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Twitter Inc., owned and operated by Elon Musk’s recently minted X Corp., faces legal challenges in and out of court regarding its mass layoffs last fall. Two former workers have filed class-action complaints, and approximately 2,000 ex-employees are pursuing claims in individual arbitration. The social media company is facing challenges because many, but not all, of its former workers signed binding arbitration agreements. Twitter included these contracts in the documents given to job applicants who were offered a position. The outcomes of these legal fights will test the company’s strategy for dealing with the fallout of its massive and sudden cuts to Twitter’s workforce, particularly its handling of worker severance packages.
Musk fired about half of Twitter’s 7,500 workers in November following his $44 billion purchase of the company. Layoffs continued into 2023, reportedly bringing the company’s headcount under 2,000. The layoffs and subsequent legal action are just part of the chaos that’s engulfed Twitter since Musk took over in October. The company also rolled back its expansive employee telework policy, called on workers to pledge to remain at an “extremely hardcore” Twitter or quit, and eliminated the blue verification check marks from users’ accounts unless they pay for them.
Prominent plaintiffs’ attorney Shannon Liss-Riordan of Lichten & Liss-Riordan PC was the first to strike at the Musk-owned Twitter, filing a lawsuit on the eve of the big November layoff alleging that the company failed to provide the legally required notices before mass termination. Although Twitter pushed that case out of court, Liss-Riordan has filed lawsuits. She added two more class-action complaints this month, bringing her pending court cases against the company to eight.
Liss-Riordan said her firm also represents about 1,700 ex-Twitter workers in a mass-arbitration campaign against the company. “It is a lot more work than traditional class actions,” she said of the mass-arbitration approach. Liss-Riordan has 15 years of experience turning to large-scale arbitration efforts when her clients are locked out of court, staffing up and building expertise while mounting campaigns against trucking companies, gig economy firms, strip clubs, and other businesses, she said.
Outten & Golden LLP; Kamerman, Uncyk, Soniker & Klein PC; and the Bloom Firm PC each represent groups of about 100 former employees pursuing individual arbitrations against the company, according to attorneys at those firms. However, the company’s approach to arbitration has been controversial, with some criticizing the use of these agreements to limit workers’ rights to seek redress for workplace grievances.
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Twitter’s handling of worker severance packages has also been a contention. While some workers received generous severance packages, others reportedly received little to nothing. The legal outcomes of these cases will test the company’s ability to handle the fallout from its massive layoffs. They may set a precedent for how other tech companies handle similar situations in the future.
In addition to the legal challenges, Twitter has faced criticism for its recent policy changes, including the rollback of its expansive employee telework policy, called on workers to sign a pledge to remain at an “extremely hardcore” Twitter or quit, and eliminated the blue verification check marks from users’ accounts unless they pay for them.
As the legal battles continue, it remains to be seen how Twitter will navigate the fallout from its mass layoffs and whether the company’s approach to arbitration and severance packages will withstand legal scrutiny.
