A federal judge has reportedly ruled that a lawsuit against Elon Musk’s company X (formerly known as Twitter) can proceed, following allegations of failing to pay promised staff bonuses.
Business Insider reports that the lawsuit, brought forth in June by Mark Schobinger, Twitter’s former head of compensation, has become a focal point in a broader narrative about employee rights and corporate promises. Representing thousands of current and former employees, Schobinger alleges that the company failed to honor verbal commitments regarding annual bonuses. These bonuses, integral to employee compensation, were promised during and after Musk’s takeover of the company.
As Breitbart News previously reported:
The lawsuit was filed in a federal court in San Francisco. It states that high-ranking executives within the company repeatedly assured staff members that they would receive 50 percent of their annual bonuses for 2022 in the months preceding billionaire Elon Musk’s acquisition of Twitter.
Judge Vince Chhabria has decided to let the case proceed despite arguments from X/Twitter’s legal team. The court found sufficient grounds to consider these verbal agreements as potentially legally binding. The central argument is that these promises, including one that employees as of January 1, 2023, would receive a part of their annual bonuses, formed a contractual obligation under California law.
This interpretation counters X/Twitter’s legal stance that such verbal agreements, especially those made by former management, are not enforceable under Texas law, where Musk’s lawyers argued the case should be tried. However, Judge Chhabria’s ruling confirmed that the case falls under California jurisdiction and that the claims for dismissal under both states’ laws failed.
The total amount in question, initially exceeding $5 million, could be much higher, with the plaintiff’s attorney Shannon Liss-Riordan suggesting it amounts to “tens of millions of dollars.” She estimates that a couple of thousand employees would have been eligible for these bonuses. According to the lawsuit, management had promised to pay employees 50 percent of their 2022 annual bonus if they remained with the company through Musk’s takeover, finalized in October 2022. However, these payments, typically distributed in the first quarter of the following year, were never paid to employees.
Schobinger’s resignation in May was attributed to X’s failure to fulfill various promises, including the payment of the 2022 bonuses. This case adds to a series of legal challenges faced by Musk’s X/Twitter, encompassing claims of missed payments on rent, other services, and disputes following layoffs and resignations post-takeover.
Read more at Business Insider here.
Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship.