Elon Musk beats $500m severance lawsuit from fired Twitter workers

Judge rules federal Employee Retirement Income Security Act governing benefit plans does not cover former employees' claims

Elon Musk was accused of reneging on promises to former Twitter employees. Reuters

Elon Musk has won dismissal of a lawsuit claiming he refused to pay at least $500 million of severance to thousands of Twitter employees he fired in mass layoffs after buying the social media company now known as X.

US District Judge Trina Thompson in San Francisco, California, ruled on Tuesday that the federal Employee Retirement Income Security Act governing benefit plans did not cover the former employees' claims, and therefore she lacked jurisdiction.

Lawyers for the plaintiffs did not immediately respond to requests for comment on Wednesday. Mr Musk's lawyers did not immediately respond to similar requests.

Elon Musk over the years – in pictures

The case is one of many accusing Mr Musk of reneging on promises to former Twitter employees, including former chief executive Parag Agrawal, and vendors after buying the company for $44 billion in October 2022.

Mr Musk also runs the electric car company Tesla, and is one of the world's richest people, according to Forbes magazine.

According to the complaint, Twitter's 2019 severance plan called for employees who stayed on after the buyout to receive two or six months of pay, plus one week of pay for each year of employment, if they were laid off.

The plaintiffs Courtney McMillian, who oversaw Twitter's compensation and benefits, and Ronald Cooper, an operations manager, said Twitter instead offered fired employees one month of pay as severance, with no benefits.

Ms Thompson said the Employee Retirement Income Security Act (Erisa) did not apply to Twitter's post-buyout plan because there was no “ongoing administrative scheme” in which the company reviewed claims case by case or offered benefits such as continued health insurance and outplacement services.

“There were only cash payments promised,” she wrote.

The judge said the plaintiffs could try amending their complaint, but only for claims not governed by Erisa.