Elon Musk, the billionaire entrepreneur and owner of X (formerly known as Twitter), has once again found himself at the center of a high-stakes legal and political storm. On August 22 and 23, 2025, multiple news outlets reported that Musk and his social media platform X had reached a tentative settlement agreement in a massive $500 million class action lawsuit brought by former Twitter employees. The suit, which has been in the works for years, accused Musk and his company of failing to pay out proper severance to thousands of workers laid off after his dramatic 2022 takeover of the platform.
The legal saga traces back to October 2022, when Musk officially acquired Twitter in a blockbuster $44 billion deal. Almost immediately, he slashed more than 6,000 jobs—over 70% of the workforce—gutting entire departments such as content moderation and communications. According to The Guardian, laid-off employees, led by Courtney McMillian and Ronald Cooper, alleged that Musk and X violated the company’s own severance policy, which promised at least two months of base pay plus an additional week for every year of service. Instead, many staffers received only a single month’s pay, and some got nothing at all.
In the words of the former staffers’ lawsuit, the company “failed to appropriately pay thousands of workers severance after conducting mass layoffs.” These claims, initially dismissed by a U.S. district judge in July 2024, were revived on appeal. The legal wrangling culminated this week in a joint court filing that both sides had reached a settlement agreement in principle, requesting that a scheduled September 17 hearing be postponed to allow time to finalize the deal.
While the exact terms of the settlement remain under wraps, the original lawsuit sought $500 million in owed severance. The court documents filed this week state that the proposed agreement will “include a proposed distribution of funds to the members of the settlements class(es),” and that if approved, “the agreement will resolve the litigation in its entirety and moot this appeal.” According to Yahoo News, the tentative settlement marks a significant turnaround for the plaintiffs, whose case was previously on the brink of collapse after the district court’s initial dismissal.
The mass layoffs and subsequent legal battles have not only put Musk under the legal microscope but have also had ripple effects throughout the tech industry. After Musk’s acquisition, the sudden and sweeping job cuts shocked Silicon Valley and beyond. The layoffs were so extensive that, as The Guardian reported, almost the entirety of some departments vanished overnight. Many observers saw Musk’s actions at X as a preview of his approach to “government efficiency,” with some drawing parallels to his later proposals for gutting government agencies.
But the legal headaches for Musk don’t end with this class action. Other lawsuits are still pending, including a separate case brought by former Twitter executives such as ex-CEO Parag Agrawal, who allege that Musk failed to pay them $128 million in severance. The controversies surrounding Musk’s management of X have only added to his reputation as a polarizing figure—both admired for his boldness and criticized for his disregard of established norms and contracts.
Meanwhile, Musk has been embroiled in a series of political and social controversies over the past two months. According to Hindustan Times, Musk recently quit an advisory role in the Trump administration after a public spat over a controversial piece of legislation dubbed the “Big Beautiful Bill.” The fallout saw Musk firing off a series of fiery social media posts, stoking rumors of a rift with former President Donald Trump. In one post, Musk lambasted the bill and, by extension, Trump’s team, leading to speculation about a permanent split between the two high-profile figures.
Trump, for his part, responded with a characteristically cryptic message: “For now, I won’t be…”—leaving the rest to the imagination of his millions of followers. The back-and-forth has fueled endless speculation about the future of Musk’s political alliances and his role in the ongoing election lottery scandal, another legal headache that has surfaced around the billionaire in recent weeks.
All these dramas have played out in the public eye, with Musk often taking to X to air his grievances and rally his supporters. Just four months ago, as reported by Hindustan Times, Musk confronted what he called “Soros operatives” at a rally, slamming what he described as attacks on Tesla and a broader left-wing agenda. His combative style—equal parts showman and disruptor—has made him a lightning rod for both admiration and criticism.
But for the thousands of former Twitter employees waiting for long-overdue severance, the tentative settlement offers a glimmer of hope. According to the class action lawsuit, the severance policy at X promised two months of base pay plus a week for every year of service. Instead, many received only a month, and some nothing at all. The uncertainty over the final payout remains, but the court filing this week signals that a resolution is finally within reach.
Legal experts note that the case could set a precedent for how tech giants handle mass layoffs and employee contracts in the future. The sheer scale of the layoffs—over 70% of the workforce—was unprecedented, and the ensuing backlash has forced companies across the sector to revisit their own severance and layoff policies. As The Guardian pointed out, Musk’s $44 billion acquisition of Twitter remains one of the most contentious deals in recent tech history, not just for its financial implications but for the human cost of its aftermath.
As the parties work to finalize the settlement, attention will inevitably turn to whether the agreement delivers meaningful compensation to the affected employees—and whether Musk’s other legal battles will follow a similar path. The outcome of the class action could influence the ongoing lawsuits brought by former executives and the broader debate over workers’ rights in the volatile tech sector.
For now, the tentative deal marks a rare moment of closure in a saga that has gripped the tech world for nearly three years. Whether it’s enough to repair the reputational damage to Musk and X remains to be seen, but for thousands of former employees, it’s a long-awaited step toward justice.
