Elon Musk’s social media company X Corp has reached a tentative agreement to settle a lawsuit filed by former employees of the company that was then known as Twitter, who argued they were owed $500 million in severance pay.
Both sides disclosed the deal on Wednesday in a court filing, with both asking a U.S. appeals court to delay an upcoming hearing to allow them to finalize a deal to pay the terminated workers and bring the case to a close. The 9th U.S. Circuit Court of Appeals agreed on Thursday to postpone the hearing.
The financial terms of the agreement were not disclosed. The settlement would resolve a proposed class action lawsuit filed by former employees Courtney McMillian and Ronald Cooper.
A federal judge dismissed the employees’ lawsuit last year, but they appealed to the 9th Circuit.
Roughly 6,000 employees were terminated after Musk’s acquisition in 2022 of the social media giant, which he later rebranded to X, as part of a cost-cutting measure.
Several former employees sued the company over their firings and severance pay.
The settlement would resolve a proposed class action lawsuit filed by former employees Courtney McMillian and Ronald Cooper. (Photo by Richard Bord/WireImage / Getty Images)
The lawsuit brought by McMillian and Cooper argued that a 2019 severance plan guaranteed that most workers would receive two months of their base pay plus one week of pay for each full year of service if they were terminated.
The complaint said senior employees like McMillian, who oversaw the company’s employee benefits programs, were owed six months of base pay.
However, the company only offered fired workers one month of severance pay at most, and many of them did not receive anything, the lawsuit says.
Other lawsuits, including one filed by executives such as former CEO Parag Agrawal, are still pending in court.
Musk’s efforts to cut the company’s workforce came before he led similar cost-cutting measures in his time at the Trump administration’s Department of Government Efficiency, or DOGE, which cut tens of thousands of government employees earlier this year as it attempted to downsize the federal workforce.
Reuters contributed to this report.