Elon Musk’s X, the social media company formerly known as Twitter, has reached a legal settlement with former employees who sued after being laid off during Musk’s 2022 takeover. The settlement addresses claims that the company owed significant severance payments, following years of resistance to such payouts. While the financial details remain undisclosed, the agreement marks a turning point in a legal battle that has been ongoing since early 2023.
Dispute Over Severance Payments
When Musk acquired Twitter in late 2022, the company underwent sweeping layoffs that affected nearly 6,000 employees. Many of those who were dismissed argued that the severance they were promised under company policy was never delivered. In 2023, a group of former staff filed a class-action lawsuit led by Courtney McMillian, who had overseen Twitter’s employee benefits programs before her own layoff. The suit claimed the company owed around $500 million in severance.
This week, The New York Times reported that the company had agreed to settle those claims. In addition to the class-action case, X also reached a separate settlement with more than 2,000 former employees who had been pursuing severance through arbitration. According to individuals familiar with the agreement, those settlements would cover nearly all severance owed, including interest, though no dollar amounts were disclosed. X did not respond publicly to questions about the settlements.
Despite resolving these disputes, other legal challenges remain. A separate case involving former senior Twitter executives is still ongoing. Those executives have argued that they too were denied severance and contractual compensation following Musk’s takeover. As of now, that case continues in court, leaving some aspects of the dispute unresolved.
Arbitration Cases and Wider Legal Fallout
The arbitration settlement involved thousands of workers who had filed individual cases after being denied severance. Arbitration is a legal process in which disputes are resolved outside of the traditional court system, often making it more difficult for employees to pursue claims collectively. In this instance, the company’s decision to settle suggests an effort to resolve the claims in bulk rather than continuing to fight them case by case.
According to two people familiar with the process, the settlement amount will address the full scope of payments owed under the arbitration claims. This represents a major shift from the company’s prior position, as Musk and X had resisted severance payments for nearly two years. By reaching an agreement, the company avoids prolonged legal exposure and the potential costs associated with ongoing arbitration hearings.
The settlement also highlights the broader pattern of legal disputes that have followed Musk’s acquisition of Twitter. Beyond severance cases, the company has faced lawsuits over unpaid rent, vendor contracts, and other employee-related matters. These disputes reflect the disruption that occurred when Musk implemented rapid and extensive changes to the company’s structure and workforce.
Musk’s Takeover and Its Legacy
Musk’s purchase of Twitter in October 2022 reshaped the company, beginning with mass layoffs that reduced staff from about 7,500 to roughly 1,500 employees. The cuts affected nearly every department, including trust and safety teams, communications, and engineering staff. The layoffs drew significant criticism, both for their scale and for the handling of severance obligations, which led directly to the lawsuits now being settled.
Since then, the company has undergone a rebrand to X and has shifted toward Musk’s vision of an “everything app,” with expanded payments and messaging features. However, the early period of the acquisition continues to cast a long shadow, with legal disputes and employee claims raising questions about how the transition was managed. For many former employees, the settlement provides long-awaited resolution, though the undisclosed terms mean the full scope of compensation remains unclear.
While the severance disputes appear to be moving toward closure, the company still faces reputational challenges tied to Musk’s leadership style and decision-making. The settlement may offer a degree of closure for thousands of former workers, but other pending cases ensure that the legal fallout from the takeover is not yet finished.