How much severance will the fired Twitter employees get?

In recent years, big tech companies have increasingly lavished benefits to attract engineers in the market for sales talent. Layoffs, a rarity in Silicon Valley over the past decade, usually come with the consolation of generous severance packages that often include months of salary and health care coverage.

Now that expectation is collapsing — and nowhere faster than on Twitter, where thousands of workers suddenly face the prospect of unemployment in a newly chilly employment landscape.

Under new owner Elon Musk, the social media platform is preparing to lay off a large portion of its workforce — about half of its 7,500 employees, according to Bloomberg.

In an email shared with the Los Angeles Times, the company said all employees would be notified if they still had their jobs by email by 9 a.m. Friday. All offices will be temporarily closed and badged access will be suspended, and all employees in one office have been told to go home, the email said.

After Musk’s $44 billion buyout was completed a week ago, there was widespread concern among employees about the severance benefits they might receive and how Musk might seek to reduce the expected payout.

News of the Twitter layoffs comes amid widespread layoffs in the tech industry, with Lyft announcing the layoff of 13 percent of its staff and Stripe cutting 14 percent of its workforce.

Stripe announced a generous 14-week severance pay plus more for longer tenure, as well as six months of health care, a 2022 bonus and accelerated stock vesting for laid-off employees.

It’s unclear what benefits Twitter employees could receive, but in the event of a mass layoff, employees have some rights protected by both state and federal law, as well as the terms of the merger agreement between Musk and of Twitter.

Musk, however, has a long history of pushing the legal agenda, whether that means regulations on how Tesla advertises its self-driving capabilities, an agreement with the Securities and Exchange Commission to pre-approve his tweets, a public health order to close a factory during the COVID-19 lockdown or many other examples.

In his pursuit of Twitter, Musk ignored SEC disclosure requirements and tried to back out of a signed merger agreement.

Employees have some protections in the terms of that merger agreement, which stipulates that Musk must provide compensation and benefits to laid-off workers within a year of the takeover that are no less favorable than those in place before Musk took over.

Ramish Saqib, who worked as a software engineer at Twitter for a year, said he was given a week’s notice and 60 days’ compensation when he was fired in July. Speaking of history, another former employee said the standard severance for large layoffs was 60 days with additional pay based on years of service.

If Musk doesn’t offer similar severance packages to laid-off employees next year, they will have grounds to sue the company as third-party beneficiaries in the deal, said Lloyd Greif, managing director of Greif & Co, an investment bank. which handles mergers and acquisitions.

“It’s a promise from the company to the employees that when Elon Musk signed on the dotted line to buy Twitter, he became the company,” Greif said. “They could sue the company he now owns … to enforce that promise.”

Musk ignoring severance packages for laid-off employees would certainly trigger a class-action lawsuit against the company under elements of the California labor code meant to protect workers in such situations, Greif said.

Under the federal WARN Act, companies with more than 100 employees are required to give at least 60 days’ notice if they plan to lay off more than one-third of the workers at a location or more than 500 employees, regardless of the percentage, within a 30-day period . An employer who violates the notice requirement may be liable for back pay for the number of days less than the 60 day requirement. Companies often offer 60 days’ severance pay in lieu of notice.

California’s WARN Act is even more stringent, as it applies when there is a layoff of 50 or more employees within a 30-day period, and the employer may be subject to additional civil penalties in addition to back pay.

According to various sources close to Twitter, there has been widespread speculation among employees in recent days that Musk may try to use layoffs as reasons to deny firing many of the laid-off workers. Immediately after taking over, Musk set aggressive deadlines for releasing new features. Managers reportedly urged their teams to work 12-hour days and sleep in the office or risk being fired.

Musk had already fired several top Twitter executives last week, including its CEO and CFO. By classifying them as layoffs for cause, he is reportedly seeking to avoid paying the $20 million to $60 million in severance payments listed in the terms of the merger agreement.

In fact, the WARN Act does not distinguish between terminated workers and those terminated for cause, said Laura Reathaford, a California employment attorney with Lathrop GPM. Companies are typically cautious about firing employees for cause during periods of large-scale workforce reductions and tend to treat such layoffs as layoffs to avoid opening themselves to legal scrutiny.

At the same time, WARN regulations are often “unwieldy and confusing” to enforce, making litigation over the act unusual, Reathaford said.

Tesla, the electric car maker that is the source of Musk’s vast fortune, was sued in June by former employees who said the company violated the WARN Act by failing to give 60 days’ notice when it laid off more than 500 workers at a factory in Nevada.

Several software engineers who were laid off during that 10% workforce reduction period were given only one week’s layoff and were told they were fired in secret meetings with their managers, Gergely Orosz reports in Pragmatic Engineer.

Orosz said Tesla was trying to circumvent the WARN Act by disguising the layoffs as performance-related terminations. Twitter did not immediately respond to a request for comment. Tesla does not maintain a media relations department or respond to media inquiries.

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