Elon Musk's X to Settle Claims Over Severance Shortfalls for Laid-Off Workers

The former employees of Twitter, now known as X, have reached a tentative settlement with Elon Musk and his social media platform to resolve a $500 million severance pay lawsuit. The agreement, filed in court, seeks to delay an upcoming hearing to allow for finalizing the terms and obtaining judicial approval [1]. The lawsuit was led by Courtney McMillian and Ronald Cooper, who alleged that the company failed to adhere to its 2019 severance plan, which guaranteed two months of base pay plus one week of pay for each full year of service for laid-off employees. Senior employees, including McMillian, were entitled to up to six months of base pay under the plan, but many were given only one month or no severance at all [3].

Musk initiated a significant downsizing of Twitter in 2022, cutting over 6,000 employees—more than half the workforce—as part of a broader cost-cutting strategy. The layoffs primarily affected teams in trust and safety, human rights, and media, with rank-and-file workers being the first to be let go [1]. The lawsuit contended that the termination process and severance packages were unjust and did not meet the terms outlined in the company's policy. The legal action became one of the earliest waves of a larger trend of tech industry retrenchments, which followed a hiring surge during the early stages of the Covid-19 pandemic [3].

In response to the legal challenge, X (formerly Twitter) has not yet disclosed the financial terms of the proposed settlement, and the agreement must still be approved by the court [3]. The case was initially dismissed by a federal judge in July 2024, but the plaintiffs successfully appealed to the 9th U.S. Court of Appeals, where the court had been scheduled to hear the case on September 17 before the settlement was announced [3]. Both Musk and the plaintiffs' attorneys have not commented on the specifics of the agreement as of the latest reporting [3].

The settlement is expected to bring closure to a high-profile legal battle that has drawn attention to broader issues around employment practices and severance policies in the tech industry. While the financial compensation details remain undisclosed, the resolution marks a significant step in addressing employee concerns regarding equitable treatment post-layoff [1]. The case also highlights the legal complexities involved in restructuring major technology platforms following a high-profile acquisition.

Source:

[1] Elong Musk and X reach settlement with axed Twitter workers (https://www.bbc.com/news/articles/c1ejq154nqzo)

[2] Elon Musk asked Meta CEO Mark Zuckerberg to join xAI bid to buy OpenAI (https://www.cnbc.com/2025/08/21/elon-musk-asked-meta-ceo-mark-zuckerberg-to-join-xai-bid-to-buy-openai.html)

[3] Musk, X Corp to settle $500-million lawsuit over Twitter firings (https://www.reuters.com/sustainability/boards-policy-regulation/musk-x-corp-settle-500-million-lawsuit-over-twitter-firings-2025-08-21/)