Musk, X Corp. Settle $500 Million Twitter Severance Lawsuit (1)

Elon Musk and X Corp. reached a tentative settlement in a lawsuit that said about 6,000 laid-off Twitter Inc. employees are owed at least $500 million in severance pay.

The parties announced the class-wide deal on Wednesday, one month before the case was scheduled to be argued before the US Court of Appeals for the Ninth Circuit. Details of the agreement aren’t yet public and will require approval from a federal district court judge.

Former Twitter employees have filed multiple severance lawsuits against X and Musk since his 2022 acquisition of the platform. A lawsuit filed by former CEO Parag Agrawal and other high-ranking officers was allowed to advance to discovery, and the company’s former chief marketing officer recently advanced a lawsuit claiming her termination was wrongly deemed as being for cause in order to deny her a hefty severance payout.

The instant lawsuit, led by former Twitter employee Courtney McMillian, says about 6,000 people were wrongly denied benefits under the company’s severance plan, which allegedly provides payments as high as six months’ base pay plus one additional week of pay for each full year of service. A California federal judge sided with Musk and X and granted their motion to dismiss, which argued there’s “no such thing” as a Twitter severance plan governed by the Employee Retirement Income Security Act.

The employees appealed to the Ninth Circuit, receiving support from the US Department of Labor. According to the department’s amicus brief, the Twitter severance policy qualifies for ERISA coverage because it pays benefits on an ongoing basis, regardless of whether it requires “particularized discretion” to administer.

The case was scheduled to be argued on Sept. 17. The parties jointly asked the court to postpone that date so they could focus on preparing settlement paperwork.

Sanford Heisler Sharp McKnight LLP represents McMillian and the workers. Morgan, Lewis & Bockius LLP represents the defendants.

The case is McMillian v. X Corp., 9th Cir., No. 24-5045, motion to postpone arguments 8/20/25.