Social media company X—formerly Twitter—is facing two federal class-action lawsuits claiming it failed to pay severance benefits after Elon Musk took over as CEO and implemented mass layoffs.
The first lawsuit, filed on July 12 in California, alleges violations of the Employee Retirement Income Security Act (ERISA). It claims that former employees are owed at least $500 million.
The second lawsuit, filed on July 18 in Delaware, alleges breach of contract, fraud and discrimination. It claims X targeted women, older employees and people of color in the mass layoffs. It also claims X stalled attempts to bring the dispute to arbitration and failed to pay the necessary fees to initiate arbitration. Like the earlier lawsuit, this one claims that former employees are owed $500 million or more.
The layoffs, totaling almost 4,000 workers, came in four rounds: one in November 2022, two in December 2022 and one in February 2023. The company's HR officials repeatedly told Musk and workers that laid-off employees would be eligible for severance and that X was obligated to pay severance under the 2022 agreement in which it merged with Twitter, according to court documents.
X agreed to pay severance in employees' initial offer letters and later confirmed workers would receive severance at least as favorable during the post-merger period as they had under the old management. The severance plan entitled laid-off workers to at least two months of base salary, pro-rated performance bonuses...
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