Elon Musk’s X, previously Twitter, is being sued in two federal class-action lawsuits over unpaid severance benefits following massive layoffs after Musk took over. The layoffs, occurring in four waves from November 2022 to February 2023, affected approximately 4,000 employees.
The first Twitter X lawsuit, filed in California, alleges X violated the Employee Retirement Income Security Act (ERISA), shortchanging former employees of over $500 million. The second, filed in Delaware, accuses X of breach of contract, fraud, and discrimination, again alleging at least $500 million owed to ex-employees.
Court documents show that X had agreed to pay severance to workers in the event of layoffs under the company’s merger agreement with Twitter in 2022. Despite this, X allegedly paid only the federal minimum required under the Worker Adjustment and Retraining Notification (WARN) Act, plus one month of severance pay, instead of the more generous severance agreement promised.
Employers who fail to meet the required severance pay under ERISA face potential personal liability and fines up to $110 per day per affected participant, issued by the Department of Labor (DOL).
X has not yet responded to the allegations.
Such violations of ERISA can be costly, so companies should take care to ensure they are in compliance with the law. It is also important for businesses to review their existing contracts and policies to make sure that employees are provided adequate severance pay when layoffs occur. Employees should also be aware of their rights under the WARN Act and contact an attorney if they believe there has been a violation.
If you’ve been subjected to labor violations or discrimination at your workplace, help is available. Reach out to the Labor Law Advocates in California and file a claim. Stand up for your rights and demand the fair treatment you deserve. Talk to our employment lawyers today.