A former Twitter employee has filed a $500 million class action suit against Elon Musk and the social media company, alleging they’ve skimped out on severance for the thousands of workers fired since Musk’s takeover last year.
The lawsuit (shared via Variety) was brought by Courtney McMillian, a former HR department employee who says she was among 3,700 employees fired on Nov. 4, 2022. The lawsuit claims that, since Musk’s acquisition, the company has “terminated approximately 6,000 employees,” and Twitter has “failed to pay any of these employees the promised severance benefits they were entitled to” under the terms of the Twitter Severance Plan.
The lawsuit alleges that some severance payments have fallen short of what the plan required, while it cites recent reporting that “indicates that some laid-off employees have yet to receive anything.” In total, the lawsuit estimates that “terminated employees are entitled to no less than $500 million.”
A lawyer for Musk did not immediately return Rolling Stone’s request for comment.
According to the suit, when Musk took over Twitter, part of the Merger Agreement stipulated that “for one year following the closing of the merger,” Twitter would stick with the severance plan that had been in effect since at least 2019. At least, the suit claims, it would provide employees with payments and benefits “no less favorable than” those stipulated in the plan.
The suit also alleges that Musk approved an “Acquisition FAQs” document for employees that similarly said severance, bonus plans, and other benefits would be protected for at least one year.
The suit later suggests that given “the widespread skepticism” about Musk’s ability to successfully run Twitter, combined with a tightening tech labor market, Musk, Twitter’s new leadership, and even outgoing management “knew that promising continued Plan benefits was necessary to prevent mass resignations that would threaten the viability of the merger deal and, potentially, of the company itself.”
Not long after Musk took over Twitter, the layoffs began. The suit alleges that Twitter’s HR officials ”repeatedly” told Musk and the other defendants that laid-off employees “would be eligible for severance” under the old Plan and that “Twitter was obligated to pay.” But, the suit alleges, Musk indicated that he “did not intend for Twitter to follow the Plan’s procedures or pay the Plan’s promised severance, because of the expense involved.”
The suit adds: “At no point did Twitter, Mr. Musk, the Doe Defendants, or anyone with control or discretion over the Plan inform employees of the anticipated changes to the severance Plan. In fact, management communication with Plan participants had largely gone silent since Mr. Musk’s takeover.”
The new class action lawsuit arrived a couple of months after six other former Twitter employees similarly sued over broken severance promises. That lawsuit accused Musk, Twitter, and parent company X Corp. of fraud, wage theft, breach of contract, and more.
That suit alleged of several former employees stated: “Musk’s Twitter fired them after the acquisition, and then flatly refused to pay them their contractually required severance. This was severance that Twitter and Musk had in order to induce Tweeps to stay through the close of the merger promised would be paid if Musk conducted a layoff, and which Twitter and X Holdings had bound themselves to pay under the terms of the Merger Agreement.”