Elon Musk has emerged victorious in a lawsuit filed by former Twitter employees who claimed he owed them at least $500 million in severance pay.
The lawsuit alleged that Musk failed to honor Twitter’s severance plan, which promised employees who stayed on after the buyout either two or six months of pay, plus an additional week of pay for each year of employment, if they were eventually laid off.
The plaintiffs Courtney McMillian, who oversaw Twitter’s compensation and benefits, and Ronald Cooper, an operations manager, said Twitter instead offered fired employees just one month of pay as severance, without any additional benefits.
U.S. District Judge Trina Thompson on Tuesday, dismissed the lawsuit on the grounds that the federal Employee Retirement Income Security Act (ERISA) did not apply to Twitter’s post-buyout plan.
According to Thompson, ERISA requires an “ongoing administrative scheme” where the company reviews claims, on a case-by-case basis and offers benefits such as continued health insurance and outplacement services.
Since Twitter’s plan only promised cash payments, the judge ruled that she lacked jurisdiction over the matter.
This lawsuit is just one of many filed against Musk alleging that he failed to honor promises made to Twitter employees and vendors after acquiring the company for $44 billion in October 2022.
Musk, who also runs Tesla and is the world’s richest person according to Forbes, has denied any wrongdoing. The plaintiffs may attempt to amend their complaint to pursue claims not governed by ERISA, but for now, the dismissal represents a significant victory for Musk and Twitter.
