TECH NEWS – Elon Musk’s court victory against former Twitter employees spares the company significant financial burdens. After taking control of Twitter in 2022, Musk cited cost-efficiency reasons for mass layoffs. The dismissed employees demanded their severance pay, but the court, referring to the Employee Retirement Income Security Act (ERISA), dismissed their claim as they were not entitled to it.

The former employees sued Musk last July after he laid off more than 85% of the staff during the takeover. Musk justified the decision by stating the company was not generating profit, necessitating not only workforce reductions but also the introduction of new features to increase revenue. One such innovation was Twitter Blue, which even previous verified users must pay for. This service provides greater reach and additional benefits, such as the ability to post longer tweets and videos.

After the layoffs, a former manager and the head of the compensation department sued Musk and Twitter, claiming the employees were entitled to approximately one month’s salary. If Twitter had followed the previous plans, they would have had to pay around $500 million, equivalent to 181.5 billion forints.

Before Musk’s takeover, Twitter’s severance plan provided at least two months’ base salary, performance-related bonuses, and ongoing healthcare contributions. The lawsuit argued that Musk and the defendants knew that not honoring the severance plan could lead to mass resignations, jeopardizing the multi-billion dollar acquisition and Twitter’s viability.

Although the lawsuit claimed that “Twitter, Musk, and the unknown defendants never informed employees of the expected changes to the severance plan,” U.S. District Judge Trina Thompson in San Francisco ruled that the employees’ claims did not fall under ERISA. ERISA allows employers to terminate programs in several cases, such as when the company faces bankruptcy or if the continuation costs would lead to insolvency.

Thus, Musk and Twitter’s owner saved a significant amount on this decision.

Forrás: WCCFTech