Twitter faces serious legal threat from ex-employees, experts say

Elon Musk exposed the company to legal peril, experts said.

November 23, 2022, 6:33 AM

Elon Musk, who admitted to overpaying for Twitter, cut workers at the social media platform almost immediately. In response, some of the axed employees want their day in court.

Within days of the acquisition, Musk fired top executives and cut the company's 7,500-person workforce in half. Soon after, he posed an ultimatum to employees asking that they commit to being, in Musk's words, "extremely hardcore" and "work long hours of high intensity" or resign. The move sent more workers out the door.

These personnel changes provoked several lawsuits from former workers alleging that the moves violated workers' rights because the company allegedly did not provide ample notice for laid-off workers or accommodations for disabled employees.

Musk, who also runs Tesla and SpaceX, may have exposed Twitter to serious legal liability that could wreak financial damage on the company, two labor experts told ABC News. The experts were reluctant to comment on the specifics of the cases, but said the former workers carry legitimate grievances that the courts will have to assess.

The combined lawsuits could cost Twitter "many millions of dollars," Michael LeRoy, a professor of labor and employment relations at University Of Illinois, told ABC News.

However, the legal proceedings could take more than five years to resolve, affording the company leverage if it were to pursue settlements with former employees, LeRoy added.

Sharon Block, executive director of the labor and worklife program at Harvard University Law School and a former member of the Obama administration, said the personnel moves demonstrate "reckless disregard for workers' wellbeing."

Twitter has not responded to a request for comment.

In one class-action lawsuit, departed workers allege that the company failed to provide the 60-day notice of layoffs required by federal law under the WARN Act, which mandates large businesses give notice when undertaking a mass layoff, Shannon Liss-Riordan, the attorney for the workers, told ABC News.

Twitter plans to keep many, but not all, of the laid-off workers on the payroll for two months as a means of complying with the law, Liss-Riordan said. However, the company does not intend to pay full severance beyond those months as previously promised, she added.

In response to the lawsuit via court filings obtained by Reuters, Twitter told a San Francisco federal judge that the recent claims of law violations are “baseless” and noted it intends to send the said claims to arbitration.

The company stressed that all legal requirements to former employees have been fulfilled, revealing that laid-off workers were informed that their last day at Twitter would be on Jan. 4, which is over the 60-day requirement under federal law.

The tech giant is responding to the recent class action lawsuit previously filed by former employees, regarding the 60-day notice that is required by law before proceeding with mass layoffs.

Twitter also said that the pending lawsuit has not only caused confusion, but also delayed severance payments and the company has asked a judge to reject the lawsuit.

In a separate class-action lawsuit – also overseen by Liss-Riordan – a disabled former employee is suing the company over allegations the ultimatum that workers be "extremely hardcore" forced disabled workers to resign because they could not meet the elevated standard for work performance.

Federal labor law affords companies wide latitude to terminate workers without explanation under a measure called at-will employment. But businesses face some limits on the type or execution of layoffs, including prohibitions against discrimination and requirements that employees at some firms be alerted in advance of large layoffs.

"We completely understand that business leaders and owners of companies get to make decisions about how they think the company will best operate going forward," Liss-Riordan told ABC News. "But we do have laws in place to protect workers and laws to protect workers subject to layoffs."

"If Elon Musk thinks it's best for Twitter and its shareholders to slash workers, he's within his rights to do that," she added. "But if he tries to violate workers' rights, he's got to expect pushback."

LeRoy, of the University of Illinois, said the breakneck speed of Musk's personnel decisions has placed his company on precarious legal ground.

"Haste makes waste," LeRoy said. "Hasty terminations often have legal consequences."

Still, the company could make arguments focused on exemptions in relevant law, LeRoy said. For example, the federal statute that mandates large companies provide notice ahead of mass layoffs excludes companies suffering financial hardship, he added. "That adds some degree of ambiguity to the situation," he said.

In addition, the legal proceedings could take many years, giving the upper hand to Twitter as it fights the lawsuits or pursues a favorable settlement, LeRoy said.

Liss-Riordan, the attorney overseeing some of the cases against Twitter, acknowledged the challenge posed by a potentially lengthy legal proceeding, but said the cases against Twitter could be resolved with relative ease.

"Cases can take a long time," she said. "In this case, I'm hopeful perhaps we might be able to get this resolved sooner."

"Paying laid-off workers what they're owed should be the easiest of Musk's current problems to address," she added.

Since he acquired Twitter late last month, Musk has imposed major changes at the social media platform.

He revamped the company's subscription product Twitter Blue, by allowing users to access verification through a monthly $8 fee, but halted the rollout after a rise of impersonations on the platform, including impersonations of Musk himself.

More recently, he reinstated the account of former President Donald Trump, reversing a previous announcement that said major account reinstatement decisions would await the formation of a content moderation council. Trump had been permanently suspended "due to the risk of further incitement of violence" in the wake of Jan. 6.

Musk, who acquired Twitter at the purchasing price of $44 billion, faces pressure to boost the company's profits. Earlier this month, he said the company was losing $4 million each day.

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