Elon Musk strikes $500M deal to end Twitter severance saga

Elon Musk and his social media company, X Corp, have reportedly reached a tentative deal to settle a lawsuit from former Twitter employees seeking $500 million in severance.

The dispute goes back to Elon Musk’s 2022 takeover of Twitter, now rebranded as X when roughly 6,000 employees were let go. Those former workers later argued they were owed severance under Twitter’s old benefits plans.

The lawyers for both sides filed a joint notice on Thursday saying they’d reached a settlement and asked the Ninth Circuit to delay a hearing that had been set for September 17.

The details of the deal are still under wraps, and won’t be revealed until the courts give the final approval.

Settlement ends Twitter severance fight

The lawsuit, filed as a class action in California by Courtney McMillian, who used to head Twitter’s employee benefits and claimed that roughly 6,000 former employees were denied the severance pay they were owed.

The plan in question is said to offer up to six months of base pay, plus an extra week for every year of service.

After Musk took over, many employees were suddenly let go, sparking several legal challenges over alleged wrongful termination and unpaid severance.

Back in July 2024, a federal judge in San Francisco threw out the case, saying the workers hadn’t proven that Twitter had a formal severance plan covered under ERISA.

But the plaintiffs appealed, and the US Department of Labor stepped in with an amicus brief, arguing the policy does qualify for protection since the benefits were paid consistently, no matter the administration.

With the appeal hearing looming, the new settlement now pauses the litigation and provides a resolution for those affected.

What the settlement means for Musk, X Corp, and former employees

The settlement marks a major turning point in what’s been a long-running legal saga tied to Musk’s takeover and shake-up of Twitter.

By settling, Musk and X Corp avoid a potentially expensive appeal and the drawn-out legal battles that could have distracted from running the company and hurt its public image.

For the former employees, it’s a chance to finally get the compensation they were owed after the sudden layoffs and denied severance pay, grievances that have lingered since 2022.

The exact terms and numbers are still under wraps until the court signs off, but the settlement shows that the claims were serious and that Musk and the company were willing to find a resolution.

The case also brings up bigger questions about how employees are treated during major corporate shake-ups, especially when tech giants are involved.

Musk’s overhaul of Twitter’s workforce stirred plenty of controversy, not just because so many people were laid off, but also because of the way it was handled.

The whole episode has sparked a lot of debate about what companies owe their workers and how far corporate responsibility should go in the tech world.