The settlement follows the termination of over 6,000 workers amid cost-cutting measures, with an official agreement expected soon.
Elon Musk and X Settle Severance Dispute with Former Employees
Elon Musk and X Settle Severance Dispute with Former Employees
Billionaire Elon Musk's firm X has tentatively resolved a lawsuit with ex-employees over unpaid severance.
In a recent court filing, billionaire Elon Musk and his social media company, now dubbed X, have come to a preliminary settlement with former employees who had been seeking $500 million (£373 million) in severance payments. This news comes as both parties have requested the US appeals court in San Francisco to delay an upcoming hearing, allowing them time to finalize the settlement details.
The controversy began after Musk's acquisition of the platform, previously known as Twitter, in 2022, which led to the dismissal of more than half its workforce, approximately 6,000 employees, as part of aggressive cost-cutting strategies. A significant number of these former staff members, represented by lead plaintiff Courtney McMillian, argued that they were unjustly denied severance benefits as stipulated in company policies.
The lawsuit contends that workers who were laid off received minimal severance—up to only one month's salary at most—while many did not receive any financial support upon termination. The claims assert that these actions were not in alignment with the promised terms of the severance plan, which had included provisions for payments to be equivalent to six months of salaries.
The repercussions of Twitter's layoffs, which saw massive cuts to departments focused on trust and safety, human rights, and media content, were among the first indicators of the significant downsizing occurring across the tech sector in the wake of the COVID-19 pandemic. As digital services surged in demand during lockdowns, many companies including Facebook, Google, and Microsoft had previously expanded their workforce, only to later resort to layoffs to stabilize costs.
Musk, having previously held a senior position in the Trump administration centered on government efficiency, is known for implementing similar workforce reductions, emphasizing efficiency and budget cuts.
As the settlement terms remain undisclosed, both parties will now await court approval before finalizing the agreement.
