“X” Didn’t Pay Severance. Now It’s Facing 2,200 Cases – and Big Fees
motherjones.comWhen do they start straight up garnishing X's bank accounts? This behavior is so shitty, indefensible and beyond absurd. I think we need stronger laws that force billionaires to pay when they think the rules just don't apply to them - it's clear they often feel that the sheer expense of the legal system is often a deterrent for poorer folks to get what they are owed.
I hope all these folks get their severance, and hopefully with interest, legal fees and penalties.
There needs to be criminal consequences for company officeholders.
If you are wilfully withholding pay then it should be mandatory jail time.
Legislation is underway here in Australia for such an approach after 7/11 et al systemically withheld pay knowing that the financial consequences weren't going to personally affect them.
We don't have debtors prisons. While there are specific cases like this where some jail time would seem just, overall it's a negative for society. It's a civil matter for a reason. I do think such cases should rip the corporate veil to shreds though, and the billionaires would have to pay up.
> We don't have debtors prisons.
No one's suggesting such.
We have plenty of disputed behavior and harms that are within the purview of civil courts, and then more egregious versions that are crimes. IMO, withholding significant pay that you have the ability to pay and is unambiguously contractually owed causes pretty serious harm, and society has strong reasons to criminalize this conduct.
Accepting services from someone while having no intent to honor the contract, hoping that disproportionate resources will prevent them from enforcing the contract "feels" like fraud: so let's codify it.
Exactly: we already have plenty of areas where a civil case can turn into a criminal one like fraud (just ask Elizabeth Holmes).
Saying "we'll pay you severance" with 0 intention to do so sure sounds like fraud to me.
Wage theft and fraud are crimes that state attorneys general do prosecute.
https://www.atg.wa.gov/news/news-releases/attorney-general-f...
Not paying severance is not wage theft. Severance was not included in Twitter's employee contract.
The kind of technical loophole that America's law system seems to be riddled with (and the "akshually" crowd kinda loves to play with)...
It's not technically wage theft, in spirit it's pretty similar to wage theft since the termination of employment contracts had severance payment as a clause.
Potato, potato.
> Severance was not included in Twitter's employee contract.
It likely was once promises were made to continue to pay severance for at least one year, and employees relied upon this promise (instead of immediately seeking to work elsewhere).
Severance is typically not "unambiguously contractually owed." The fact that many here would want company executives imprisoned for not offering goodwill boggles my mind.
No, they should be imprisoned for misleading, by defrauding. The "goodwill" was promised, in legal documents, and not fulfilled, that same goodwill is a major leverage against the employee, if such a promise was made you will take life decisions differently than if there was no such promise, when that promise is broken and your life is affected (as in: you'd move somewhere else and try a different venture, now you can't because you need to look for a job right now) then it's a fraud and a billionaire should really suffer just due to the power imbalance in the equation.
The fact that you are defending this practice makes me almost want to ask you how do their boots taste like...
It may not be owed but it was promised, presumably in legally enforceable documents that would have been used if the former employees broke the terms of severance.
> overall it's a negative for society
I would disagree.
We shouldn't allow criminal behaviour to be tolerated just because it's white collar.
And the whole point of laws is to protect the vulnerable in our society which definitely includes the innocent employees who are being harmed for doing nothing other than working for Twitter/X.
How is it criminal behavior to not offer severance, which 99% of companies don't offer? Not offering severance has nothing to do with criminal behavior. If so, 99% of small businesses owners would be imprisoned in your world.
Why do you keep posting stuff like this, when people are very clearly not arguing this?
Nobody believes that executives should be jailed for not offering severance - that's not what is being discussed. But if part of a termination agreement includes a guarantee of severance (and these termination agreements basically always include responsibilities for the employee to uphold in order to receive that sentence), and then you just decide not to pay it, and it looks like you basically never had the intent to pay it, that looks a lot more like fraud.
The purchase contract had language in that that current twitter employees would be paid out severance via the then current twitter standards. He signed said contract.
He also publicly promised severance to all employees he laid off, when laying them off, then tried to back out of it after the fact.
So we have both contract law and public statements that he owes severance to thousands of people, and now is just refusing to pay. What kind of behavior is that?
You're responding to something not in the parent comment.
"Protect the vulnerable" there probably means enforcing contractual obligations to pay severance that was promised, not to offer severance in the first place.
Elon? Is that you?
Until corporate personhood means Twitter/X can be thrown in jail, I don't think debtors prisons are relevant.
> When do they start straight up garnishing X’s bank accounts?
Well, they have to lose the cases before people can start enforcing judgements.
X is not paying their bills either from the sounds of it. Musk should be on the streets already.
Well, yeah, both the Connecticut case that is the primary reason for this article and the generally similar (but somewhat broader in terms of the kinds of wrongs raised) San Francisco case are not just about the initial violations by Twitter, but Twitter’s alleged failure to pay the arbitration fees required by the arbitrator they have required people to use in place of going to court, which is claimed to have stalled all the arbitration cases (and which is the basis for bringing the dispute to court, despite the binding arbitration agreement which would normally foreclose that.)
Is it possible for someone else to fund the arbitration fees so they can proceed without Twitter’s participation? Similar to how Peter Thiel financed the destruction of Gawker via Bollea v. Gawker. Ideally, you get to a judgement as quickly as possible (by any means necessary) before Twitter’s insolvency, even if someone else has to front whatever Twitter was in the hook for to proceed with arbitration.
Arguably Twitter's refusal to honor the arbitration agreement should just invalidate the agreement and allow these to proceed as a class action.
Strongly agree, but if it’s faster to cough up $3M to force arbitration to start while the enterprise still has value to extract vs waiting for a court to force it because of the bad faith actions of stalling, leaving you with potentially no enterprise value to extract when a court renders a judgement, that might make the path forward more obvious.
Regardless, I hope whatever actions are taken make the plaintiffs whole.
Of course when the shoe is on the billionaires foot, the workers are immoral: https://www.cnbc.com/amp/2023/05/16/elon-musk-work-from-home...
Our culture is joke, bleating about how free we are. Some freedom from a mathematical minority would be nice.
We need term limits on all forms of social influence.
In general, there should be prompt payment legislation.
My family used to be in food processing. The grocers (except Walmart, which is one of the reasons they can get lower prices), will straight up just not pay by the date specified in the contract and will make you hound them.
This is just contract law. When I managed vendor contracts I had to specify the terms of payment (net30, etc) and penalty for late (2%, etc).
So there’s already legislation that enforces contracts. I’m not sure how you would make a law that was helpful to force prompt payment clauses specifically.
It’s important to only accept terms that you want. And if your customers keep paying late, then collect your penalty charges and negotiate for higher penalties next time.
Most vendors will pay on the absolute last day possible so if the terms are net30, they will pay on the 30th day.
My primary point is that there should be much, much quicker resolution of these cases, and when the facts aren't in doubt (e.g. contract says I delivered X, and if I did, I have the right to garnish wages/bank accounts/etc.) there should be a much faster pace to start requiring that the deadbeat pays up.
Taking the Twitter case, a lot of these folks were laid off nearly a year ago. Why is this still going on? Is there anything that could be more cut-and-dry: they were promised severance, in writing, in their termination agreements, and they haven't received it. As far as I'm aware there are 0 facts that are actually in dispute (save some of the highest up execs that were basically fraudulently fired "for cause", but that's a different story).
If Twitter wants to continue not paying them, they should have to file for bankruptcy, otherwise the laid off workers should get to take it straight from the Twitter bank accounts at this point.
Power imbalances still exist. The problem is, if I have a contract with Google that is 80% of my small business revenue and they pay me late, what recourse do I have? It's a constant negotiation of who has the willingness to walk away. If they pay me late, I'll likely not complain because the money is big for me. I don't want to rock the boat.
Now if the gov told Google they could receive a massive fine for paying late, they would stop doing it.
> I hope all these folks get their severance, and hopefully with interest, legal fees and penalties.
I wonder what percentage the legal team will take. I doubt this is happening pro bono.
Sounds like a good argument for Twitter/X to have to pay the legal fees; the laid off employees should get their full severance, and in order for that to happen, they shouldn't have to spend it on the lawyers
And it certainly should not be pro bono.
It is a serious amount of work to take people to work, requiring years of education and a ton of skill. Particularly when the opposition has pockets as deep as X/Twitter/Musk.
Hopefully there are large damages that go to those who have been wronged in addition to restitution and repayment of the legal fees
I can not understand why some body like Musk who has such as easy ability to do the right thing would instead choose a far loser costly and damaging right. It's absolutely idiotic, absolutely damaging to the word as a whole, and fuck Musk. Only the worst sort of shit bag steals money at this level. If somebody steals baby formula out of desperation, they will feel far more drastic legal consequences than Musk will.
A judgment would include legal fees, and depending on the state, X might be on the hook for triple damages. Plenty of money to go around, they just need to win in court.
I'm guessing that lawyers are perhaps the one group that Musk pays on time, so he doesn't have to pay up elsewhere.
A certain former president has shown that you don't even need to do that!
Elon: I want X to be the next network people trust to transfer money
Also Elon: Let’s not pay any of Twitter’s bills
When a large corporation or wealthy person doesn't pay bills on time it's called managing cashflow.
When a peon does it he's a deadbeat.
It’s basically a scumbag move to try to wear the former employees down. I imagine Twitter will just stonewall for as long as they possibly can.
What real consequences could the officers of the company actually face that would encourage them to behave like adults?
How about prison time for executives who use the legal system in bad faith? Refusing to pay is not permissible.
Sorry, wage theft is done by people in corporations, therefore it doesn't count as real theft, so going to jail for it is almost impossible.
If you wanna get away with a crime, do it in a company.
It need not be that way, as Sarbanes-Oxley demonstrates.
Agreed, it doesn't have to be that way, but for most crimes, it's currently that way. The kinds of things that would get an individual sent to jail usually get a corporation hit with a fine.
I have this vague recollection that back in the 90's, some culture jamming collective tried to do adbusting defacement of billboards as an LLC, to avoid jail time.
Might have been a CrimethInc. cell, I don't recall.
This is America. Wage theft rarely gets punished, if ever.
Give the plaintiffs significant shares in the company, transferred directly as a flat percentage from the other shareholders.
You will find it very hard to reach C-suite level at any publicly company where you cost your shareholders that way. And since it would constitute a violation of fiduciary duty, executives would be able to defend themselves when they take action to avoid that happening.
Given that it is a private company, would those share be meaningfully valuable? Plenty of ways to screw minority shareholders in private markets.
In some places, and _generally_ California is one of them, certain executives and board members can be held personally liable for payroll issues.
Of course there must be a legal case, and enough money can buy some great attorneys, but there are laws that enable payroll disputes to pierce the corporate veil.
I think lawyers will be happy to push the issue forever. There's a big payout down the line here.
Meta question:
Does anyone know why negative Twitter/X stories tend to drop off the front page so quickly.
It is now ranked 65 despite having a lot of votes in such a short time period.
Just wondering if it's because it is heavily flagged or if the mods are intervening like they have in the past ?
Dang has specifically said recently that Musk content is hit with a penalty as it has a habit of taking over and discourse around these articles falls.
It went from top of page 1 to page 3 by the time I came back to read the comments (less than an hour later). It's definitely someone playing games.
Not on the same case, but a previous HN discussion on the general subject of large volumes of arbitration cases being a kind of double-edged sword for the companies that originally decided to contractually compel arbitration: https://news.ycombinator.com/item?id=22798118
This reminds me, did Parag and other in the top management get their money? I didn't see any update on that.
Supposedly, they were dismissed for cause minutes before they would have been awarded millions in severance when the sale closed. I’m fairly sure I recall that Parag and colleagues sued because the dismissal for cause was an obvious stretch of the imagination.
Musk bragged about doing that which will probably be an exhibit in their lawsuit.
I think they'll get everything they want. All they need to do is enter discovery and he'll have to fold.
Any one know the status of this lawsuit?
Every shareholder got their money at the buyout price: $54.20 per share.
The parent post is referring to the "golden parachute" execs are entitled to when fired by new ownership in situations like this. This is different from getting the $54.20 for shareholders. The purpose of these payments are to help align the incentives of leadership with shareholders so they cooperate in getting these complex deals closed.
I also haven't heard any updates.
That's not what the parent comment was referring to. Senior execs had golden parachutes they were due if they were terminated.
We’re not even talking about golden parachutes. Literally every employee had a severance package specified and agreed to in the sales contract. Musk straight up violated the agreement the first week.
The amount is negligible to the world’s richest man. He just violated it because he could.
http://www.businesstoday.in/technology/news/story/elon-musk-...
I was referring to the GP argument that was specifically asking about exec payouts, not the broader point of the article that Musk is just stiffing these people just because he can.
Why don't the people who actually do the work get golden parachutes?
Because they don’t negotiate for it.
How did we get to this place that so much of our media landscape was centralized within one failing company on Market Street in San Francisco?
I have long held that Twitter should have been bought by a consortium of media companies and run as a market utility. It’s been the media internet’s comment section for long enough that the BBC, MSNBC, Sinclair and even OANN ought to have understood the value of sharing it.
Twitter always should have been an Internet protocol.
But we don’t make those anymore. Haven’t for a while. If we didn’t already have email, I doubt we could create it (and have it take off) today.
If we didn’t already have email, I doubt we could create it
Hell we've pretty much 'uncreated' email over the past decade. How many people do you know who don't get their email via Google or Microsoft? I used to work for a very large university. Back when I was there, there was a team of Unix greybeards hosting all of the Universities email off of a bunch of Solaris boxes. It worked pretty flawlessly, end when it didn't they knew how to fix it. Today it's all been handed over to Microsoft and when something doesn't work, the help desk can just shrug and say "nothing we can do, it's Microsoft"
Running your own email server in any practical meaning is more or less impossible.
Most of the world only got online and owned personal computers for the first time in the past decade through the meteoric spread of smartphones. Twitter was just there when they arrived and I suppose it was good enough. Twitter was also a famously mediocre implementation of a "great" idea but again, it was just at the right place at the right time.
Law doesn't apply to secret service special agents! Just like with Tesla/SpaceX, it'll get the help it needs from the government
https://www.businessinsider.com/elon-musk-tesla-spacex-secre...
Would any of the people defending Musk in this thread care to explain why? Every single time there's a thread about his abhorrent behaviour a percentage of people turn up to defend him, no matter what he's done. I honestly can't even begin to understand why.
Anybody who still uses X (formerly Twitter) is supporting their behavior
Using X/Twitter to catch up and interact with the numerous friends, artists, and other communities there doesn't mean you support wage theft and withholding severance. It's hard to break away from such a populated platform, especially if most of the people you care about go to different platforms or don't share the same motivation to move.
I imagine GP is not only using 'support' to mean 'condone'; GP is using 'support' in its more literal sense, i.e. the users of the platform provide the means for the behaviour to continue by funding the company.
The world is shaded in more than black and white.
This line is a low-effort, cliché dismissal that does not engage the statement in a meaningful way.
The original statement is also low-effort and cliché, so why should a comment require more effort?
Because we should strive to improve discussions and pull them up to a higher level if possible. Especially on HN, where the comment section is actually useful instead of a cesspool of empty arguments and insults.
But saying "This line is a low-effort, cliché dismissal that does not engage the statement in a meaningful way" does none of the things you're hoping for, either.
A much better idea is to down vote and move on.
If I downvote a comment, how is the author to know why? If I want to promote thoughtful discussion on HN, downvoting without explaining why does absolutely nothing to serve that goal.
Not true, downvoted comments get dimmed and placed lower, so the majority of viewed comments will be higher quality.
It doesn't communicate anything to the author, true, but insulting them is still not going to get you any closer to your goal.
It's incredible just how comically bad the saga of Musk's acquisition of Twitter and his general fall from public grace has turned out. You really can't come up with this shit. Next thing you know, he's going to walk into a rake.
"X is not, in fact, gonna give it to ya"
Nice.
I hope the judge awards them all 3X what they were promised as a punitive measure.
I’m not an employment lawyer, but it seems these former employees have a decent shot. They will eventually win their severance in court. But will they ever be paid?
By the time they win, will “X” even exist in its current corporate form? Or will it have gone bankrupt, only to have its assets purchased, leaving the employees standing in line with all the other creditors.
Indeed, I wonder whether Elon Musk structured the deal with a heavy layer of debt precisely so that the firm could be taken through Chapter 11 and reorganized under a fresh cap table. It wouldn’t be the first time in corporate history that a leveraged buyout resulted in existing stakeholders getting screwed over.
Is he known for plotting financial exploits like that? He certainly isn’t playing to make friends, but I’m not sure we’ve seen that kind of thing out of him before.
I know having to say it’s sarcasm ruins the joke, but it’s so hard to tell on the internet sometimes. But… this is sarcasm, right?
Not sarcasm, he is a jerk but I am trying to figure whether it would be in character or not. It sounds more like a play from the “vulture capitalist” toolbox. Although I suppose it could fit with a vision of unburdening a company to allow rebuilding.
Check out the time he bailed out his brother and Solar City at the expense of Tesla shareholders. Definitely some sharp financial engineering type shenanigans going on in that deeply conflicted transaction.
I don't think X is going to go bankrupt any time soon, as I'm sure Musk can raise a billion dollars, which is what I understand the annual operating loss to be.
However, in the event that it did, the US has a waterfall payment structure. Secured creditors get paid first, then lawyers, then employee wages and taxes, then unsecured creditors, then shareholders.
I'll just add this to the endless list of evidence, that true capitalists like lil' musky over there really just want stuff for free and hence not pay for anything.
Is severance something that’s legally required?
When you promise it, sure.
https://www.shrm.org/resourcesandtools/legal-and-compliance/...
> X agreed to pay severance in employees' initial offer letters and later confirmed workers would receive severance at least as favorable during the post-merger period as they had under the old management. The severance plan entitled laid-off workers to at least two months of base salary, pro-rated performance bonuses as though all triggers for such bonuses had been hit, the cash value of any restricted stock units that would have vested within three months of separation, and a cash contribution for the continuation of health care coverage. Instead, the company paid two months of base salary to comply with the notice requirements of the federal Worker Adjustment and Retraining Notification (WARN) Act, plus one month of severance pay, according to court documents.
Heavily depends on locale and what the employment contract says.
https://en.m.wikipedia.org/wiki/Severance_package
But Musk did publicly promise severance, then didn’t deliver. That would almost certainly be breach of contract.
And also given that Twitter universally refused to pay severance in all markets, including those with mandatory severance, I suspect Twitter’s decision isn’t coming from a legally sound place.
Article is not clear. For instance:
> In October, shortly after taking Twitter’s reins, Musk laid off more than half of its employees, promising most at least two months’ salary plus a week’s pay for every year they’d worked at the firm.
Key word here is the severance was promised to “most”, not “all” employees. Was that how it went down? I dunno, the article doesn’t say. Now you’re saying that no one was paid severance (“universally refused to pay severance in all markets”). Seems like there’s a lot of uncertainty here.
The July 12th lawsuit has some choice quotes[0] on exactly what was said.
>38. Section 6.9 of the Merger Agreement provided that for one year following the closing of the merger, Twitter would continue to provide Plan participants with “Severance payments and benefits . . . no less favorable than” those provided under Twitter’s policies immediately prior to the merger.
> 39. The same day the Merger Agreement was announced, Twitter’s then-CEO, Parag Agrawal and its then-Chairman Bret Taylor met with all Twitter employees and informed them that Twitter would continue to provide the severance Plan benefits for at least one year following the change in company ownership.
>42. The Acquisition FAQs relied on the Merger Agreement and stated that “[t]he terms of the agreement specifically protect Tweep [Twitter employees] benefits, base salary, and bonus plans (short/long term incentive plans) so they cannot be negatively impacted for at least one year from the closing date.” The FAQ specifically stated that, “[i]n the event of a layoff, any employee whose job is impacted would be eligible for severance.”
That final sentence in 42 is pretty solid.
[0] https://variety.com/wp-content/uploads/2023/07/McMillian-v.-...
Note that Employees were not a party to the merger agreement. Does an acquisition FAQ bind the company? I believe the argument is that it was effectively an offer to employees to stick around, and employees who did so effectively accepted the offer, at the cost of other opportunities in the market, and hence this was a binding contract. This doesn't seem so solid to me.
> I believe the argument is that it was effectively an offer to employees to stick around, and employees who did so effectively accepted the offer, at the cost of other opportunities in the market, and hence this was a binding contract. This doesn't seem so solid to me.
That's established law, it's the only way to hold companies to any of their promises.
Promissory estoppel / detrimental reliance: https://en.wikipedia.org/wiki/Estoppel
So, another comment detailed other legal aspects, I'll tackle the "most" part. Even if no other contract exists, that means at least 50.1% of all laid off employees should receive some type of severance. Said severance can be anywhere from a penny to millions.
We don't know what went down. Musk could have actually paid 50.1% (or greater) employees severance. It doesn't matter, because in the U.S. you can sue anyone else for anything, illegal or not. I can sue you because your username sucks, for example. Oh and if you don't show up, I win a default judgement, so there is that.
Courts are a little more complicated than you are giving them credit for.
For example, federal courts can dismiss a case due to lack of standing in sua sponte (Frank v Gaos).
While you can file any sort of insanity, the courts are not beholden to just robotically follow though with it.
Not in most of the US, but as detailed in the article, telling people you're paying two months severence (presumably in writing no less) and then not paying it is likely a breach of contract law.
Don’t contracts have to be two sided ? Like a promise to donate no strings attached, and then not donating is no breach of contract. If there are strings attached to donation and the other side promises signs off on the strings, then you have a contract but it’s not a one sided donation.
Under at-will employment, merely continuing to work for an employer amounts to consideration. This is well established.
Giving up a large portion of your life to work for a company isn’t enough of a party to a contract in this regard? Someone could conceivably take this job over others, or not leave as early, if they have assurances of severance. It’s not a gift any more than paying someone for employment is a gift, so I don’t see how this has anything to do with charity.
That wasn't done in exchange for Elon Musk's severance offer. Existing employees when he took over were... already employees when he took over.
https://en.wikipedia.org/wiki/Estoppel
Detrimental reliance/promissory estoppel.
If an employee continues to work under a contract, relying upon a promise that is later broken...
Doesn't the WARN act require 60 days notice minimum (or 60 days worth of pay and vesting off all rewards in such period) in the case dog layoffs?
These lawsuits are about enforcing contract terms. In business, if you don't honor agreements you get sued (and lose).
> In business, if you don't honor agreements you get sued (and lose).
Unless you want future options with the person you are suing. Unless you need a reference. If you can afford it and if you are prepared to burn bridges.
Or, you don't want a public record of having previously sued a similar entity (e.g. employer, landlord).
He famously and publicly promised severance to all the employees he fired, as well as an incentive to get more of them to leave.
> Is severance something that’s legally required?
(1) In some jurisdictions, some amount of severance is legally required in some circumstances, but the count at issue here is all in US jurisdictions where I don’t think that applies (to severance narrowly; there’s been some conflation of pay during a no-duty employment period that was used to comply with state and/or federal WARN Act notice requirements as “severance”, and while full pay and benefits for that time is legally required, its not severance in the strict sense),
(2) In most US jurisdictions, there is no general legal mandate for severance, but severance that is embodied as a term in the employment contract or otherwise part of a legally binding commitment or promise is required, and these cases involve specific allegations of such contracted or otherwise bindingly-committed-to severance.
Classy
Somehow people are still trusting musk run companies? Especially with major public infrastructure stuff and government subsidies. What is the logic. He's backing out of all the promises and shown him self to be unreliable and vindictive but surely that won't happen to us?
The former employees who are suing for unpaid severance certainly aren't trusting anyone; that's why they're suing.
Surely there's a "change of control" clause in their contractuals?
Who do you think that clause would benefit and how?
Many employees stock options plans vest the options on change of control. All the ones I’ve had did.
What does that have to do with severance?
The severed employees likely had accelerated stock vesting the moment Elon took ownership.