Elon Musk and Twitter sued for $500million in alleged severance

Elon Musk and Twitter are being sued by fired workers who say company failed to pay collective $500million in severance

• Courtney McMillian, ex-head of total rewards’ at Twitter’s employee benefits, filed the potential class action Wednesday, seeking at least $500m in damages
• The suit alleges Twitter staffers were promised two months base pay plus a week of compensation for every year they were employed after Musk’s takeover
• McMillian claims many received only a month of severance, while others got nothing. She says Twitter violated federal law regulating employee benefit plans

Twitter owes ex-employees some $500million in severance, a new lawsuit claims – after CEO Elon Musk put roughly 80 percent of the site’s staff on the chopping block since taking over last year.

Courtney McMillian, who oversaw Twitter’s employee benefits programs as its ‘head of total rewards’ before she was laid off, filed the potential class action in San Francisco federal court Wednesday, seeking damages of at least $500million.

McMillian claims that under a severance plan created by Twitter in 2019, most workers were promised two months of their base pay plus one week  each full year of service – while senior employees such as herself were owed six months of base pay.

Laid off in one of four rounds of firings following Musk’s $44billion takeover of the company, McMillan now claims several workers received only a month of severance money – while others received nothing.

The lawsuit accuses Twitter and Musk of violating a federal law regulating employee benefit plans. The company – now without an HR department – responded to a Wednesday request for comment with a poop emoji.

Twitter owes ex-employees some $500million in severance, a new lawsuit claims – after CEO Elon Musk put roughly 80 percent of the site’s staffer on the chopping block last year

Courtney McMillian, who oversaw Twitter’s employee benefits programs as its ‘head of total rewards’ before she was laid off in January, filed the potential class action in San Francisco federal court Wednesday, seeking damages of at least $500million

Twitter laid off more than half of its workforce as a cost-cutting measure after Musk acquired the company in October. 

The company has already been sued for allegedly failing to pay severance, but those cases involve breach of contract claims and not the benefits law being cited by McMillian, who was laid off in January.

The company has maintained it has paid ex-employees in full.

The lawsuit, meanwhile – the latest in a series of legal actions against Twitter following the mass layoffs that occurred after Musk’s acquisition of the company – claims layoffs affected around 6,000 individuals. 

Kate Mueting, the lawyer representing McMillian, on Wednesday said Musk – who this week has made headlines after Facebook-owner Meta launched rival service Threads – failed to uphold severance plans set in place before his multibillion-dollar takeover.

‘Musk initially represented to employees that under his leadership Twitter would continue to abide by the severance plan.

‘He apparently made these promises knowing that they were necessary to prevent mass resignations that would have threatened the viability of the merger and the vitality of Twitter itself.’

A pending lawsuit filed last month further accuses Twitter of also failing to pay millions of dollars in bonuses it owes to remaining employees. In that case, Twitter has said the claims lack merit.

The company is also facing a series of other lawsuits stemming from another round layoffs that began last year, including claims that it targeted women and workers with disabilities. 

Twitter has denied wrongdoing in the cases in which it has filed responses.

The Twitter logo is seen outside their headquarters in downtown San Francisco, California

After Musk assumed control of Twitter in October 2022, he fired Twitter’s executive leadership and dismantled its board. Twitter then conducted four rounds of broad employee layoffs, slashing its headcount by about 80 percent, from an estimated 7,800 to about 1,500

On Monday, a report also revealed Tesla board members discreetly investigated whether Musk misused company resources – in a bid to build a glass-walled mansion near the company’s Texas headquarters.

Dubbed ‘Project 42’ and described inside the company as a mansion for Musk, the plans involved a dramatic glass-walled building near Tesla’s gigafactory in Austin, the Wall Street Journal reported on Tuesday.

Following an order for millions of dollars worth of specialized glass, Tesla board members investigated whether company resources had been misused, and whether Musk himself had a role, people familiar with the matter told the Journal.

Plans for the building evolved over time, but at least some of the renderings seemed to show a residential area with bedrooms, bathrooms and a kitchen, the people said.

One rendering depicted the building as a glass cube similar to the Apple Store on Manhattan’s Fifth Avenue, while another showed it as a ‘twisted hexagon’ next to a body of water with the Tesla factory in the background, the report said.

Musk reportedly owns a modest home in Boca Chica, Texas, near the launch site of SpaceX, which he founded and controls. 

That said, the Tesla CEO has recently spent much of his time at Twitter’s San Francisco headquarters – where last year he set up sleeping quarters for overworked staffers.

After Musk assumed control of Twitter in October 2022, he fired Twitter’s executive leadership and dismantled its board. 

The Tesla CEO has recently spent much of his time at Twitter’s San Francisco headquarters (seen here) – where last year he set up sleeping quarters for his remaining staffers. The suit is currently making its was through the U.S. District Court

Twitter then conducted four rounds of broad employee layoffs, slashing its headcount by about 80 percent, from an estimated 7,800 to about 1,500.

According to this most recent lawsuit, Musk and Twitter terminated employees and failed to provide them with information about potential changes to the severance plan.

The suit further alleges Musk and Twitter breached their fiduciary duties to the plan by misleading class members about their eligibility, and refusing to make severance payments ‘so those funds could be used to prop up the company.’

The suit is currently making its was through the U.S. District Court.

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