A lawsuit brought by ex-employees claiming inadequate severance pay after layoffs has reached a tentative settlement.
Elon Musk and X Settle Lawsuit with Former Employees Over Severance Pay
Elon Musk and X Settle Lawsuit with Former Employees Over Severance Pay
Former Twitter employees receive a settlement after suing for $500 million in severance pay.
Billionaire entrepreneur Elon Musk and his social media company X have achieved a preliminary settlement with former employees who had claimed $500 million (£373 million) in unpaid severance. In a court filing made on Wednesday, both parties requested the US appeals court in San Francisco to delay an impending hearing in order to finalize the settlement details.
The lawsuit was initiated after Musk's acquisition of the company, leading to a substantial reduction in workforce, with around 6,000 employees—over half of the staff—laid off as a part of cost-cutting measures implemented in 2022. The BBC has sought comments from X, formerly known as Twitter, and the attorneys representing the impacted workers.
According to the court documents, “The parties have reached a settlement agreement in principle and began negotiating the terms of a long form settlement agreement.” The specifics of the agreement are currently under wraps and are pending court approval.
The lawsuit, spearheaded by former employee Courtney McMillian, alleges that approximately 6,000 laid-off workers were unjustly denied compensation outlined in the company’s severance plan. Complainants asserted that severance packages falling short of six months’ worth of salaries were inadequate, with many receiving no severance at all, while others received as little as one month’s pay.
The mass layoffs executed by Musk affected various departments globally, including trust and safety, human rights, and media teams. These layoffs marked one of the earliest instances in a wave of workforce reductions across the tech industry, where similar cutbacks followed at major firms such as Facebook, Google, and Microsoft.
Earlier this year, Musk's approach to workforce reduction mirrored actions taken when he oversaw President Donald Trump’s Department of Government Efficiency, which was devoted to slashing federal expenditure and workforce numbers.
Additional insight provided by reporter Lily Jamali.
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