Twitter’s former head of HR filed a proposed class action lawsuit against the company on Wednesday, demanding Elon Musk pay out $US500 million to former employees for allegedly not paying severance fees to laid-off staff. Courtney McMillan, the head of total rewards for the company’s benefits programs before she was laid off in January, claimed in the lawsuit that Twitter’s then-CEO Parag Agrawal promised employees they were entitled to their paid severance under the Merger Agreement.
McMillan claimed Agrawal assured employees that their benefits, including base salary, bonus, and severance pay, would remain the same after Twitter changed hands and Musk took over the company in October. The lawsuit said on the same day that employees were notified that Musk had bought the company, Agrawal and then-Chairman Bret Taylor told all employees “that Twitter would continue to provide the severance Plan benefits for at least one year following the change in company ownership.”
Musk approved an FAQ document before officially stepping in as owner and CEO of Twitter, which stated that “[i]n the event of a layoff, any employee whose job is impacted would be eligible for severance,” the lawsuit said.
Musk allegedly confirmed in the FAQ he approved in May that in the case of layoffs, the minimum severance would include “two months base salary, prorated performance bonuses, cash value of any RSUs vesting within three months of separation, and a cash contribution for continued healthcare coverage,” the lawsuit says.
Musk took over the company in October 2022 and shortly after, he laid off thousands of employees in November amounting to about half of the employee base, mere weeks after he started. Two other mass layoffs followed, but several of those who were entitled to paid severance only received one month’s worth while a majority of other former employees didn’t receive any severance, the lawsuit claims.
In the wake of the layoffs, terminated employees were offered “at most three months of compensation: two months to comply with the notice requirements of the WARN Act, and then one month of severance pay,” according to the lawsuit. This was only “a fraction” of the severance former employees were entitled to receive, the lawsuit says.
It clarified that senior employees were entitled to receive six months’ base pay with an additional week per full year of service. Non-senior employees, it said, were entitled to two months of severance plus an additional week per year.
McMillan claims in the suit that Twitter planned to mislead employees about the severance they were entitled to and their eligibility, despite the FAQ confirming the agreement stated in the merger would be upheld. “Upon information and belief, Mr. Musk and the Defendants had no intention of fulfilling these promises,” the lawsuit says.
This is just the latest in a series of lawsuits filed against Twitter, with third-party companies filing a class action lawsuit accusing Twitter of not paying for their services. Another lawsuit claims women and workers with disabilities were targeted during the mass layoffs and another lawsuit filed last month claims Twitter didn’t pay millions of dollars in bonuses to its employees.