Elon Musk and his social media company X Corp have reached a tentative agreement to settle a lawsuit filed by former Twitter employees who said they were owed $500 million in severance pay.
Attorneys for X Corp and the former Twitter employees reported the deal in a Wednesday court filing, in which both sides asked a U.S. appeals court to delay an upcoming court hearing so that they could finalize a deal that would pay the fired employees and end the litigation. The financial terms of the deal were not disclosed.
Before he finalized the Twitter acquisition, Musk floated the idea of cutting the micro-blogging app’s workforce to 2,000. This he justified with a reference to WhatsApp’s 50 engineers. WhatsApp was said to have 35 engineers for 450 million users, and grew to a team of 50 for 900 million users at the time.
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Musk fired approximately 6,000 employees after his 2022 acquisition of Twitter, which he rebranded as X. Several employees sued over their terminations and severance pay, and other lawsuits are still pending in courts in Delaware and California.
The settlement would resolve a proposed class action filed in California by Courtney McMillian, who previously oversaw Twitter’s employee benefits programs as its “head of total rewards,” and Ronald Cooper, who was an operations manager.
A federal judge in San Francisco dismissed the employees’ lawsuit in July 2024, and they appealed to the San Francisco-based 9th U.S. Circuit Court of Appeals. The 9th Circuit had been scheduled to hear oral arguments on September 17. Attorneys for Musk and McMillian did not immediately respond to requests for comment on Thursday.
The lawsuit argued that a 2019 severance plan guaranteed that most Twitter workers would receive two months of their base pay plus one week of pay for each full year of service if they were laid off. Senior employees such as McMillian were owed six months of base pay, according to the lawsuit.
But Twitter only gave laid-off workers at most one month of severance pay, and many of them did not receive anything, according to the lawsuit. Twitter laid off more than half of its workforce as a cost-cutting measure after Musk acquired the company.
Musk’s Layoffs and Labor Disputes
The case is one of several legal battles Musk has faced since his $44 billion takeover of Twitter. The sweeping layoffs—carried out with little notice—sparked criticism not just in the U.S. but also in Europe, where labor protections are stronger. In Ireland and the UK, former employees also initiated legal challenges over abrupt dismissals and unpaid severance.
The severance battle highlights a growing tension between Musk’s cost-cutting approach to running X and existing corporate governance and labor standards. Analysts believed that Musk prioritized slashing expenses to keep the company afloat after the takeover, as X has struggled with revenue declines, advertising losses, and heavy debt from the buyout.
The tentative deal also comes as Musk continues to defend X against multiple lawsuits and regulatory probes, from unpaid rent and vendor disputes to content moderation battles with governments worldwide.
If finalized, the settlement could help Musk close one of the biggest remaining liabilities from his mass layoff strategy, though his legal headaches are far from over. The settlement is expected to gulp a chunk of fortune from the social media platform, which is still struggling with revenue decline.