Musk Averts $500M Storm with Ex-Twitter Staff in Secret Pact

Elon Musk and his company X Corp. have reached a tentative settlement with former Twitter employees over severance pay disputes, resolving a lawsuit that claimed the company owed approximately $500 million in unpaid benefits. The settlement was announced after both parties jointly requested a delay in an upcoming hearing before the U.S. Court of Appeals for the Ninth Circuit, which was scheduled for September 17, 2025. Details of the financial agreement remain undisclosed but would resolve a proposed class action lawsuit led by former Twitter employees Courtney McMillian and Ronald Cooper [3].

The legal dispute originated after Musk’s 2022 acquisition of Twitter, which was rebranded as X. During his tenure, Musk laid off approximately 6,000 employees as part of cost-cutting measures, many of whom claimed they were denied severance pay outlined in a 2019 severance plan. According to the lawsuit, the plan stipulated that employees would receive two months of base pay plus one week of pay for each full year of service. Senior employees, such as McMillian, were allegedly owed six months of base pay. However, the company reportedly paid at most one month of severance to most employees, with many receiving nothing [3].

Musk and X Corp. previously succeeded in having the case dismissed by a federal judge in San Francisco in July 2024. The employees appealed, arguing that the severance plan should be governed under the Employee Retirement Income Security Act (ERISA). The U.S. Department of Labor supported the appeal, suggesting the severance policy met the criteria for ERISA coverage due to its ongoing nature of benefit payments. The settlement now appears to bypass further legal challenges, though it must still be approved by a federal district court [4].

This resolution comes amid broader legal scrutiny of Musk’s business practices. In a separate case, a federal judge in San Francisco recently allowed a class action lawsuit to proceed against Tesla, alleging that the company misrepresented the capabilities of its Full Self-Driving technology since 2016. Meanwhile, Tesla is also facing the aftermath of a Miami jury ruling that found the company partially responsible for a fatal crash involving its Autopilot feature, awarding victims $240 million in damages [6]. These cases highlight increasing legal and reputational risks for Musk’s ventures, particularly as he pivots back to leading his companies.

The settlement with Twitter employees underscores the financial and legal consequences of Musk’s aggressive restructuring at X. While no public announcement has been made by Musk or X Corp. regarding the settlement’s terms, the resolution indicates a pragmatic approach to resolving costly litigation. For former employees, the agreement offers a potential path to compensation after prolonged legal uncertainty. The broader implications for Musk’s management style and corporate strategy remain to be seen, particularly as he continues to navigate lawsuits across multiple industries [3].

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[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/)

[4] Musk, X Corp. Settle $500 Million Twitter Severance ... (https://news.bloomberglaw.com/employee-benefits/musk-x-corp-strike-deal-in-500-million-twitter-severance-suit)

[5] Tesla drivers can pursue class action over self-driving ... (https://www.reuters.com/sustainability/boards-policy-regulation/tesla-drivers-can-pursue-class-action-over-self-driving-claims-judge-rules-2025-08-19/)

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