Elon Musk’s social media company X has reached a settlement with former employees who sued for $500 million in severance pay. These workers sued the company over their terminations and severance packages, after around 6,000 workers — more than half the workforce — were laid off when Musk first took over the company in 2022.
Court documents filed by both sides state, “The parties have reached a settlement agreement in principle and began negotiating the terms of a long form settlement agreement,” according to the BBC. Details of the settlement have not been made public.
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The lawsuit has been filed by former Twitter (now X) employee Courtney McMillian, who says about 6,000 people were wrongly denied benefits under the company’s severance plan. According to the lawsuit, Twitter employees should have received two months of their base pay and one week of pay for each full year they were at the job per a 2019 severance plan. However, they only received at most one month of severance pay and many laid-off workers didn’t receive any additional compensation. McMillian and other senior employees were guaranteed six months of base pay, per the suit.
The settlement was reached about a month before the suit was set to go before a federal appellate court. A California federal judge previously granted a motion to dismiss the lawsuit, according to Bloomberg Law.
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Musk had bought Twitter in 2022, and cut down the company’s staff globally. Early on, he fired then-CEO Parag Agarwal and multiple other executives. He also downsized the platform’s trust and safety, human rights and media teams. The Twitter layoffs were among the earliest among a series of cost-cutting efforts by tech companies. Rank-and-file workers were often first to be laid off. Musk had also made similar moves when he fired thousands of federal workers this year, while leading President Donald Trump’s Department of Government Efficiency (DOGE).
Musk is also under scrutiny over a $29 billion equity award at Tesla, another company he leads. The SOC Investment Group, which advises union-backed pension funds that hold Tesla stock, has urged NASDAQ to investigate the automaker’s handling of executive compensation. In a letter to the exchange, the group questioned Tesla’s transparency with shareholders and raised concerns about the award. It expressed “serious concerns,” alleging that Tesla’s board bypassed NASDAQ’s listing standards by approving what it called the “2025 CEO Interim Award” for Musk without shareholder approval. According to the group, the multibillion-dollar grant reshaped the company’s pay structure to such an extent that it should have required a shareholder vote.