US billionaire Elon Musk and Twitter have been slapped with a $500 million lawsuit over alleged non-payment of severance packages to ex-employees. The lawsuit was filed by law firm Sanford Heisler Sharp on Wednesday in US District Court for the Northern District of California on behalf of employees who were fired from Twitter post Musk’s takeover.
The lawsuit seeks damages worth $500 million as well as directions for Twitter to “abide by all terms of the severance plan by paying all terminated employees what they are owed.”
Twitter’s severance plan gone for a toss
It is alleged that prior to Elon Musk’s takeover of Twitter, the company had a severance plan in place for its employees, which was protected under the Employee Retirement Income Security Act of 1974 (ERISA). According to the complaint, both Musk and Twitter assured employees that the benefits provided by the severance plan would continue even after the acquisition.
However, the lawsuit claims that Twitter and Musk have failed to uphold their promise and have not paid the expected benefits to the terminated employees.
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“Musk initially represented to employees that under his leadership Twitter would continue to abide by the severance plan,” Sanford Heisler Sharp’s firm administrative partner in Washington, Kate Mueting, said in a statement. “He apparently made these promises knowing that they were necessary to prevent mass resignations that would have threatened the viability of the merger and the vitality of Twitter itself.”
Twitter’s legal challenges
This is not the first time Twitter has faced legal challenges regarding its mass layoffs. In May, a class-action lawsuit accusing Twitter of gender-based layoffs was dismissed by a federal judge due to a lack of specific details in the complaint.
Another lawsuit alleging discrimination against employees with disabilities was also dismissed around the same time. According to labour attorney Shannon Liss-Riordan, who represented the plaintiffs in these cases, her firm currently has 11 class-action cases pending against Twitter, along with approximately 2,000 arbitrations.
How many people have Twitter fired after Musk’s takeover?
Since Elon Musk took control of Twitter in October 2022, significant changes have occurred within the company. The executive leadership was replaced, and the board was dismantled.
Subsequently, Twitter conducted four rounds of widespread employee layoffs, resulting in a reduction of approximately 80 per cent in its workforce, from an estimated 7,800 employees to around 1,500.
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