Tesla CEO accused of refusing to pay severance to laid-off Twitter employees
A U.S. District Court dismissed on Tuesday a lawsuit against Elon Musk alleging that he refused to pay at least $500 million of severance to laid-off Twitter employees in 2022.
The lawsuit claimed that Twitter only offered laid-off employees one month of pay as severance with no benefits, as opposed to an agreed severance plan in 2019.
In the earlier plan, those who stayed after Twitter's buyout would receive two or six months of pay, on top of one week of pay for each year of employment should they be laid off, Reuters reported.
But U.S. District Judge Trina Thompson in San Francisco ruled that she lacked jurisdiction over the case, according to the report.
Thompson said the federal Employee Retirement Income Security Act (ERISA) governing benefit plans did not cover the former employees' claims.
According to Thompson, ERISA did not apply to Twitter's post-buyout plan because there was no "ongoing administrative scheme" where the company reviewed claims case-by-case or offered benefits such as continued health insurance and out placement services, Reuters reported.
Plaintiffs could try amending their complaint, she noted, but only for claims that aren't governed by ERISA.
The case's dismissal is a victory for former X CEO Musk, now its chief technology officer, after he bought the platform for roughly $44 billion and laid off many of its employees, including its top executives.
Musk has been facing lawsuits from former Twitter employees, including former CEO Parag Agrawal, also over severance pay.