In a dramatic turn of events, Twitter, now rebranded as X under Elon Musk‘s ownership since October 2022, is embroiled in a legal battle over allegations of failing to deliver promised employee bonuses. The social media giant, once a microblogging site, has undergone significant changes, including a rebrand to X and the introduction of features like long video publishing.
One of Musk’s first actions as the owner was the dismissal of then-CEO Parag Agrawal and a subsequent wave of employee layoffs and resignations across all levels. Now, over a year after the acquisition, X faces a court battle concerning the non-payment of employee bonuses initially promised after the change in ownership.
According to a report by CNN, a federal judge ruled on Friday that X must face a lawsuit over allegations of reneging on promised bonuses to its staff, rejecting X’s attempt to dismiss the case.
The lawsuit, initiated by Mark Schobinger, a former senior director of compensation at X, seeks class action status for current and former employees who did not receive their 2022 bonuses. The complaint, filed in June 2023, accuses X of failing to fulfill promises of annual bonuses made both before and after Elon Musk’s acquisition in October 2022.
US District Judge Vince Chhabria, in his ruling, stated that “Twitter’s offer to pay him a bonus in return became a binding contract under California law.” Despite X’s attempt to dismiss the case, arguing that an oral promise should not be legally binding and proposing a change of venue to Texas, the judge asserted that California law would apply in matters concerning the enforceability of a contract.
The lawsuit sheds light on concerns raised by employees about the fate of their compensation and annual bonuses following Musk’s acquisition announcement in April. Company executives had assured employees in the months leading up to the acquisition that 2022 bonuses would be paid out at 50 percent of the target. However, the lawsuit alleges that X failed to honor this commitment.
Mark Schobinger, who left X in May, attributed his departure to “Twitter’s reneging on various promises it had made to employees, including its failure to pay promised bonuses,” as stated in the complaint.
As the legal battle unfolds, X, which has dismantled its public relations team, has yet to respond to CNN’s request for comment on the matter. The case marks another chapter in the transformation of the social media platform under Elon Musk’s ownership.
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