Elon Musk’s X Faces Court Battle Over Alleged Withholding of Promised Staff Bonuses

A federal judge has ruled that X, formerly known as Twitter, must proceed to face a lawsuit accusing the company of reneging on promised bonuses for its staff after being acquired by billionaire Elon Musk in October 2022. The judge dismissed X’s motion to dismiss the case, allowing the lawsuit to move forward.

Employees of X filed the lawsuit in June 2023, alleging that the company failed to fulfill commitments to pay annual bonuses, despite executives’ assurances both before and after the acquisition. Mark Schobinger, a former senior director of compensation at X, initiated the lawsuit seeking class action status on behalf of former and current employees who did not receive their 2022 bonuses.

U.S. District Judge Vince Chhabria, in a ruling on Friday, deemed Schobinger’s case plausible, stating, “Twitter’s offer to pay him a bonus in return became a binding contract under California law.” X, which no longer maintains a public relations team, did not respond to CNN’s request for comment.

X, in its motion to dismiss, argued that an oral promise should not be legally binding and suggested that the case should be heard in Texas. However, Judge Chhabria asserted that California law applies to matters questioning the enforceability of a contract.

The June complaint highlighted that concerns were raised by many employees about the fate of their compensation and annual bonuses following Musk’s announcement of the acquisition in April. Leading up to the acquisition’s completion, X executives repeatedly assured employees that 2022 bonuses would be paid at 50% of the target, as per the complaint. Despite these promises, the lawsuit alleges that X did not fulfill its commitment to pay the bonuses. Schobinger left the company in May, citing Twitter’s failure to fulfill various promises made to employees, including the non-payment of promised bonuses, according to the complaint.