In October 2022, Elon Musk took ownership of Twitter, and since then, significant changes have occurred on the microblogging site. Under Musk’s leadership, Twitter underwent a rebranding process and introduced the ability to publish long videos, transforming it into something different from its original form. One of Musk’s initial actions as the new owner was to dismiss Parag Agrawal, the CEO at the time. Following this, numerous employees across all levels either lost their jobs or chose to resign. Now, more than a year after the acquisition, Twitter, now referred to as X, finds itself entangled in a legal battle concerning the non-payment of employee bonuses that were promised after Musk’s acquisition.
According to a CNN report, a federal judge has ruled that X must face a lawsuit regarding allegations of failing to fulfill its commitment to provide promised bonuses to its staff. The judge’s decision, which was made on Friday, rejected X’s attempt to have the case dismissed.
The accusations against X revolve around the company’s failure to honor its promises of annual bonuses to its employees following the acquisition by Elon Musk in October 2022. Despite assurances from executives both before and after the acquisition, a lawsuit filed in June 2023 claims that X did not follow through on its commitment to distribute these bonuses.
The lawsuit, initiated by Mark Schobinger, a former senior director of compensation at X, seeks class action status for current and former employees who did not receive their 2022 bonuses. Schobinger, who left X in May, presented a plausible case against the company, leading a federal judge to allow the lawsuit to proceed.
US District Judge Vince Chhabria, in his ruling, declared that Twitter’s offer to provide a bonus to the individual in question had become a legally binding contract under California law. X, which has disbanded its public relations team, did not respond to CNN’s request for comment. X attempted to dismiss the case by arguing that an oral promise should not hold legal weight and suggested that the case should be heard in Texas. However, the judge asserted that California law is applicable when it comes to matters concerning the enforceability of a contract.
The lawsuit, which was filed in June, brought attention to concerns raised by employees regarding the fate of their compensation and annual bonuses following Musk’s acquisition announcement in April. Company executives consistently reassured employees in the months leading up to Musk’s acquisition that 2022 bonuses would be paid out at 50 percent of the target. However, despite these assurances, X failed to fulfill its commitment to pay the bonuses, as stated in the lawsuit.
According to the complaint, Schobinger’s departure from the company in May was attributed to “Twitter’s failure to uphold various promises made to employees, including the non-payment of promised bonuses.”