Elon Musk wins $500 million severance lawsuit from fired Twitter employees | Social Media News

A U.S. judge said federal laws governing the benefits system did not cover the former employees’ claims.

Elon Musk has won the dismissal of a lawsuit alleging he refused to pay at least $500 million in severance packages to thousands of Twitter employees he laid off after buying the social media company now known as X.

U.S. District Judge Trina Thompson in San Francisco, California, ruled Tuesday that she lacked jurisdiction because the federal Employee Retirement Income Security Act (ERISA), which governs benefit plans, does not cover the claims of former employees.

The lawsuit is one of many accusing Musk of breaking promises to former Twitter employees and vendors, including former Chief Executive Parag Agrawal, after he bought Twitter in October 2022 for $44 billion.

Musk, who also owns the electric car company Tesla, is the richest man in the world, according to Forbes magazine.

A spokesman for Sanford Heisler Sharp LLP, which is representing the former employees, said the firm was disappointed and was considering legal action. Lawyers for Mr Musk and Mr X did not immediately respond to Reuters requests for comment.

According to the lawsuit, Twitter’s severance plan provided that if employees were fired after the acquisition, they would receive two or six months’ pay, plus one week’s pay for each year of service they had.

Plaintiffs Courtney McMillian, who oversaw compensation and benefits at Twitter, and operations manager Ronald Cooper, allege that Twitter offered fired employees just one month’s salary as severance and no benefits.

Thompson said ERISA did not apply to Twitter’s post-acquisition plans because the company did not have a “continuing administration plan” that would have involved individually reviewing claims or providing benefits such as continuing health insurance or outplacement services.

“All we were promised was cash payment,” she wrote.

The judge said employees fired in Twitter’s mass layoffs in 2022 and 2023 can try to amend their complaints, but only to claims that don’t comply with ERISA rules.

The case is McMillian et al v Musk et al, U.S. District Court, Northern District of California, No. 23-03461.

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