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 listening today. I really do appreciate your support. If you could take a second and hit the subscribe or the follow button on whatever podcast platform that you're listening on right now, I greatly appreciate it. It helps out the show tremendously and you'll never miss an episode.
And each episode is about 10 minutes or less to get you caught up quickly. And please, if you want to support the show even more, go to patreon.com/stagezero and please take care of yourselves and each other and I'll see you tomorrow.