- An ex-Twitter employee won a legal battle through arbitration over unpaid severance, per Bloomberg.
- Legal experts say it may prompt X to handle similar cases consistently and consider settling disputes.
A former Twitter employee's victory in a legal dispute over unpaid severance could prompt more ex-staff to pursue cases against the social media company, legal experts have said.
The ex-Twitter worker, who was laid off during the chaotic aftermath of Elon Musk's takeover of the social media platform, won the case after it was handled through a closed-door arbitration, according to a memo obtained by Bloomberg.
The decision comes nearly two years after Elon Musk completed a $44 billion takeover of Twitter and then laid off around half the company's staff a week later.
The former Twitter employee's lawyer, Shannon Liss-Riordan, reportedly said in the memo that her client was awarded the full severance package and that she expects more rulings to come out in the following months. There are 15 other cases that have also had arbitration hearings, per the memo seen by Bloomberg.
The ex-Twitter worker's win is the first of what experts say could lead to many more similar resolutions. It might raise hope for other former employees who feel their severance agreements were mishandled during Musk's tumultuous restructuring of Twitter, now called X.
Jamie E. Wright, labor attorney and founder of The Wright Law Firm, told BI that the arbitration ruling could inspire ex-Twitter staffers who "lodged comparable arbitration claims to pursue their cases further."
It could encourage Musk to settle with other former employees
Even though the outcome is not a binding precedent like a court ruling, Russel Morgan, principal and founder of Morgan Legal Group, told BI it could still persuade companies to align with it. Such arbitration rulings could help "move the dial" in similar cases, he added.
"This could set a precedent for all the other employees claiming they are still owed money and pressure the social media company to settle," Morgan said.
Musk should also consider settling with others with similar complaints to avoid taking a reputational hit and incurring expenses from more legal battles, Wright said.
X and Musk are also facing a lawsuit over severance terms from 100 former Twitter workers who were fired in 2022. Lisa Bloom, the attorney representing the group, said in a statement to BI that they "applaud" the arbitrator's decision and encouraged Musk to "do the right thing now and pay the workers who built Twitter what they were promised."
Bloom said they are still aggressively pursuing their cases and have scheduled individual arbitration hearings for each of the clients. The hearings will begin in December 2024 and run through August 2025.
Musk avoided a $500 million severance pay lawsuit
In July, a federal judge in the Northern District of California dismissed a lawsuit from former Twitter employees that claimed the company owed $500 million severance to around 6,000 laid-off workers. The judge ultimately found insufficient facts to support the claim that the Employee Retirement Income Security Act (ERISA), a federal law, governs the severance plan.
Weeks after Musk took over the company, he sent out a companywide email giving employees a stark choice: either sign up to work at an "extremely hardcore" rate and help build "Twitter 2.0" or resign.
"This will mean working long hours at high intensity," Musk wrote in the email. "Only exceptional performance will constitute a passing grade."
He added that anyone who didn't click yes on an attached Google form by the next day would receive three months of severance pay.
Gary Rooney, a former Twitter employee, was laid off after he didn't respond to the email and brought his case to Ireland's Workplace Relations Commission. In August, Rooney won the unfair dismissal case and was awarded about $600,000.
For Musk and X, the question remains whether they fight each case or find a way to settle what might be a brewing storm of claims.
Liss-Riordan declined to comment.
X didn't respond to a request for comment from Business Insider.