A US federal court has greenlit the lawsuit against X, formerly known as Twitter, marking a pivotal step in the legal battle. The case, initiated by Mark Schobinger, the company’s former head of compensation, alleges non-payment of promised annual bonuses to thousands of current and former employees.
Alleged Breach of Verbal Promises
The lawsuit contends that X failed to honor verbal commitments made to employees regarding annual bonuses. These purported assurances stated that all employees as of January 1, 2023, would receive a portion of their annual bonuses. The total amount owed, as per court documents, surpasses $5 million, with claims of owed bonuses reaching tens of millions of dollars for several thousand workers.
The court ruling rejected X’s plea to dismiss the case, contesting that the company cannot be held accountable for verbal contracts made by former management. The alleged promises of a 50% 2022 annual bonus for those remaining with the company during Musk’s takeover in October 2022 reportedly went unfulfilled, contrary to the usual first-quarter payment schedule.
Ramifications and Company Troubles
Schobinger’s resignation in May, citing X’s failure to honor commitments, especially the non-payment of 2022 bonuses, underscores the escalating discontent among former employees. This legal setback compounds X’s existing litigations over unpaid rent, service fees, and disputes from employees who left following Musk’s takeover, notes NIXSolutions.
X, grappling with a decline in advertising revenue, faces mounting legal challenges amidst internal dissent.