A federal judge in California has dismissed a severance suit against tech billionaire Elon Musk that accused him of refusing to pay at least $500 million in severance to former Twitter staffers whom he fired when he took over the social media platform, now called X.
U.S. District Judge Trina Thompson in a ruling Tuesday said the estimated 6,000 workers who were laid off after Musk purchased the company in 2022 were not owed severance payments under the federal Employee Retirement Income Security Act (ERISA). As a result, the court lacks jurisdiction to weigh in on the matter, Thompson said.
The Hill has contacted Musk’s legal team for comment.
The complaint, filed in July of last year, alleged Musk went back on his promise to pay a total of at least $500 million to the thousands of laid-off staffers.
The suit claimed employees were promised two months of their base pay and one week of pay for each full year of service if they were laid off, while senior employees were allegedly guaranteed six months of severance, Reuters reported. The employees, however, received at most one month of pay, or no money at all and no benefits, according to the suit.
Thompson found ERISA did not apply to Twitter’s layoff process as there was no “ongoing administrative program for processing claims and paying benefits.”
“After the takeover or merger, there were only cash payments promised,” she wrote. “There were no promises to continue healthcare benefits or outplacement services provided by a third-party and there were no eligibility determinations beyond being terminated.”
A spokesperson for Sanford Heisler Sharp, which represents some of the former Twitter employees, told The Hill they are “disappointed” in the ruling and are looking at options moving forward.
Musk faces other similar suits over alleged unpaid severance payments, including one from Twitter’s former CEO Parag Agrawal, Chief Financial Officer Ned Segal, chief legal counsel Vijaya Gadde and general counsel Sean Edgett. In a complaint filed in March, the former executives said they were fired without a reason on the day Musk completed the acquisition of Twitter.