Elon Musk and X agree to settle $500m Twitter severance pay lawsuit

Elon Musk and his social media company X have reached a tentative agreement to settle a case filed by former employees over claims they were owed $500 million in severance pay.

Legal teams from both sides announced the deal in a Wednesday court filing, wherein both sides requested a US appeals court to delay an upcoming hearing so they could finalise an agreement that would allow payments to former employees, terminating the litigation.

Neither side disclosed the financial terms of the agreement.

The settlement would resolve a California class action suit filed by Courtney McMillian, who previously managed Twitter's employee benefits programmes, and operations manager Ronald Cooper.

A federal judge in San Francisco, meanwhile, dismissed the X employees' lawsuit in July 2024. They appealed to the 9th US Court of Appeals in San Francisco, and oral arguments had been scheduled on September 17.

The employees' lawsuit alleged Twitter had a 2019 severance plan that guaranteed most staff would receive two months of their base pay, in addition to one week of pay for each full year of service if they were terminated.

Senior employees, such as Mr McMillian, were owed six months of base pay, according to the lawsuit.

However, the company only gave terminated workers one month of severance pay at most, and several did not receive anything, the lawsuit added.

The employees, who filed lawsuits over their terminations and severance pay in a number of courts, are among approximately 6,000 staff fired over the course of the billionaire's tumultuous takeover of the company formerly known as Twitter in 2022 and 2023.

During that time, Mr Musk, who in October 2022 finalised a deal to buy Twitter for $44 billion, made a series of controversial moves, including cutting staff numbers, introducing paid subscriptions and ditching the iconic bird logo. He also faced accusations of using the platform for his own gains.

Mr Musk, the world's richest person with a net worth of about $364 billion as of Friday, added X to his business empire, which includes SpaceX and xAI, which he is using to take on former ally Sam Altman's OpenAI in the artificial intelligence race.

The Tesla chief executive also ended his stint as a special adviser to US President Donald Trump three months ago. During his time at the White House, Mr Musk was a major influence, but once he left, he engaged in a very public spat with Mr Trump over policy disagreements.