Elon Musk acquired Twitter in October 2022 and the microblogging site has changed a lot since then. From being rebranded to X to allowing long videos to be published, X is no longer what it used to be. One of the first things that Musk did after taking over the social media site was firing its then CEO, Parag Agrawal. Then, many other employees, from all levels, either lost their jobs or resigned. Now, over a year after the acquisition, X is facing a court battle over non-payment of employee bonuses promised after Musk’s acquisition.
According to a report in CNN, a federal judge has ruled that X must face a lawsuit over allegations of failing to deliver promised bonuses to its staff. The judge’s decision, made on Friday, rejected X’s attempt to dismiss the case.
The accusations against X involve the company’s failure to fulfill promises of annual bonuses to its staff following its 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 deliver on its commitment to pay out these bonuses.
The lawsuit, initiated by Mark Schobinger, a former senior director of compensation at X, seeks class action status for current and former X employees who did not receive their 2022 bonuses. Schobinger left X in May, and his case against the company was deemed plausible by a federal judge, allowing it to proceed.
US District Judge Vince Chhabria, in his ruling, stated, “Twitter’s offer to pay him a bonus in return became a binding contract under California law.” X, which has dismantled its public relations team, did not respond to CNN’s request for comment. In its attempt to dismiss the case, X argued that an oral promise should not be legally binding and proposed that the case should be heard in Texas. However, the judge asserted that, in matters concerning the enforceability of a contract, California law is applicable.
The lawsuit, filed in June, highlighted concerns raised by employees about the fate of their compensation and annual bonuses after Musk’s acquisition announcement in April. The company executives repeatedly assured 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 promises, X did not fulfill its commitment to pay the bonuses, the lawsuit states.
As per the complaint, Schobinger’s departure from the company in May was attributed to “Twitter’s reneging on various promises it had made to employees, including its failure to pay promised bonuses.”
