Elon Musk is now dealing with compensation lawsuits among employees. During this process, he laid off thousands of employees to cut costs. Musk’s move came after a decision was made regarding a lawsuit filed by former employees seeking $500 million in damages. In California, a judge ruled that former employees did not have the right to claim damages, resulting in the dismissal of the case.
Did the laid-off employees get their rights?
Musk and Twitter, last July, after taking over the company, dismissed more than 85% of the company. Later, they were sued by former employees. During the layoffs, a manager shared that Twitter could not make a profit and had to significantly reduce its workforce to cut costs.
After the layoffs, employees sued Musk and former employers for severance pay. The employees claimed they would receive over $500 million in compensation if the company acted in accordance with its former compensation plan.
Twitter’s layoffs were sued. The plaintiffs claimed that laid-off employees were paid severance pay for one month, but Musk claimed that payments changed from two to six months according to the Twitter compensation plan before he took over. The plaintiffs said that X’s failure to comply with the payment plan could trigger many resignations, and that this could endanger the future of the social media platform.
The case was heard on ERISA provisions that include the employer’s plan termination authority. The court ruled that X used its right to terminate the layoff plan. It was stated that the decision was made to prevent the bankruptcy of the business.
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