Hey, everybody. Welcome back to the Elon Musk
Podcast. This is a show where we discuss
the critical crossroads, the shape, SpaceX, Tesla X, The
Boring Company and Neural Link. I'm your host Will Walden.
Elon Mux. Elon Mux, Elon Musk and X Corp
have successfully defended against a lawsuit demanding $500
million in severance pay for former Twitter employees.
Now, this lawsuit initiated by X employees claimed that X Corp
and Musk failed to provide severance in accordance with the
Federal Employee Retirement Income Security Act after Musk's
acquisition of Twitter in October of 2022.
Now the plaintiffs, including Twitter's former global head of
compensation and benefits and another ex manager, asserted
that about 6000 laid off employees received severance
equal to only one month's pay, contrary to what they believed
was promised under E risa. However, U.S.
District Judge Trina Thompson in San Francisco ruled on Tuesday
that the employees claims were not covered, and Judge Thompson
explained that the company had informed employees post
acquisition that those who were let go would receive only cash
payouts, thus not falling under the jurisdiction.
Now, this case, which is Macmillan versus Musk in the US
District Court for the Northern District of California, is one
of several lawsuits filed by former Twitter employees and
executives following the mass layoffs that occurred after
Musk's takeover of the social media platform.
Now, the lawsuit specifically cited that X Corp and Musk owed
at least $500 million in severance pay under the
provisions of ERISA, which governs employee benefit plans.
Now, the plan The plaintiffs were Courtney McMillan,
Twitter's former head of total rewards, and another ex manager
who believed they were entitled to more substantial severance
packages. And according to McMillan in the
other plaintiff, senior managers were supposed to receive a
severance package of six months bonus pay plus one week for each
full year of experience. This contrasts starkly with what
they received after the layoffs. But in Musk's defense, Judge
Thompson clarified that following the takeover,
employees were explicitly told they would only receive cash
payouts, that an IRISA did not apply in this context, that
there was no ongoing administrative scheme to manage
benefits like health insurance or outplacement services.
Now, the decision from the judge effectively dismissed the
lawsuit, saying there were only cash payments promised.
This verdict allows Musk and the X Corp to avoid paying the
additional $500 million sought by the plaintiffs.
Now, in November of 2022, Musk addressed the severance issue in
a post on X, stating everyone excited was offered three months
of severance, which is 50% more than legally required or exited.
Sorry, not excited. This declaration was part of
Musk's strategy to counter claims that the severance
offered was inadequate. Now, despite the resolution of
this particular case, several other lawsuits from former
Twitter employees are still in progress.
These suits similarly address issues of severance and other
post acquisition employment terms under Elon's leadership
now. The layoffs were part of a
broader restructuring effort after Musk purchased Twitter for
$44 billion in October of 2022. This massive reduction in
workforce led to numerous legal challenges from former employees
who felt they were not adequately compensated now.
The plaintiffs, McMillan and Ronald Cooper and operations
manager, said that Twitter's 2019 severance plan promised
employees who remained post buyout two or six months of pay
plus one week of pay for each year of employment if they were
laid off. However, Musk's new policy post
takeover replaced the previous severance plan, providing only
one month of pay as severance without additional benefits now.
This shift sparked the legal disputes that have followed
Musk's acquisition. Judge Thompson pointed out that
the lack of an ongoing administrative scheme under
Musk's new severance plan meant ERISA did not apply.
The plan lacked continued health insurance or third party
outplacement services consisting solely of cash payments.
And the judge has left open the possibility for the plaintiffs
to amend their complaint, but only for claims that are not
governed by ERISA. This ruling sets a precedent of
how similar cases might be adjudicated moving forward.
Now, the legal battles following the layoffs reflect broader
issues of corporate responsibility and employee
rights. And former employees want to
hold Musk accountable for what they perceive as broken promises
regarding their severance. Beyond this lawsuit, Musk
continues to face scrutiny and legal challenges related to his
management decisions at X and his other enterprises, including
Tesla and SpaceX, and his actions remain under close
examination by former employees, the courts, and also the public.
Now, the case of McMillan versus Musk and Twitter remains a
significant legal matter, highlighting the complexities in
disputes that can arise from corporate takeovers.
As other related lawsuits proceed, the outcomes will
likely shape the future landscape of employment law in
similar corporate contexts. Hey, thank you so much for
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