Elon Musk, entrepreneur and co-founder of multiple companies, has succeeded with his plea to dismiss a lawsuit alleging that he refused to pay at least $500m of severance due to employees after his takeover of the then Twitter.
$500m Twitter Severance Lawsuit Against Elon Musk Dismissed
Musk, who heads enterprises such as Tesla (TSLA) and SpaceX, acquired Twitter in October 2022 and changed the name to X. He then proceeded to fire thousands of employees in mass layoffs.
Trina Thompson, the presiding US district judge in the matter, found that the Employee Retirement Income Security Act (ERISA) did not cover these severance claims. The claimants accused Musk of going back on payment promises made when he bought the social media platform for $44bn.
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According to Reuters, the severance plan, for those who stayed on after the takeover, made provision for two to six months of remuneration and a week’s pay for each year of employment. They allegedly only received a month’s severance and no added benefits.
Sanford Heisler Sharp, the legal firm representing the disgruntled workers, expressed disappointment with the ruling and said that it would investigate other legal avenues. Neither Musk nor X offered any comments.
Judge Thompson stated that ERISA is not applicable to Twitter as there was no “ongoing administrative scheme” handling individual cases or providing things such as continued health cover and out-placement services. She added:
There were only cash payments promised.
These employees can still amend their claims and submit those that do not fall under ERISA.
