WASHINGTON (dpa-AFX) - U.S. District Court Judge Vince Chhabria, on Friday, allowed a lawsuit against Elon Musk's X, formerly known as Twitter, to move ahead. The company was accused of failing to pay promised annual bonuses to employees.
The lawsuit was filed in June by Mark Schobinger, the company's former head of compensation, on behalf of himself and approximately 2,000 other current and former employees. They claimed that the then-Twitter management had verbally promised employees to pay 50% of their 2022 annual bonus if they remained with the company during Musk's takeover in October 2022.
Usually, annual bonuses are paid in the first quarter of the following year, but the employees didn't receive any bonuses by the end of the first quarter, which amounted to more than $5 million.
Schobinger left in May after the company failed to honor its verbal contract.
X's lawyers argued the case stating that the Performance Bonus Plan was not a valid and enforceable contract, and thus verbal contract between Schobinger and former management couldn't be upheld.
However, the judge ruled that, 'Once Schobinger did what Twitter asked, Twitter's offer to pay him a bonus in return became a binding contract under California law. And by allegedly refusing to pay Schobinger his promised bonus, Twitter violated that contract.'
Further, X's lawyers argued to try the case under Texas law, where verbal contracts are not upheld, but the judge ruled against them and said that the case would be tried under California law.
In a similar scenario, many former employees had filed cases against X regarding around $500 million in unpaid severance to nearly 5,000 laid-off employees.
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