Musk Wins Lawsuit Over $500 Million Severance Claim
Jul 12, 2024
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Elon Musk and X Corp win lawsuit over $500 million severance claim by former Twitter employees. Judge rules claims not covered under ERISA. Legal victory highlighted, ongoing lawsuits continue addressing employment issues.
Judge ruled Musk's severance policy not covered under ERISA due to explicit communication of cash payouts.
Legal disputes highlight need for clear communication and accountability in post-acquisition severance agreements.
Deep dives
Lawsuit Over Severance Pay Dismissed
A lawsuit against Elon Musk and X Corp demanding $500 million in severance pay for Twitter employees post-Musk's acquisition of Twitter was dismissed by US District Judge Trina Thompson. The plaintiffs, former Twitter employees, claimed they were entitled to more substantial severance packages under ERISA, citing promises made which were not fulfilled. However, Judge Thompson ruled that the employees' claims were not covered under jurisdiction as the company had explicitly informed post-acquisition employees of cash payouts instead of complex benefit management, leading to the dismissal of the case.
Broader Legal Battles After Twitter Acquisition
The acquisition of Twitter by Elon Musk for $44 billion in October of 2022 led to a significant reduction in the workforce and subsequent legal challenges regarding severance packages for laid-off employees. Former employees like Courtney McMillan and Ronald Cooper contested Musk's severance policy, which offered one month's pay instead of the promised compensation under the previous plan. Legal disputes ensued as employees sought redress for what they perceived as broken promises post-acquisition, setting a precedent for addressing similar cases in corporate contexts moving forward.
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Legal Victory in Severance Lawsuit Against Musk and X Corp
Elon Musk and X Corp. have won a lawsuit demanding $500 million in severance pay for former Twitter employees. The plaintiffs, including Twitter's former global head of compensation and benefits, claimed that about 6,000 laid-off employees received only one month's pay, contrary to promises made under the federal Employee Retirement Income Security Act (ERISA). However, US District Judge Trina Thompson ruled that the claims were not covered under ERISA, as employees were informed they would receive only cash payouts post-acquisition. This verdict allows Musk and X Corp. to avoid the additional $500 million payout sought by the plaintiffs.
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