Elon Musk’s social media platform X, formerly known as Twitter, has reached a tentative settlement with thousands of former employees who alleged they were denied severance pay after Musk’s dramatic takeover and restructuring of the company in 2022. The agreement, disclosed in a joint court filing on Wednesday, August 20, 2025, marks a major chapter in the ongoing saga of Musk’s controversial leadership of the platform and his aggressive approach to cost-cutting and workforce management.
The class-action lawsuit, filed by former Twitter staffers Courtney McMillian and Ronald Cooper, sought $500 million in unpaid severance for themselves and approximately 6,000 other employees who lost their jobs as Musk slashed more than half of Twitter’s workforce after acquiring the company for $44 billion. According to documents filed with the U.S. Court of Appeals in San Francisco, both parties have agreed in principle to the settlement and requested that a scheduled September 17 hearing be postponed so they can finalize the paperwork. The court granted this request, pausing proceedings as the details of the agreement are ironed out.
"The parties have reached a settlement agreement in principle and began negotiating the terms of a long form settlement agreement," the court filing stated, as reported by BBC and CNN. While the exact terms remain confidential, the proposed deal aims to resolve the litigation in its entirety, potentially bringing closure to a dispute that has cast a long shadow over Musk’s stewardship of the company.
The roots of the lawsuit stretch back to Musk’s whirlwind acquisition of Twitter in late 2022. Upon taking the helm, Musk quickly moved to rebrand the platform as X and initiated sweeping layoffs, eliminating entire teams dedicated to trust and safety, human rights, accessibility, and media. According to BBC, these actions mirrored a broader trend across the tech sector, as companies like Facebook, Google, and Microsoft also shed tens of thousands of jobs in the wake of pandemic-era hiring sprees.
But what set Musk’s approach apart, according to the lawsuit, was the alleged failure to honor Twitter’s existing severance plan. The 2019 policy guaranteed most employees at least two months of base salary plus an additional week of pay for each full year of service if laid off. Senior staff, like McMillian—who had served as Twitter’s Head of General Rewards—were promised six months of base pay. Instead, many workers received at most one month’s compensation, and some got nothing at all. As CNN reported, these shortfalls became the crux of the legal challenge.
The dispute has seen its share of legal twists and turns. In July 2024, a federal judge dismissed the lawsuit, but McMillian and Cooper appealed, pushing the case to the Ninth Circuit Court of Appeals. With the September hearing looming, the parties opted for settlement rather than risk prolonged litigation and further public scrutiny. As noted by BBC, "Details of the agreement are not yet public and will require the courts' approval."
For Musk, the settlement is more than just a legal maneuver—it’s a signal that X is ready to move past the turbulence of its early Musk era. The company’s legal team has not commented publicly, nor have the attorneys representing the former employees. Yet, as Mezha observed, the agreement helps X avoid the risks and distractions of a protracted court battle, allowing it to focus on its reorganization and ambitious future plans. Musk has made no secret of his desire to transform X into an all-in-one platform, with features ranging from financial services and trading to digital wallets, aiming to rival the likes of WeChat.
Still, the shadow of Musk’s cost-cutting strategy looms large. The layoffs at Twitter were among the first in a wave of retrenchments that swept through Silicon Valley in the years following the early COVID-19 boom. Rank-and-file workers were often the first to go, and entire departments—such as those responsible for making the platform accessible to people with disabilities—were wiped out. According to BBC and Mezha, these decisions not only saved money but also set a precedent for how Musk would approach workforce management in other arenas.
Indeed, Musk’s methods at Twitter served as a template for his brief but impactful stint as head of President Donald Trump’s Department of Government Efficiency (DOGE) in 2025. Under his leadership, DOGE cut tens of thousands of federal jobs, echoing the mass layoffs at Twitter. An email sent to federal workers in 2025, offering a "deferred resignation" with pay through September, bore the title "Fork in the Road"—a phrase Musk had previously used in a similar message to Twitter employees in 2022. As noted by AP and BBC, these parallels have not gone unnoticed, with some observers seeing Musk’s approach as a harbinger of broader trends in both tech and government.
The legal battles are not entirely over for Musk and X. Other lawsuits stemming from the Twitter takeover, including one brought by former CEO Parag Agrawal and other top executives, remain pending in courts in Delaware and California. The outcomes of these cases could further influence how severance and compensation are handled in future tech industry shakeups.
For the thousands of former employees caught in the crossfire, the tentative settlement offers at least some measure of closure. While the specific payouts remain undisclosed and subject to court approval, the agreement is expected to resolve the core dispute and spare both sides from the uncertainty of a trial. As Mezha pointed out, the fact of the agreement itself may shape future negotiations over compensation in tech, especially as companies continue to grapple with the fallout of rapid expansion and abrupt contractions.
In the broader context, Musk’s handling of the Twitter layoffs—and now the settlement—reflects the high-stakes, high-profile nature of leadership in today’s tech world. The episode has sparked debates about corporate responsibility, the treatment of employees during mergers and acquisitions, and the ripple effects of executive decisions on workers’ lives. As the dust settles, all eyes remain on Musk and X, watching to see whether this chapter marks the beginning of a new era—or merely the end of one particularly tumultuous saga.
