A former Twitter employee’s victory in a legal battle over unpaid severance pay could encourage more former employees to file lawsuits against social media companies, legal experts say.
Former Twitter employees who were fired amid the chaos that followed Elon Musk’s acquisition of the social media platform have won their lawsuit after private arbitration, according to a memo seen by Bloomberg.
The decision comes nearly two years after Elon Musk bought Twitter for $44 billion and fired about half of the company’s employees a week later.
Shannon Rhys Riordan, a lawyer for the former Twitter employees, reportedly wrote in a memo that her clients have received their full severance pay and that she expects further rulings in the coming months. There are 15 other cases where arbitration hearings have been held, according to the memo seen by Bloomberg.
The victory for the former Twitter employees is the first of what experts say could be a similar settlement, and could offer hope to other former employees who feel their severance agreements were mishandled during Musk’s violent restructuring of Twitter, now known as X.
Jamie E. Wright, employment lawyer and founder of the Wright Law Firm, told BI that the arbitration award could inspire former Twitter employees “who have filed similar arbitration claims” to further their litigation.
This could be the catalyst for Musk to reconcile with other former employees.
While the ruling isn’t a binding precedent like a court ruling, it could still persuade companies to comply, Russell Morgan, president and founder of Morgan Legal Group, told BI. Arbitration decisions like this one could help “change the game” in similar cases, he added.
“This could set a precedent for other employees to claim they are owed money and pressure social media companies into settling,” Morgan said.
Wright said Musk should also consider settling with others who have similar complaints to avoid the reputational damage and costs of further legal battles.
X and Musk are also facing a lawsuit over severance pay terms from 100 former Twitter employees who were fired in 2022. Lisa Bloom, a lawyer representing the group, said in a statement to BI that she “applauds” the arbitrator’s decision and urges Musk to “do the right thing now and pay the employees who built Twitter the wages they were promised.”
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Bloom said he is still actively pursuing the litigation and is scheduling separate arbitration hearings for each of his clients, which are scheduled to begin in December 2024 and run through August 2025.
Musk avoids $500 million severance lawsuit
In July, a federal judge in the Northern District of California dismissed a lawsuit brought by former employees who claimed Twitter owed $500 million in severance to about 6,000 fired employees. The judge ultimately found there were insufficient facts to support the argument that the Employee Retirement Income Security Act (ERISA), a federal law, governs the retirement plans.
A few weeks after Musk took over, he sent a company-wide email giving employees a stark choice: work “extremely hardcore” rates to help build “Twitter 2.0,” or quit.
“This means working long hours at high intensity,” Musk said in an email. “Only exceptional performance will pass.”
He added that anyone who did not click “yes” in the attached Google form by the next day would be paid three months’ severance pay.
Former Twitter employee Gary Rooney was fired after not responding to emails and filed a lawsuit with the Irish Workplace Relations Commission. In August, Rooney won his wrongful dismissal lawsuit and was awarded approximately $600,000 in damages.
The question remains as to whether Musk and X will fight their respective lawsuits or find a way to resolve the swirling firestorm of litigation.
Rhys Riordan declined to comment.
Company X did not respond to Business Insider’s request for comment.