Elon Musk and other Twitter executives shorted thousands of laid-off employees $500 million by failing to honor the company’s severance plan, according to a class action lawsuit filed Wednesday in federal court.
Senior employees like Courtney McMillian, who worked for Twitter from August 2020 through January 2023, were entitled to at least six months of base pay upon their departure from the company, the lawsuit alleges. Instead, Twitter offered at most three months of compensation—“a fraction” of what they were owed—to the about 6,000 employees it has terminated since Musk took over, McMillian’s attorneys said in the suit.
At the same time, the suit says, the tech magnate was making public claims that fired workers would be well-compensated: Shortly after the acquisition, Musk Tweeted that terminated employees were receiving “50% more than legally required.”
Legal battles mounted quickly for Musk after he took charge of Twitter. On Nov. 3, five former employees sued their former chief, claiming that his abrupt first round of layoffs violated California regulations requiring employee notifications ahead of layoffs. That kicked off a series of complaints from beleaguered ex-Tweeps who felt mistreated by their dismissals.
Meanwhile, controversies unfolding across the social media platform scared off top advertisers, and many of the site’s super users spurned Musk’s attempt to monetize the user base when he rolled out a paid Twitter Blue subscription.
A request for comment was greeted with Twitter’s standard poop emoji reply.
When it was announced that Musk would take the helm at Twitter, then-CEO Parag Agrawal assured employees that the company would keep its same severance plan benefits in place for at least one year following the change in ownership, and that same message was communicated in pre-merger emails that Musk approved, according to McMillian’s attorneys.
But Musk was already planning mass layoffs and had no intention of honoring the plan, the suit claims. The tech billionaire and his team purposely tried to hide the existence of the severance plan from soon-to-be fired employees, the suit alleges. Instead of answering questions about the severance package directly, the new executive team told inquiring workers to listen to episodes of a podcast hosted by two of Musk's friends: entrepreneurs and VCs David Sacks and Jason Calacanis.
Musk ordered his subordinates to comb through employees’ Slack and Twitter accounts, including personal one-on-one conversations, and fire people who criticized him, according to the lawsuit.
The $500 million that McMillian’s attorneys say laid-off Twitter employees are entitled to includes compensation for their base pay, health insurance, vested stock shares and outplacement services, which help laid off employees find new jobs.
McMillian worked at Twitter as the “head of people experience,” where she led the company’s compensation and benefits work, according to her attorney Kate Mueting. McMillian was part of the Nov. 4, 2022, layoffs and formally left the company in January 2023.
Twitter’s mass terminations reduced the company’s workforce from over 7,500 to around 1,300, the suit says.