Elon Musk’s social media company, X (formerly Twitter), has reportedly reached a tentative settlement with thousands of former employees who accused the firm of withholding severance payments worth around $500 million. The lawsuit, filed in 2023, alleged that Musk’s leadership failed to honor contractual obligations following mass layoffs.
Background: Layoffs After Musk’s Twitter Takeover
When Musk acquired Twitter for $44 billion in late 2022, he immediately slashed the workforce by more than half, citing cost-cutting and operational restructuring. Former employees claimed they were promised specific severance packages under Twitter’s old management, but those commitments were never fulfilled.
Lawsuit Claims and Employee Demands
The ex-workers accused X of breaching agreements under the Employee Retirement Income Security Act (ERISA), demanding compensation for unpaid severance, health benefits, and stock-related payouts. The case quickly gained attention as one of the largest severance disputes in recent U.S. corporate history.
Musk’s Response and Legal Strategy
While Musk has consistently defended his restructuring moves as necessary for survival, the lawsuit posed financial and reputational risks for X. The tentative settlement, if finalized, could help the company avoid a prolonged courtroom battle and additional legal costs.
What Happens Next?
Details of the settlement remain confidential, but both parties are expected to submit final terms to the court in the coming weeks. If approved, this would mark one of the most significant legal resolutions since Musk took control of Twitter, now rebranded as X.