Elon Musk is being sued by his ex-employees, alleging unpaid severance
The arbitration proceedings could end up costing Musk’s business millions of dollars
Musk has already been charged and failed to pay the amounts of ex-employees
Elon Musk, an owner of Tesla, SpaceX, and Twitter, still needs to pay the bills of over 2,000 fired employees. Several lawsuits alleging that the tech giant failed to pay severance owed to many of the 6,000 employees. According to the news channel on Monday, the tech company now known as X deals with 2,200 arbitration proceedings filed by former employees. These cases demand $3.5 million in mandatory costs, which doesn’t even account for the severance payments given to the workers Musk fired. After acquiring Twitter last October, Elon Musk laid off more than half its employees, including seniors and high executives. He promised to pay two months’ salary plus a week’s pay every year when laid off. Many ex-employees claimed they have not received a single penny from the tech giant and are still seeking their promised benefits.
According to news, one of the lawsuits filed earlier this year invokes an arbitration clause in employees’ contracts, which leaves Musk company on the hook for $1,600 in arbitration expenses for each party dispute while only requiring former ex-employees to pay $400.With over 2,000 cases, the social media network’s arbitration bill is nearly $4 million.
McMillion served the company as “Twitter’s head of total rewards” and was in charge of the company’s employee perks program. She filed the case in federal court in San Francisco. According to McMillian, most employees were guaranteed two months of base pay plus one week of compensation for each complete year of service under a severance package Twitter implemented in 2019. According to the lawsuit, senior workers like McMillian were promised six months base salary.
Reportedly, X has refused to pay the bills, claiming that it has not required the former employees to move their disputes to arbitration. After this statement, the former employees filed another lawsuit demanding the company pay the fees linked with their original filing. As a result, ex-employees have filed another lawsuit, asking the company to cover and pay the costs associated with their initial petition.
It is essential to mention that after acquiring Twitter, Musk laid off millions of employees. He slashed the company’s workforce from about 7,500 employees to an estimated 2,000 to cut costs. According to the reports, the latest layoffs came after Twitter employees realized they had been cut off from using Slack.
Many of his employees got offended after getting the news, whereas one tweeted and said, “The worst take you could have from watching me go all-in on Twitter 2.0 is that my optimism or hard work was a mistake… I’m deeply proud of the team for building through so much noise & chaos.”
While laying off the employees, Elon Musk promised to pay two months’ salary and a week’s pay, but still, many of the employees are waiting for his commitment to be fulfilled. Twitter and Musk are accused of violating a federal law that governs employee benefit programs in the case. Instead of knowing that Twitter has already been sued for allegedly failing to pay severance, such lawsuits center on contractual breaches rather than claims under the benefits statute. The business claims to have fully compensated all former employees.