Lawsuit: Elon Musk’s X/Twitter Welshed on Promise to Pay Employee Retention Bonuses

According to a class action lawsuit filed against Elon Musk’s X/Twitter, the company refused to pay bonuses it promised to employees to keep them from seeking new jobs after Musk’s takeover. The company has argued that oral promises of bonuses made to employees are not legally binding, calling into question just how far Silicon Valley can push its legal obligations to workers.

Courthouse News Services reports that the responsibility of companies to pay bonuses they promise to employees is being tested in a recent class action lawsuit against Twitter, now known as X. The lawsuit arose following Elon Musk’s acquisition of the company in October 2022. Central to the controversy are the oral promises made to employees about bonuses for staying with the company during the transition period.

Initially, these promises were made by executives, including the former chief financial officer, who assured employees of receiving bonuses at “fifty percent of target.” These assurances, according to the lawsuit filed by Mark Schobinger, a former senior director of compensation at Twitter, played a significant role in employees’ decisions to remain at the company. Corporate employees, especially in the competitive Silicon Valley economy, are more likely to stay through a transition period when they know they will receive a bonus for not jumping ship.

However, Twitter’s legal stance, as presented by attorney Eric Meckley, is that these oral commitments do not hold legal weight. During a hearing at the U.S. District Court for the Northern District of California, Meckley emphasized that there was no written or signed agreement regarding these bonuses. Twitter’s argument hinges on the principle that verbal promises cannot legally modify the terms of their existing employment contracts.

On the other side, Schobinger’s legal representation, Shannon Liss-Riordan, contends that these oral promises constitute a reasonable basis for employees to expect the bonuses. The lawsuit leverages the doctrine of promissory estoppel, which deals with the reliability of a promise made by one party to another, especially when the latter party has acted based on that promise.

The case is Schobinger v. Twitter, 3:23-cv-3007, in the United State District Court Northern District of California San Francisco Division.

Read more at Courthouse News Services here.

Lucas Nolan is a reporter for Breitbart News covering issues of free speech and online censorship.