Elon Musk accused of not paying $500 million in severance pay to ex-Twitter employees; gets sued

Twitter’s Elon Musk and Twitter are being sued for failing to pay the promised $500 million severance of thousands of employees fired from the company. Courtney McMillian, who worked in Twitter’s HR department and was laid off in January 2023, filed a class-action suit in San Francisco federal court. Musk has been slapped with several lawsuits for mass firing after his Twitter takeover last year.

As per the lawsuit, the company fired over 6,000 people. Musk slashed over 80 per cent of the Twitter staff, including its then-CEO Parag Agrawal since October 2022.

The lawsuit accused Musk was aware of the company’s severance plan before he started firing employees. Under Twitter’s severance plan, the laid-off employees are given a minimum of two months base salary and a cash contribution toward health insurance and more benefits, revealed the lawsuit. It adds that employees with senior roles were due six months base salary and one week for each full year of experience.

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Twitter is accused of giving “at most” three months of pay to the fired employees. These three months included one month of severance pay and two months worth of pay to comply with a US law that requires an employer to provide workers with notice of firing. Twitter is accused of terminating employees without informing them of the changes in the severance plan and without paying them any employee benefits they were entitled to. As per the lawsuit, all employees are entitled to their vested restricted stock units, bonuses, a cash contribution for health insurance and three to six months of outplacement services.

Back in November, Musk tweeted, "Everyone exited was offered 3 months of severance, which is 50 per cent more than legally required."

Twitter is facing a series of similar lawsuits because of mass layoffs that took place after Musk assumed control of the social media company. One of the lawsuits claims that the company targeted women and employees with disabilities. However, Twitter has repeatedly denied any wrongdoing in the cases.

Notably, Musk in a virtual interaction with Wall Street Journal at CEO Council Summit in London, stated that many people didn't seem to have a lot of value before he took over the company. Hence, he decided to make the job cuts, resulting in improved productivity.

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