Elon Musk's X Breached Contracts By Failing To Deliver Promised Bonuses, Rules Judge

A U.S. federal judge has ruled that X Corp, previously known as Twitter, failed to honor contracts by withholding millions in promised employee bonuses.

What Happened: U.S. District Judge Vince Chhabria made the ruling in response to a case filed by Mark Schobinger, the ex-senior director of compensation at Twitter, reported Reuters.

Schobinger claimed that the social media giant had pledged to pay 50% of 2023 target bonuses to staff before and post the takeover by Elon Musk but reneged on its promise.

“Twitter’s offer to pay him a bonus in return became a binding contract under California law. And by allegedly refusing to pay Schobinger his promised bonus, Twitter violated that contract,” said Judge Chhabria.

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The company argued that it had only made an oral promise, which did not constitute a contract, and suggested that Texas law should preside over the case. However, the judge dismissed these arguments, ruling that California law was applicable.

Since being acquired by Musk, X Corp has been served with multiple lawsuits from former employees, alleging everything from discrimination to failure to provide advance notice of mass layoffs. The company has consistently refuted any wrongdoings.

Why It Matters: This case is part of a series of legal challenges faced by X Corp since Elon Musk’s acquisition, with former employees raising claims of discrimination and failure to provide advance notice of layoffs.

Given the judge’s ruling in favor of Schobinger, it seems that X Corp’s legal battles are far from over. The company’s alleged broken promise on employee bonuses is a critical development, shedding light on the company’s internal workings and potentially impacting its reputation among current and future employees.

The ruling also sets a precedent for other cases concerning oral contracts, particularly within California’s jurisdiction.

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Elon Musk and X Photo by Angga Budhiyanto on Shutterstock