Former Twitter employees claim Elon Musk owes $500 million in severance

Since Elon Musk took over Twitter last October, more than 6,000 employees have been laid off, in a move Musk says was a cost-cutting measure. But some former employees say layoffs weren't the only way Twitter tried to trim expenses.

Former Twitter employees have filed multiple lawsuits this month against Musk and Twitter (now X Corp.), claiming the employer owes at least $500 million for failing to provide the full severance pay and benefits employees were promised. One of these class action lawsuits is expected to be heard in a Delaware federal court, while the other will go to the U.S. District Court for the Northern District of California.

The suit claims that Twitter had promised senior employees six months of base pay, in addition to one week for every year of service as part of their severance package, as noted through several company-wide communications made prior to Musk's takeover. Instead, employees were only given three months of pay, including the state and federally-mandated notice periods, such as the WARN Act, which requires businesses to provide 60 days' notice or 60 days of severance pay before engaging in mass layoffs. 

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Christopher Owens, an attorney with Sanford Heisler Sharp, the firm defending former employees in the California court, believes this should be a straightforward case — Musk owes money.

"They're owed their severance benefits under company policy, which we argue had existed at the time of the layoffs and three years prior," says Owens. "And they're owed this money under the federal law ERISA, which guarantees that these policies must be enforced."

ERISA, or the Employee Retirement Income Security Act, is intended to protect employee benefits plans, like retirement, healthcare and severance plans, from being mismanaged by employers. And while some severance policies do not fall under ERISA's jurisdiction, Owens argues that Twitter's plan meets the criteria: it is a plan, fund or program established by the employer to provide benefits in the event of unemployment, and employees knew what the plan offered long before they were terminated. It was an established benefit and would be considered an employee welfare plan under ERISA.

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"You need to fulfill promises that you made regarding employee separation," says Owens. "The plan indicates that Twitter has these obligations, and Mr. Musk can't simply refuse to abide by them because he doesn't want to."

Owens emphasizes that Musk had also reassured employees that they would receive their promised severance benefits prior to Musk officially buying the social media platform. But thousands of former employees have been proven otherwise.

EBN reached out to Twitter for comments but received the infamous poop emoji as an automated reply, which Musk started back in March as a response to any journalist who reaches out to their press department. There have been no official comments from Twitter in their defense.

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"Can the plan simply be canceled because the CEO decides he doesn't want to pay?" says Owens. "Can the plan be hidden or misrepresented to employees? These are straightforward questions, and the answers are in our favor."