuit alleges that Musk and Twitter breached their fiduciary duties to the employee plan by misleading class members about their eligibility for severance pay and refusing to pay severance “so that those funds will be available to support the company,” the law firm said in the announcement. the litigation.