Elon Musk Accused in $500 Million Lawsuit of Denying Severance to Fired Twitter Employees

“Despite giving multiple assurances to all employees… Musk denied these benefits to thousands of terminated employees,” a filing states

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Elon Musk and his successor corporation to Twitter, X Corp., face a lawsuit filed by attorneys at Sanford Heisler Sharp LLP.

The suit was filed Wednesday on behalf of the terminated Twitter employees who have allegedly been denied severance benefits promised them following Musk’s takeover of Twitter in October.

The suit states that despite employees being promised severance benefits as part of the Twitter exit plan that existed before Elon Musk’s takeover, a plan that Musk assured employees would be respected, the benefits have not been paid out.

According to the suit, Musk and Twitter “breached their fiduciary duties” by misleading employees about severance pay eligibility and then failing to make the associated payments, with Musk and Co. instead using those funds to help the company after terminating vast swathes of employees.

“We believe that these defendants were not loyal to Twitter employees as participants in the Plan, and they knowingly participated in and enabled each other’s disloyal conduct,” said Sanford Heisler Sharp litigation fellow Christopher Owens. “As we allege, at the center is Mr. Musk himself, who sought to deprive thousands of people the benefits and compensation they are owed under US law.”

In addition to seeking a minimum of $500 million in damages, the suit also aims to produce orders that compel Twitter and Musk to pay terminated employees what they’re owed under the severance plan.

“Despite giving multiple assurances to all employees that Twitter would continue to provide promised severance benefits following Musk’s takeover, Musk denied these benefits to thousands of terminated employees – a clear violation of ERISA,” said Kate Mueting, partner, Sanford Heisler Sharp, lead counsel for Twitter employees who were terminated. ERISA stands for “Employee Retirement Income Security Act.”

This is far from the only legal dispute Twitter’s dealing with. It’s also facing a $250 million copyright infringement lawsuit in which music publishers say the platform’s been undermining existing licensing models and violating copyright law.

And it’s not just lawsuits attacking Twitter that Musk is juggling; his company is also threatening to initiate them, as recently evidenced by his lawyer, Alex Spiro, sending a cease-and-desist letter to Meta regarding Threads. In the letter, Twitter accused Meta of stealing trade secrets by utilizing former Twitter employees for its Threads initiative. Meta denied that former Twitter employees were on the Threads engineering team.

On the financial side, Twitter was hit with an eviction notice in June due to not paying rent for its Colorado office.

Representatives for Twitter did not immediately respond to TheWrap’s request for comment.