Elon Musk’s social media company, X Corp, has taken a dramatic turn in a long-running legal battle with former Twitter employees, agreeing to a tentative settlement over severance payments that has captured the attention of Silicon Valley and beyond. The agreement, reached in the week of August 18-22, 2025, follows years of contentious litigation after Musk’s 2022 acquisition of Twitter and subsequent rebranding of the platform as X, according to filings reported by Reuters, BBC, and The New York Times.
The saga began in 2022, when Musk bought Twitter for $44 billion and swiftly moved to cut costs by firing approximately 6,000 employees—more than half the company’s workforce. This sweeping layoff reduced Twitter’s staff from about 7,500 to fewer than 2,000, a move that sent shockwaves through the tech industry and left thousands of workers abruptly unemployed. As detailed in court documents, the layoffs were not just about numbers; they set off a cascade of legal challenges centered on severance pay that Musk’s acquisition agreement was supposed to guarantee.
At the heart of the dispute was a 2019 severance plan, which, according to the class-action lawsuit filed in California, guaranteed most Twitter workers at least two months of their base pay plus one week for each full year of service if they were laid off. Senior employees were entitled to even more—six months of base pay, with some, like former head of total rewards Courtney McMillian, promised six and a half months’ pay, six months of health insurance coverage, and any bonuses. However, as the lawsuit alleged, Twitter under Musk’s leadership offered most laid-off employees only a single month’s pay, and many received nothing at all.
McMillian and Ronald Cooper, a former operations manager, led the charge in the class-action suit, seeking $500 million on behalf of themselves and their colleagues. The suit argued that Twitter’s merger agreement explicitly stated that severance and other benefits would be honored for up to a year after the merger—a promise made, the plaintiffs claimed, to prevent a mass resignation that could have jeopardized the entire deal. Yet, after the acquisition, many employees were left in the dark. The company reportedly shut down internal communication channels like Slack and email, making it difficult for workers to seek information or coordinate about their benefits. When employees asked for clarification, they were directed to Musk’s personal X account and the “All In” podcast, hosted by his friends Jason Calacanis and David Sacks, for updates—a move that many saw as dismissive.
“I was informed that Musk and the company decided to deny employees their severance after reviewing how much it would cost the company,” McMillian stated in the lawsuit, as reported by BBC. Cooper’s experience was similar; though his severance package was supposed to include six months and one week of pay, six months of health insurance, and any owed bonuses, he was also offered just one month’s pay. The suit further claimed that some employees received nothing at all, deepening the sense of betrayal among the former staff.
Legal wrangling ensued. In July 2024, a federal judge in San Francisco dismissed the employees’ lawsuit, but McMillian and Cooper quickly appealed to the 9th U.S. Court of Appeals. Oral arguments were scheduled for September 17, 2025, but in a surprise twist, both sides filed a joint request on August 20, 2025, asking the court to delay the hearing as they worked to finalize a settlement. The financial terms of the deal remain undisclosed, but the agreement would resolve the class-action lawsuit and bring closure to thousands of former employees who have been fighting for their severance for nearly three years.
This settlement isn’t the only legal headache Musk’s X Corp has faced over the layoffs. According to The New York Times, the company also reached a separate settlement with more than 2,000 former employees who were pursuing their claims through arbitration. This agreement, the details of which have not been made public, is said to cover almost all of the severance payments for those involved, including interest. However, not all disputes have been resolved. Legal battles continue between X Corp and former senior Twitter executives over $128 million in severance payments, a sign that the company’s post-acquisition turbulence is not entirely in the rearview mirror.
The lawsuits and settlements have cast a spotlight on the high-stakes world of tech mergers and the promises companies make to their employees. The class-action suit argued that the severance plan was not just a matter of contract, but a crucial part of the merger’s success. “Those promises were made to prevent a mass resignation that would threaten the merger deal,” the lawsuit stated, underscoring the delicate balance between business strategy and employee trust in Silicon Valley’s fast-moving environment.
Throughout the ordeal, communication—or the lack thereof—became a central issue. After the layoffs, many former employees found themselves unable to access basic information about their benefits. The decision to shut down Slack and email channels left them isolated, and the company’s suggestion to follow Musk’s social media musings for updates struck many as tone-deaf. Lawyers for both the former employees and X Corp have declined to comment on the settlement, and Musk himself has yet to address the agreement publicly on his X platform.
The impact of Musk’s cost-cutting measures at Twitter—now X—goes beyond the immediate financial losses suffered by former employees. The layoffs and subsequent legal battles have fueled ongoing debates about the responsibilities of tech giants to their workers, especially in the context of high-profile mergers and acquisitions. For many in the industry, the case serves as a cautionary tale about the importance of honoring commitments and the potential fallout when those promises are perceived to be broken.
As the dust settles on this chapter of X Corp’s tumultuous history, thousands of former Twitter employees may finally see some resolution to their long fight for severance pay. While the exact terms of the settlement remain under wraps, the agreement marks a significant step toward closure for those affected by one of Silicon Valley’s most dramatic corporate shake-ups in recent memory.
For now, the world watches to see how X Corp navigates the aftermath of this legal storm—and whether the lessons learned will shape the future of employee relations in the tech industry.
