Elon Musk wins $500 million severance lawsuit filed by fired Twitter employees

Elon Musk has successfully had a lawsuit dismissed that alleged he refused to pay at least $500 million in severance to thousands of Twitter employees he fired in mass layoffs after acquiring the social media company, now known as X.

United States District Judge Trina Thompson in San Francisco, California, ruled on Tuesday that the federal Employee Retirement Income Security Act (ERISA), which governs benefit plans, did not cover the former employees’ claims, thus she lacked jurisdiction.

This lawsuit is one of several accusing Musk of failing to fulfill promises to former Twitter employees, including ex-CEO Parag Agrawal, and vendors following his $44 billion purchase of the company in October 2022.

Musk, who also leads the electric car company Tesla and is the world’s richest person according to Forbes magazine, has not commented on the ruling. Lawyers for Musk and X did not immediately respond to requests for comment.

According to the complaint, Twitter’s severance plan offered employees who stayed on after the buyout two to six months of pay plus one week of pay for each year of employment if they were laid off. However, plaintiffs Courtney McMillian, who oversaw Twitter’s compensation and benefits, and Ronald Cooper, an operations manager, claimed Twitter only provided fired employees with one month of pay as severance, without benefits.

Judge Thompson ruled that ERISA did not apply to Twitter’s post-buyout plan because it lacked an “ongoing administrative scheme” for reviewing claims on a case-by-case basis and did not offer benefits such as continued health insurance and outplacement services.

“There were only cash payments promised,” she wrote.

The judge noted that employees laid off in Twitter’s 2022 and 2023 mass layoffs can attempt to amend their complaint, but only for claims not governed by ERISA.

The case is McMillian et al v Musk et al, US District Court, Northern District of California, number 23-03461.