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US court dismisses $500 million severance lawsuit against Elon Musk's X

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Elon Musk has won a lawsuit filed by laid-off Twitter (now X ) employees which sought $500 million in severance payments. In the lawsuit, the former employees alleged that Musk has failed to provide praised severance after their termination from the company.

What the US court said?
According to a report by news agency Reuters, the US District Judge Trina Thompson in San Francisco has ruled that the federal Employee Retirement Income Security Act ( ERISA ) governing benefit plans did not cover the former employees' claims. Therefore, the judge lacked jurisdiction.

In the verdict, Thompson said ERISA didn't apply to Twitter's post-buyout plan because there was no ‘ongoing administrative scheme’ where the company reviewed claims case-by-case, or offered benefits such as continued health insurance and out placement services, the report says.

Elon Musk bought the then Twitter (now X) for $44 billion in late 2022. He fired hundreds of employees in mass layoffs, prompting laid-off employees to file several lawsuits seeking severance.

What was the ex-employees demand?
According to a Bloomberg report, the lawsuit was filed by Twitter’s former head of total rewards, Courtney McMillian, and another ex-manager. As per the complaint, Twitter's 2019 severance plan called for employees who stayed on after the buyout to receive two or six months of pay, plus one week of pay for each year of employment, if they were laid off.

They also alleged that as senior managers they were entitled to a severance package of six months base salary plus one week for each full year of experience. While other senior employees were entitled to two months base pay plus one week for each full year of service.

In the lawsuit, the plaintiff claimed that some laid-off employees got no severance, while others received just one month's pay.
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