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Elon Musk’s company, X (formerly Twitter), has agreed in principle to a $500 million class-action settlement with thousands of former employees who claimed they were denied severance pay after Musk’s acquisition of the platform in 2022. The settlement, disclosed in a recent court filing, is still pending final approval from a federal appeals court.
Background of the Dispute
When Musk bought Twitter for approximately $44 billion in 2022, he swiftly eliminated more than half of its workforce—affecting nearly 6,000 employees—during a dramatic organizational overhaul. Former staffers Courtney McMillian and Ronald Cooper spearheaded this class-action lawsuit, alleging the company failed to honor a 2019 severance plan. Under that blueprint, most employees were entitled to at least two months of base pay plus one additional week for each full year of service, while senior employees were entitled to six months’ base pay.
However, plaintiffs contend that many laid-off workers received nothing or at best one month’s pay—far less than what the policy guaranteed.
Legal Proceedings and Settlement Steps
In July 2024, a federal judge in San Francisco dismissed the lawsuit under provisions of the Employee Retirement Income Security Act (ERISA), ruling in Musk’s favor. McMillian and Cooper appealed the dismissal, moving the case to the Ninth Circuit Court of Appeals.
The latest court filing reveals that both sides have reached an agreement in principle and have jointly asked that a hearing scheduled for September 17 be postponed while they iron out the final settlement details. The appeals court has granted the delay to allow time for that process.
What Remains Unclear
The settlement’s financial specifics, including the breakdown of payouts per employee, remain undisclosed. Should the district court approve the finalized agreement, the settlement is expected to resolve this lawsuit fully and halt the appeals process.
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Notably, other lawsuits stemming from Musk’s Twitter takeover—such as one filed by former CEO Parag Agrawal and other executives over $128 million in alleged unpaid severance—are still pending.
Additionally, legal observers have noted parallels between Musk’s aggressive restructuring approach at Twitter and similar downsizing measures he later influenced within the Trump administration’s Department of Government Efficiency.
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