San Francisco – A class action lawsuit against Twitter filed by employees after Elon Musk’s takeover of the company can proceed, a San Francisco judge ruled this week. The lawsuit alleges that Twitter illegally withheld employee bonuses that were owed after the acquisition.
Filed in late October by several Twitter employees, the complaint argues that the company violated labor laws when it refused to pay contractually obligated retention bonuses to some employees post-acquisition. These kinds of bonuses, promised to incentivize employees to remain at Twitter through the ownership transition, represent between 8-20% of annual compensation.
“Elon Musk and Twitter are not above the law,” said an attorney representing the Twitter employees. “Twitter executives were handed lucrative employment contracts guaranteeing these bonus payments if they met certain conditions. Yet rather than honoring these deals, Musk and Twitter breached their obligations.”
In seeking a dismissal, Twitter had claimed the bonuses were discretionary and that previous communications indicating they would be paid did not represent a legal duty. However, Judge Ethan Schulman rejected this argument, allowing the lawsuit to advance.
“We are pleased the Court is permitting our lawsuit on behalf of Twitter employees to move ahead,” said another attorney for the plaintiffs. “Elon Musk is not above the law, and we anticipate presenting the merits of our case in Court.”
If successful, the lawsuit could result in Twitter being liable for millions in owed bonus payments. The plaintiffs aim to represent an estimated class of 10,000 current and former Twitter employees qualified for unpaid retention bonuses.
Also read: Twitter violated contract for withholding millions of dollars in bonuses: US judge
The lawsuit adds to Elon Musk legal troubles as he pushes major corporate changes at Twitter post-acquisition. Soon after taking Twitter private for $44 billion in late October, Elon Musk laid off roughly 50% of employees. Groups of ex-employees have already filed complaints over these terminations.
Additionally, Elon Musk dissolved Twitter’s former board of directors this week, installing himself as sole director in a regulatory filing. This new lawsuit represents his first major court loss as CEO and could make him culpable for refusing the bonus payments.
Some former employees still anticipate potentially receiving their owed bonuses if the case succeeds. But Elon Musk unpredictable leadership casts doubt on whether court-ordered payments would influence his decisions.
“This is a guy trying to shred the rulebook,” said Paul Argenti, a corporate communication professor at Dartmouth College. “What employee contracts mean to Elon remains unclear. But the court says employees have a valid case.”
The lawsuit signifies the latest legal scrutiny around Elon Musk high-profile Twitter takeover. It also serves as a warning that despite his wealth and power, Musk and Twitter remain accountable to labor laws regarding employee compensation, even for discretionary bonuses.
Also Read – Breaking Twitter — Elon Musk controversial social media takeover
As the case proceeds, the coming months will determine whether Twitter must pay out withheld bonuses owed to employees from before and after Elon Musk assumed leadership. But the court battle and resulting public attention already shed light on the tech billionaire’s controversial handling of Twitter’s workforce.
“Elon Musk flipping typical corporate culture at Twitter on its head has a touch of the Wild West about it,” said Argenti. “This lawsuit pulls on the reins a little, binding Twitter to some past agreements. It’ll be interesting to see how the saga plays out regarding employees counting on those bonuses.”
The case carries broad significance for tech sector labor relations as Silicon Valley adjusts to Elon Musk unpredictable, self-driven leadership style. All eyes will remain on Twitter and its embattled workforce.
