Elon Musk’s Twitter (now X) violated contracts by failing to pay millions in promised bonuses, federal judge rules
Legal setback for Elon Musk and X, as the firm formerly known as Twitter continues to face a large number of lawsuits from former employees.
Reuters reported that a US federal judge last week ruled that Twitter had violated contracts by failing to pay millions of dollars in bonuses, which the platform had promised its employees.
It was back in June when Mark Schobinger, Twitter’s former senior director of compensation before he left X in May, sued Twitter alleging breach of contract.
The lawsuit was filed in a San Francisco federal court sought class action status for former and current Twitter employees who did not receive their 2022 bonus.
The complaint alleges that after it was announced that Musk was acquiring the social media company in April 2022, “many employees raised concerns” over the fate of “their compensation and annual bonus” if and when the deal closed, CNN reported.
In the months leading up to Musk completing his acquisition of Twitter, company executives repeatedly promised staff that 2022 bonuses would be paid out at 50 percent of the target, according to the complaint. “The promise was repeated following Musk’s acquisition,” the complaint alleges.
Now Reuters has reported that in denying Twitter’s motion to dismiss the case, US District Judge Vince Chhabria ruled that Schobinger plausibly stated a breach of contract claim under California law and he was covered by a bonus plan.
“Once Schobinger did what Twitter asked, Twitter’s offer to pay him a bonus in return became a binding contract under California law. And by allegedly refusing to pay Schobinger his promised bonus, Twitter violated that contract,” the judge wrote.
Twitter’s lawyers had reportedly argued that the company made only an oral promise that was not a contract, and that Texas law should govern the case, according to Courthouse News, which first reported the ruling.
The judge however ruled that California law governed the case and that “Twitter’s contrary arguments all fail.”
Twitter is headquartered in San Francisco, California.
X has been hit with numerous lawsuits by former employees and executives since Musk bought the company and culled 80 percent of its workforce.
The lawsuits make a range of claims, including that X discriminated against older employees, women, and workers with disabilities, and failed to give advance notice of mass layoffs.
X denies all wrongdoing.
In April Twitter’s former CEO Parag Agrawal and two other former executives sued the company for more than $1 million (£800,000) in outstanding legal bills they allege should have been reimbursed.
In May this year former janitors at Twitter offices in New York City filed a lawsuit against Twitter over their abrupt termination in December 2022. They were not given the chance to reapply for their role, as per local laws in NY.