Latest / Elon Musk Podcast / Musk’s X Corp Agrees to Pay $500 Million in Severance

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Musk’s X Corp Agrees to Pay $500 Million in Severance · Elon Musk Podcast

0:01
Hey, everybody. Welcome back to the Elon Musk
0:04
Podcast. This is a show where we discuss
0:07
the critical crossroads, the Shape, SpaceX, Tesla X, The
0:11
Boring Company, and Neurolink. I'm your host, Will Walden.
0:16
A federal lawsuit against Elon Musk's X Corp has ended with a
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settlement that requires a company to pay $500 million in
0:25
severance to thousands of former Twitter employees.
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The lawsuit, filed in the US District Court for the Northern
0:32
District of California, accused X of violating federal labor
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laws by refusing to provide severance pay after Musk's
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acquisition of Twitter back in October of 2022.
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The company now is X terminated over half of its workforce in
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the weeks after Musk completed his $44 billion purchase.
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Now, how did a deal that was supposed to redefine social
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media as we know, it turned into a legal battle over unpaid
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severance and millions of dollars, hundreds of millions of
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dollars to the employees should have just paid him in the 1st
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place. Right now, the question surfaces
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from the scale and speed of Twitter's layoffs.
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They just cut everybody out. And the way that those exits
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were handled, when Musk took control of Twitter, he slashed
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roughly 6000 jobs across the company within days.
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Many of those employees said they were promised specific
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severance packages under the previous ownership.
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Now, the lawsuit led by former Twitter employee Courtney
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Mcmillion, alleged that Musk and his team chose to ignore those
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agreements and instead offered significantly reduced exit
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terms. Mcmillion served as Twitter's
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former head of Total Rewards, which included overseeing
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employee benefits and severance. She filed the class action
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lawsuit July of 2023, stating that the company's leadership
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had unilaterally decided to discard the company's previous
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severance policy, and under the old policy, senior employees
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were entitled to six months of base pay plus equity.
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Most other workers were supposed to receive at least two months
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of pay, and the complaint alleged that laid off staff
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received only a fraction of that and in some cases, no money
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whatsoever. Now, the core legal issue
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revolved around the Employee Retirement Income Security Actor
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ERISA, a federal statute that governs employer benefit plans.
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The lawsuit argued that Twitter had a formal severance plan and
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that X Corp violated ERISA by not honoring it.
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The settlement ends that legal challenge without requiring Musk
2:34
risk company to admit wrongdoing.
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Still, the $500 million payout adds to the financial weight
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Musk took on when he acquired the company with $13 billion in
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debt. Now, the case was assigned to
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U.S. District Judge Trina Thompson,
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who approved the confidential agreement to resolve the
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dispute. While the full terms of the
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settlement remains sealed, court filings confirm the $500 million
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figure. Ex Corp has not issued a public
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statement. Of course we asked them.
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They didn't say anything. Of course they didn't.
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And Musk as well, hasn't responded to our comments or to
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our asks about what's going on now.
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The company has consistently denied any wrongdoing and tried
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to compel arbitration for several of the claims, but the
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court allowed the clash action suit to proceed.
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This is also not the only legal fight must connects court face
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over layoffs. Several other lawsuits related
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to employment practices after the acquisition are still
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pending. One of those suits focuses on
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discrimination against women during the layoffs, while
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another accuses the company of failing to provide the legally
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required 60 day notice under the Warren Act.
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WERN legal experts say the severance dispute illustrates
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how companies can face long term consequences when they abandoned
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established employment agreements during transitions.
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Sevens pay is governed not just by contracts, but also by
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federal statutes ensure transparency and fairness.
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And while Musk frame the layoffs as necessary to rescue a
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financial struggling company, courts still expect companies to
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follow legal obligations during restructuring.
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The layoffs and the way they were handled have had lasting
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effects on X's corporate reputation.
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Former employees have spoken publicly about how the process
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unfolded, describing confusion, very poor communication and just
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sudden firing some terminations. Some workers learned they had
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been let go by only being locked out of their accounts overnight.
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You know what, this happened to me, and this is a little
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personal note due to one of the companies that I worked for.
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They went under. I was working for an action
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sports company in Oceanside, CA and they had a web, the
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e-commerce store, and I was head of e-commerce at that company.
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We were doing well. The e-commerce site was doing
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great. We had good numbers, but the
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boss wanted to focus on the brick and mortar store only.
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So what he did, we had a staff of five people.
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It's myself. And then I was the head and
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there are four people working for me.
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And they were the people that were adding the products to the
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store, taking photos, doing all that stuff.
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And I was managing everybody. So lead of e-commerce at that
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site. And I'm not going to call them
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out or tell them tell you they were because that's a not the
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right thing to do. But one day we were all locked
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out of our accounts. Never told me, never had an
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honest conversation about it, never said, hey, I just want to,
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you know, I just want to lock up the e-commerce store, go back to
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brick and mortar. You can still work at the brick
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and mortar if you want to, But you know, we're going to shut
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down the E com because I just don't like it.
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He didn't want to do e-commerce at all.
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He never did, but he started in the e-commerce store because he
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wanted to make a lot of money and we were making good money
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for the e-commerce store. We're doing good.
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The numbers were good. We were up and to the right as
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they say. So we were making a profit and
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he just shut it down one night, locked us all out of our
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accounts. I had no idea.
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I couldn't even e-mail the guy, so I had to go to the store and
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talk to him because he didn't have a cell phone.
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Which is funny because this is like the height likethe.com dot
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com e-commerce height, you know, before Amazon took took over
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everything, you know, so I had to go to the store and be like,
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Hey, what's going on? And the boss just told me
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straight up, Hey, we're shutting down e-commerce.
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I was like, well, you should have told us, you know, like I
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could have looked for another job or whatever.
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He said, well, it's not really my not really my job to, you
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know, see what happens to you next.
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I was like, wow, you're an asshole.
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Like, wow, George, you're a slimy and he was a slimy.
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Listen, I'm going to be honest with you guys because I think
7:02
you deserve it. And over the thousands of
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episodes I've done here, I think we've got to know each other
7:08
pretty well. And I'm going to be honest with
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you. I'm going to speak from my
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heart. This guy was a greasy son of a
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bitch. He was a piece of garbage.
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He treated everybody unfairly. He was mean to people.
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He's a mean, mean person. So I, I left there confused more
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than anything. So there was no restructuring.
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It was just, he just cut off the e-commerce.
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I was more confused. I wasn't upset as much as I was
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like, well, you're a piece of shit anyway, so I don't want to
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work for you anymore. See you later, you stupid idiot.
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And then I, you know, then I when I got another job within a
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week, so it was not a big deal, but and I actually got paid
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more. I got paid almost double in the
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next place. Guy was healthily underpaying me
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for doing what I was doing. So luckily for me, you know, you
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shut down the E Comm site, but it was similar, you know, like
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you'd go, you think you're going into work things shut down.
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What are you supposed to do? You can't even check your
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e-mail, you can't send DMS, There's no slack at that time.
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There's nothing. I just shut you down.
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And I was doing some freelance work just recently actually for
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a company. I had a three month sever or not
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severance, a three month contract with them.
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And I was doing some front end work and we were going to
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connect the back end, front end web development.
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We're going to connect the back end in about 3 months.
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I had a three month time frame. Literally the job was, and this
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is we're getting away from you a lot, a little bit, but I'm going
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to I'm going to circle back. I promise.
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After about 3 months, we were supposed to connect the front
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end to the back end. The back end wasn't done.
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So I was also promised, listen to this.
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This is even better. A little rug pull here.
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My experience is vast. I'm not, you know, senior level
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high end front end web developer.
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Been doing this for 20 years. I know my shit, right?
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These people said to me before I started this contract, hey,
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we're going to do this contract. We do 90 days and after those 90
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days we're going to really look into we need a new CTO, right?
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And you're the like a perfect fit for our company.
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And I was sold. Do this for three months, work
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your ass off, get to know the team, do crazy shit.
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They had me waking up at 3:00 in the morning one night to restart
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some stupid servers on the other side of the world.
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Because somebody who is the CTO at the time decided it was a
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great idea from somebody to have somebody from North America on
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the East Coast wake up at 3:00 in the morning and restart some
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servers that literally takes 3 minutes to do instead of
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instead. And I'm a grown person.
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I don't need to prove myself anymore doing this shit.
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So I was chosen by them to do this because somebody who is
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also in the time zone, they didn't want to do it.
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And for that time zone, it was like 6 in the afternoon instead
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of three in the morning. So the CTO at the time was like,
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oh, you know, Will can do it, put that on me.
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And I was like, you know what, I'm working towards the CTCTO
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thing. I got to prove myself a little
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bit. I got to show him I'm down, you
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know, because if I'm going to have people working under me,
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they got to know that I'm there for him, right?
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That's what a good leader does. You, you lead by example.
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So I was like, hell yeah, dude, 3:00 in the morning.
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You know what they did after three months?
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Shut me out of the system completely.
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Shut me up. Anyway, they are also pieces of
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shit. So I just wanted to let you all
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know that it doesn't just happen in X or Twitter.
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And Musk isn't the only person that does this.
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You know, there were no courts involved.
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There's nothing involved. There is no, you know, there's
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no severance for me. I was on a contract for three
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months and then when that contract was done and we had
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great discussions, great discussions about what's next.
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You know, what are your next steps?
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Let's get you set up. You know everything.
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I was on my path to being the CTO of this company and they
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were using me come to find out, to get this front at the front
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end of this very complicated system built out in three months
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as fast as possible. This is like a four man job.
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I did it by myself, not bragging or any shit like that, but I'm
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just saying I did it because there was the, the opportunity I
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got along with everybody there. By the way, everybody was in the
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CEO of the company at the time was like, dude, we got you.
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You're going, you're doing this. We got you set up and you're
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going to be the CTO like the whole time.
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Never even talked to me about anything I was doing wrong or
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that they didn't want me to be that, you know, want me to be
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CTO or anything like that. Nothing.
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No communication. So I can see from these people's
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perspectives, they got the rug pulled out from underneath them.
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They got screwed over. They had a contract in place
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with Twitter, Elon Musk joint that contract away from them and
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that was it. They couldn't do anything.
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There's no recourse until they did this lawsuit.
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The way they were handled that where they handled these
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lawsuits was horrible, $500 million settlement also arrives
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as X struggles with advertising and platform stability.
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Right now, they're still struggling with advertising.
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Ever since Musk took over, the company faced reduced ad sales.
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Since day one of Musk, there's not much content.
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There's no content moderation anymore, and there's a sharp
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decline in its valuation. I mean, Grok's on it now, so
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maybe Grok will moderate things, but I haven't seen it happen.
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Musk bought Twitter for $44 billion, and late 2023, Fidelity
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estimated its value 12 billion. So it lost 20 or about $30
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billion in value. So see what you know, you can
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treat people well, that's all. You could have just given these
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people the money. 500 million. Like, of course he's trying to
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save money and trying to save free speech or whatever,
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whatever you believe. You know, he's trying to reshape
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X into an everything app that goes way beyond social media.
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Grok is part of it and wants to take payments, wants to do
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basically he wants to do everything that Facebook does,
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but different with a different name.
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Facebook does payments, Facebook does calling.
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They you can hail a ride on Uber or through Facebook if you get
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the right app or whatever. So or Meta, sorry.
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So it's basically the WhatsApp slash everything app slash
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everything Facebook does. Anyway, that's what Musk is
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trying to do with X. And there's financial burdens
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that may hinder efforts to rebuild morale.
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Of course, in this lawsuit, like you see how he treats people and
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they're going to, they won. These people won and they
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defeated Elon Musk. And you know, a mass difficult
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or mass layoff is very difficult.
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But you can't break the law when you do it.
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These are legal agreements that these people signed with Twitter
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back when it was Twitter. You can't break those legal
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agreements to execute these layoffs, you know have lost
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lasting consequences plus hundreds of millions of dollars.
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Now you're paying that money now.
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So payment distribution will begin following final judicial
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approval with a total sediment split among eligible ex
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employees based on tenure and salary.
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And while it remains unclear exactly how much each former
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employee will receive, the average payout is expected to
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fall between a few thousand to 10s of thousands of dollars,
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depending on their roles and seniority.
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Musk has frequently criticized the US labor laws as well,
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spoken against what he describes as over regulation.
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That's why he left California. But in this case, federal
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employment law imposed a cost that cannot be ignored.
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Settlement closes one major chapter in the legal fallout of
16:08
Musk's Twitter acquisition, but many unresolved disputes remain
16:14
in the court system. Hey, thank you so much for
16:19
listening today. I really do appreciate your
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support. If you could take a second and
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16:48
tomorrow.