Bloomberg Law
April 24, 2023, 9:30 AM

Musk’s Twitter Layoffs Generate Thousands of Legal Headaches

Robert Iafolla
Robert Iafolla
Senior Legal Reporter

Twitter Inc.’s legal battles over its mass layoffs last fall continue to grow, with two more former workers filing class action complaints and approximately 2,000 ex-employees pursuing claims in individual arbitration.

The social media company owned and operated by Elon Musk’s recently minted X Corp. faces challenges both in and out of court because many, but not all, of its former workers signed binding arbitration agreements. Twitter included the contracts in the packet of documents given to job applicants who were offered a position.

The outcomes of those legal fights will test the company’s strategy for dealing with the fallout of its massive and sudden cuts to Twitter’s workforce, particularly its handling of worker severance packages.

Musk fired about half of Twitter’s 7,500 workers in November, following his $44 billion purchase of the company. Layoffs continued into 2023, reportedly bringing the company’s headcount under 2,000.

The layoffs and subsequent legal action are just part of the chaos that’s engulfed Twitter since Musk took over in October. The company also has rolled back its expansive employee telework policy, called on workers to sign a pledge to remain at an “extremely hardcore” Twitter or quit, and eliminated the blue verification check marks from users’ accounts unless they pay for them.

Prominent plaintiffs’ attorney Shannon Liss-Riordan of Lichten & Liss-Riordan PC was the first to strike at the Musk-owned Twitter, filing a lawsuit on the eve of the big November layoff alleging that the company failed to provide the legally required notices prior to mass termination.

Although Twitter pushed that case out of court, Liss-Riordan has continued filing lawsuits. She added two more class action complaints this month, bringing her total of pending court cases against the company to eight.

Liss-Riordan said her firm also represents about 1,700 ex-Twitter workers in a mass-arbitration campaign against the company.

“It is a lot more work than traditional class actions,” she said of the mass-arbitration approach.

Liss-Riordan has 15 years of experience turning to large-scale arbitration efforts when her clients are locked out of court, staffing up and building expertise while mounting campaigns against trucking companies, gig economy firms, strip clubs, and other businesses, she said.

And Liss-Riordan isn’t alone in targeting Twitter with mass-arbitration filings.

Outten & Golden LLP; Kamerman, Uncyk, Soniker & Klein PC; and the Bloom Firm PC each represent groups of about 100 former employees pursuing individual arbitrations against the company, according to attorneys at those firms.

An auto-response message from Twitter’s press contact email sent a poop emoji when asked for comment on the allegations against the company.

Tailored Claims

The claims former Twitter workers brought in arbitration overlap with some of those in lawsuits.

Twitter’s alleged bait-and-switch on its severance package is a major focus of many arbitration cases, leading to claims of breach of contract, breach of the covenant of good faith and fair dealing, fraud, and unfair competition, according to lawyers representing the former Twitter workers.

The ex-employees allege Twitter broke its promise to provide severance packages at least as favorable as those given before Musk bought the firm. According to one lawsuit, Twitter pledged to pay a lump sum amount that would include at least two months’ salary, a pro-rated bonus, cash value of equity that would have vested three months after the separation date, and money to continue health-care coverage.

Instead, they say they were offered only one month’s salary in exchange for a full release of any legal claims.

Unlike class action complaints, which require allegations that are common to a class or subgroups of a class, claims in arbitration can be tailored to the individual plaintiff.

Depending on the worker, current arbitration claims against Twitter include discrimination based on race, age, and other protected characteristics; retaliation for taking leave; failure to reimburse expenses and pay all wages on time; and violations of the Worker Adjustment and Retraining Notification Act, which requires a certain amount of notice before a mass layoff, lawyers said.

Settlement Leverage

Some of the firms representing former Twitter staffers regularly collaborate with one another to help handle the massive amount of work triggered by mass-arbitration campaigns.

Attorney Jahan Sagafi said his team at Outten & Golden has been working on Twitter arbitrations with attorneys at Kamerman Uncyk and Rudy Exelrod Zieff & Lowe LLP.

“A lot of plaintiffs’ lawyers value community and collaboration,” he said. “It’s a win-win for the clients and the lawyers.”

Although mass arbitrations are more laborious than class actions, the cost to the companies—which are generally required to foot the bill for arbitration—gives plaintiffs some of the settlement leverage they could get from suing as a class. Each individual arbitration can run tens of thousands of dollars in fees.

Uber Technologies Inc., for example, paid at least $146 million in 2019 to resolve the bulk of the more than 60,000 arbitration claims related to drivers’ alleged employment misclassification.

Mass arbitrations also may be more expensive to settle than class actions, said Amy Schmitz, a law professor at Ohio State University who’s written extensively on arbitration.

Participating in an arbitration requires much more time and attention from a plaintiff than a class action, Schmitz said. That means plaintiffs who are willing to commit to an arbitration are often “squeaky wheels” who want to be involved and be heard, rather than just being in it for the money, she said.

‘Dragging its Feet’

Twitter has responded thus far by slow walking the arbitration process, according to attorneys representing former company employees.

“We are frustrated that Twitter has been dragging its feet every step of the way,” said Lisa Bloom of the Bloom Firm. “They’re just doing everything as slowly as possible. It’s a common but frustrating tactic.”

The company has delayed paying invoices and picking arbitrators, and has been asking its former workers to produce copies of their arbitration agreements, plaintiffs’ lawyers said.

Although defendants in arbitration have latitude to stretch out the proceedings, the Federal Arbitration Act provides a path back to court if the delay reaches a point when a defendant has effectively waived its right to arbitration.

The US Supreme Court made it easier to prove such a waiver with its 2022 decision in Morgan v. Sundance, which said a party doesn’t have to show they suffered prejudice by their opponent’s actions to move the dispute out of arbitration.

Liss-Riordan said she’s prepared to call Twitter on delays that cross a line, but the company’s conduct so far is similar to other businesses facing mass arbitrations. The cases are in their early stages, with a lot more action to come, she said.

“I look forward to deposing Musk,” Liss-Riordan said. “I look forward to deposing him 1,700 times if necessary.”

To contact the reporter on this story: Robert Iafolla in Washington at

To contact the editor responsible for this story: Martha Mueller Neff at; Rebekah Mintzer at

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