Elon Musk‘s X Corp., formerly known as Twitter, and the billionaire himself have successfully defended a lawsuit seeking $500 million in severance pay for thousands of employees laid off after the acquisition of social media company in 2022.
What Happened: A lawsuit was filed against X Corp. and Musk, alleging that they owed over $500 million in severance pay to approximately 6,000 laid-off employees. This was based on the federal Employee Retirement Income Security Act, which sets rules for benefit plans, reported Bloomberg.
However, U.S. District Judge Trina Thompson in San Francisco ruled on Tuesday that the employees’ claims were not covered under The Employee Retirement Income Security Act of 1974 (ERISA). This was because the company had informed employees after Musk’s takeover that those let go would only receive cash payouts.
Several similar cases filed by former Twitter employees and executives are currently in progress.
Why It Matters: Musk’s $44 billion acquisition of Twitter in October 2022 was followed by the controversial firing of 85% of the social media giant’s staff. This move led to widespread criticism and legal challenges, including a class-action lawsuit filed in San Francisco by attorney Shannon Liss-Riordan, who accused Musk of repeating his “Tesla playbook.”
Subsequently, in March, four former Twitter executives, including ex-CEO Parag Agrawal, filed a lawsuit against Musk for allegedly withholding over $128 million in severance payments. The executives claimed that Musk displayed a “special ire” towards them after taking over the social media platform.
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This story was generated using Benzinga Neuro and edited by Kaustubh Bagalkote
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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