Former Twitter HR boss, Courtney McMillian, has filed a lawsuit against Twitter and owner Elon Musk, claiming that the company failed to pay $500 million in severance pay owed to laid-off staff. The lawsuit, filed in San Francisco, alleges that Twitter did not properly compensate workers when they were laid off and provided them with much less severance pay than what was promised.
According to the lawsuit, Twitter had been calculating severance pay for its employees based on a matrix that took into account various factors such as role, base pay, location, performance metrics, and the reason for termination.
In April 2022, when Musk offered to buy the company, Twitter stated in its merger agreement that it would continue to provide severance payments and benefits to staff for at least one year after the merger, on terms no less favorable than those available before the merger. The then-CEO, Parag Agrawal, and then-Chairman, Bret Taylor, reportedly confirmed this to employees.
However, after taking control of the company, Musk initiated significant layoffs, citing the need to cut costs and avoid bankruptcy. The lawsuit claims that Twitter offered terminated employees a maximum of three months of compensation, which included two months of non-working employment to comply with notice requirements and one month of severance pay. This amount was described as “a fraction” of what employees were entitled to under the severance plan outlined in the matrix.
The severance plan mentioned in the lawsuit indicated that senior employees were entitled to six months’ base pay plus an additional week per full year of service, while non-senior employees were entitled to two months’ base pay plus an extra week per year of service.
The lawsuit alleges that Musk and other members of Twitter’s leadership deliberately failed to pay laid-off staff the amount they were owed under the matrix due to the associated expense. It seeks a court order to compel Twitter to pay back at least $500 million in severance pay that the company allegedly owes. However, the specific calculation methodology used to arrive at this figure has not been disclosed.
As of now, Twitter has not responded to requests for comment on the lawsuit. It is worth noting that since Musk took over, Twitter has faced various legal challenges, including lawsuits from vendors claiming unpaid invoices and employees who alleged that their promised 2022 bonuses were not fully paid.
Courtney McMillian, who worked as Twitter’s head of total rewards and later as the head of people experience, appears to have been laid off in November, although her separation date was in January.
The lawsuit serves as a legal battle highlighting allegations of improper compensation and non-payment of severance to laid-off Twitter employees, with a substantial claim amount that could have significant implications for the company’s financial standing and reputation.
The lawsuit filed by Courtney McMillian against Twitter and Elon Musk raises significant concerns about the treatment of laid-off staff and the company’s adherence to its severance pay commitments. If the allegations are proven true, the case could have far-reaching implications for Twitter’s financial liabilities and the reputation of its leadership.
The lawsuit alleges that Twitter’s severance pay calculations were based on a comprehensive matrix that considered various factors, such as the employee’s role, base pay, location, performance metrics, and reason for termination. This approach ensured a fair and consistent method for determining the amount of severance owed to each employee.
The merger agreement between Twitter and Musk, signed in April 2022, explicitly stated that the company would continue to provide severance payments and benefits to employees for at least one year following the merger, maintaining the same level of favorability as before the merger.
However, after Musk assumed control of the company, he initiated significant layoffs, justifying them as a necessary cost-cutting measure to prevent bankruptcy. The lawsuit alleges that Twitter offered terminated employees a mere fraction of the severance pay they were entitled to under the matrix. The discrepancy between the promised severance and the actual compensation provided raises concerns about Twitter’s compliance with its contractual obligations.
According to the lawsuit, senior employees were entitled to six months of base pay plus an additional week per full year of service, while non-senior employees were entitled to two months of base pay plus an extra week per year of service.
In contrast, the lawsuit claims that terminated employees were offered, at most, three months of compensation, consisting of two months of non-working employment to fulfill notice requirements and one month of severance pay. This significant shortfall in compensation suggests a disregard for the severance plan and an apparent cost-cutting motive.
The lawsuit specifically accuses Elon Musk and other Twitter leadership members of intentionally withholding proper severance pay from laid-off employees due to the associated expense. If substantiated, this allegation could raise concerns about the prioritization of cost savings over employee welfare and adherence to contractual commitments.
Seeking redress, the lawsuit requests that the court orders Twitter to pay back at least $500 million in owed severance pay. While the exact calculation methodology behind this figure has not been disclosed, it likely reflects the aggregated severance amounts owed to the affected employees.
As this legal battle unfolds, it will be essential for Twitter to address the allegations promptly and transparently. Failure to do so could further damage the company’s reputation, exacerbate employee discontent, and potentially lead to additional legal and financial repercussions.
It is important to note that the lawsuit represents one side of the story, and the court will ultimately determine the veracity of the claims. However, regardless of the lawsuit’s outcome, it sheds light on the complexities of severance agreements, the treatment of laid-off employees, and the responsibilities of employers to fulfill their obligations in such circumstances.
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