A federal judge in California has dismissed a compensation lawsuit against tech billionaire Elon Musk, who accused him of refusing to pay at least $500 million in compensation to former Twitter employees he fired when he took over the social media platform. , now called X.
US District Judge Trina Thompson in a decision Tuesday said the estimated 6,000 workers who were laid off after Musk bought the company in 2022 were not entitled to severance pay under the federal Employee Retirement Income Security Act (ERISA). As a result, the court does not have jurisdiction to weigh in on the matter, Thompson said.
The Hill has reached out to Musk’s legal team for comment.
The complaint, filed in July last year, supposed musk went back on its promise to pay a total of at least $500 million to the thousands of laid-off employees.
The lawsuit alleged that employees were promised two months of their base salary and one week’s pay for each full year of service if they were fired, while senior employees were guaranteed six months of severance pay, Reported by Reuters. The employees, however, received a maximum of one month’s salary, or no money and no benefits, according to the lawsuit.
Thompson found that ERISA did not apply to Twitter’s termination process because there was “no administrative program in place to process claims and pay benefits.”
“After the acquisition or merger, only cash payments were promised,” she wrote. “There were no promises of continued health benefits or outplacement services provided by third parties and there were no eligibility determinations other than termination.”
A spokesperson for Sanford Heisler Sharp, which represents some of Twitter’s former employees, told The Hill that they are “disappointed” with the decision and are looking at options to move forward.
Musk faces other similar lawsuits over alleged unpaid compensation, including one from former Twitter CEO Parag Agrawal, chief financial officer Ned Segal, chief legal counsel Vijaya Gadde and general counsel Sean Edgett. In a complaint filed in March, the former executives stated that they were fired without reason on the day Musk completed the acquisition of Twitter.
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