Elon Musk’s social networking company X—known to the world for many years as Twitter—has reportedly reached a preliminary agreement to resolve a class-action lawsuit valued at half a billion dollars, according to information first published by The New York Times. The litigation revolved around severance pay, and the possibility of a settlement suggests a turning point in a legal battle that has spanned nearly three years.
The origins of the lawsuit can be traced back to Musk’s purchase and subsequent restructuring of Twitter in 2022. Shortly after acquiring the platform, Musk initiated sweeping and aggressive cost-cutting measures, which included reducing the workforce by more than eighty percent. In numerical terms, that translated to approximately six thousand employees losing their positions in what became one of the largest single rounds of corporate layoffs in the modern technology industry. For many of those dismissed, the matter did not end with their termination. Thousands of them challenged the company’s actions in court, arguing that they had been deprived of severance packages that were rightfully theirs under existing company policy.
Now, nearly three years after those mass firings, Musk’s rebranded enterprise, X Corp, has opted to settle the class-action lawsuit. Although the parties have reportedly agreed to terms, the specific financial arrangements, conditions, and concessions—beyond the publicly cited $500 million magnitude of the claim—have not yet been disclosed to the public. The decision to settle comes just as oral arguments were scheduled to begin in mid-September in San Francisco, suggesting that the company may have sought to avoid a lengthy courtroom battle with uncertain outcomes and significant reputational costs.
Court filings highlighted a fundamental dispute over a corporate severance plan originally adopted in 2019. That plan promised terminated employees a minimum of two months of base salary, supplemented by an additional week of pay for each year of service at the company. According to the lawsuit, however, many employees did not receive what they were promised. Certain individuals reported being compensated with only a single month of severance, while others, according to the filing, were provided no severance at all. The discrepancy between the written policy and the payments rendered laid the foundation for the massive class-action litigation.
Beyond the class-action case that now appears close to resolution, several related legal battles continue. Separate lawsuits have been filed on behalf of former senior executives who allege that they too were denied contractually promised benefits. At the same time, arbitration proceedings initiated by more than two thousand former Twitter employees have also been settled, marking progress in untangling the vast web of litigation that followed Musk’s drastic downsizing of the company.
The New York Times described Musk’s decision to settle as an “about-face,” given the billionaire’s prior hardline approach toward such disputes. Musk, whose personal wealth was most recently estimated at $379 billion according to the Bloomberg Billionaires Index, remains the wealthiest individual in the world, and his handling of these legal claims has attracted widespread scrutiny, particularly in relation to issues of corporate responsibility and treatment of employees.
The resolution of this lawsuit represents not merely a financial transaction, but also a symbolic moment in the ongoing narrative of how Musk’s leadership continues to reshape both the internal structure of X Corp and the broader expectations for employment practices within Silicon Valley’s most influential firms.
Sourse: https://www.entrepreneur.com/business-news/elon-musk-x-corp-settle-500-million-severance-lawsuit/496306
