Billionaire Elon Musk, along with his social media firm X, has confirmed a tentative settlement with former employees who filed a lawsuit claiming $500 million (£373 million) in severance payments. This information came forward in a recent court filing which requested a delay of an upcoming hearing to finalize the settlement paperwork in the US Appeals Court located in San Francisco.
The lawsuit stems from the termination of approximately 6,000 workers, representing more than half of X's workforce, as part of extensive cost-cutting measures implemented following Musk’s acquisition of the company in 2022. Many of the dismissed employees contend they were unfairly denied benefits outlined in the company’s severance plan, as detailed in court documents reviewed by the BBC.
Courtney McMillian, who led the lawsuit, highlighted that the impacted former employees were denied severance benefits, with claims indicating that many were only entitled to payments equivalent to six months' salary but were instead offered at most just one month. Reports also suggested that some no longer received any severance at all, sparking fierce backlash against the firm's treatment of its laid-off staff.
X, which was previously known as Twitter, endured heavy layoffs as part of a trend that saw various technology companies reduce their workforce. This began with Musk drastically cutting the number of employees in several divisions, including trust and safety, human rights, and media. In a wider context, other tech giants like Facebook, Google, and Microsoft similarly let go of tens of thousands of employees post-Covid as the industry faced a slowdown following a hiring surge during the pandemic.
Musk, who previously worked to streamline efficiency in government, sought similar strategies when he terminated thousands of federal employees earlier this year in his role with the Department of Government Efficiency. This department's main goal was to reduce governmental expenditure and personnel.
Further statements from both X and representatives for the former employees have yet to be released regarding the forthcoming settlement agreement.
