A federal judge yesterday granted Elon Musk's motion to dismiss a class-action complaint alleging that laid-off Twitter employees were wrongfully denied the severance they were entitled to under the Employee Retirement Income Security Act (ERISA).
The employees may be able to latch onto another lawsuit against Twitter that alleges different severance-related violations, but their claim under ERISA was denied by US District Judge Trina Thompson in the Northern District of California.
"Plaintiffs are not without recourse," Thompson wrote, noting that they may benefit from similar cases ongoing against the Musk-owned firm. "Indeed, there are other cases brought against Twitter for the failure to pay wages or provide employee severance benefits during the same or overlapping period that Plaintiffs allege Defendants denied them and the putative class sufficient severance benefits under the severance plan at issue here."
The putative class action that was denied yesterday was filed last year by former Twitter employees Courtney McMillian and Ronald Cooper, who were offered one month of severance pay. They claim that the "severance Twitter has offered to date is a fraction of what employees are entitled to as Plan participants," and they wanted to represent a class defined as all participants in the severance plan who were terminated from Twitter after Musk bought the company in October 2022. They alleged that "terminated employees remain entitled to no less than $500 million." That would be the total amount allegedly due to thousands of ex-employees laid off after the Musk buyout.
Twitter, now X Corp., claimed that the company did not maintain a severance plan governed by ERISA. Plaintiffs claimed that for several years before the Musk takeover, there was a "formalized policy" and pointed to "documents that provide a uniform and detailed policy framework for the numerous post-termination benefits Twitter provided to employees." Plaintiffs said employees were promised severance based on the reason of departure, length of tenure, job level, department, issuance of stock units, and other factors.