Elon Musk just dodged a $500 million bullet

Ana Altchek
·3 min read
3

  • Elon Musk's X avoids $500 million in severance after favorable court ruling.

  • The court found insufficient evidence of ERISA governance of benefits for employees.

  • X still faces multiple lawsuits over severance pay and unpaid bills from vendors.

Elon Musk and his company X, formerly Twitter, just got out of a $500 million in severance pay lawsuit for now, according to a Tuesday court ruling.

A federal judge in the Northern District of California dismissed a lawsuit brought by former Twitter employees who said the company owed $500 million in severance to those laid off after the Twitter acquisition.

Former Twitter HR boss Courtney McMillian and ex-manager Ronald Cooper filed the lawsuit last July. They argued the company failed to properly compensate over 6,000 laid-off employees under rules set by the Employee Retirement Income Security Act.

The plaintiffs said in the lawsuit they were only offered one month of severance pay after Musk's 2022 takeover of Twitter.

They said in the lawsuit that was " a fraction" of what they were entitled to under the severance plan."

A spokesperson for McMillian's legal team at Sanford Heisler Sharp told BI they are "disappointed in the ruling and considering our options for moving forward."

US District Judge Trina Thompson ultimately found insufficient facts to support that the severance plan is governed by the ERISA.

The judge noted in her ruling that the company told employees after Musk took over that laid-off employees would get cash payouts. There were also no promises to continue healthcare benefits or outplacement services following termination, she wrote.

The company told employees after Musk took over that laid-off employees would get cash payouts, according to the ruling. There were also no promises to continue healthcare benefits or outplacement services following termination, the ruling said.

McMillian and Cooper can amend their complaint about insufficient severance in the next 21 days, but any ERISA claim won't hold up in court.

Despite this win, Musk and his social media platform aren't quite off the hook yet.

Several lawsuits have been filed regarding Musk's takeover of X and insufficient severance pay awarded to laid-off employees — and they're ongoing. Some employees also claimed they weren't paid a proper portion of their 2022 bonuses.

Even vendors have accused the social media platform of not paying its bills. Australian project management company Facilitate filed a lawsuit seeking $700,000 for unpaid work it completed in Twitter offices. Twitter's London and Boulder, Colorado, offices were also both accused of not paying rent.

Since taking over Twitter, Musk has slashed about 80% of its workforce and implemented a number of controversial changes that have altered the company's brand, like offering verification to anyone who pays, renaming the company "X," and making users' likes private.

Twitter did not immediately respond to a request for comment.

Read the original article on Business Insider