Former employees argued a 2019 severance plan guaranteed more pay than the company offered after Musk’s acquisition

Elon Musk’s X Corp, formerly known as Twitter, has reached a tentative settlement in a high-stakes \$500 million lawsuit brought by thousands of former employees who claimed they were denied fair severance packages following Musk’s chaotic takeover in late 2022.

Both sides disclosed the agreement in a filing on Wednesday, asking the 9th U.S.

Circuit Court of Appeals to delay an upcoming hearing so that they could finalize the deal. On Thursday, the court granted the request, postponing oral arguments that had been scheduled for September 17 in San Francisco.

The legal dispute, led by former employees Courtney McMillian and Ronald Cooper, centered on a 2019 severance plan that they said guaranteed far more generous payouts than Musk’s team ultimately offered.

Under that plan, most terminated employees were entitled to at least two months of their base salary plus an additional week of pay for each year of service.

Senior-level employees like McMillian, who once oversaw Twitter’s employee benefits programs, were supposed to receive six months of base pay.

Instead, according to the complaint, many workers were offered a maximum of one month’s pay — and in numerous cases, nothing at all.

The settlement, while not yet finalized, signals the possible resolution of a bitter chapter in Musk’s ownership of the platform he controversially rebranded as X.

Though the precise financial terms remain under wraps, lawyers for the terminated employees described the development as a “step toward accountability.”

One former staffer, who asked not to be named, was quoted outside the courthouse saying, “We poured years of our lives into building Twitter, only to be tossed aside. This case was never just about money — it was about being treated with respect.”

For Musk, the lawsuit was just one of several legal headaches stemming from his \$44 billion acquisition of Twitter in October 2022.

Within days of taking control, he launched sweeping cost-cutting measures that saw roughly 6,000 employees — nearly half of Twitter’s global workforce — abruptly laid off.

Musk defended the firings at the time as necessary to save a company he claimed was “losing \$4 million a day.” Critics, however, accused him of gutting essential teams, from trust and safety to engineering, while violating longstanding agreements with employees.

The severance battle is far from the only courtroom clash involving Musk and his social media venture.

Other lawsuits remain pending, including one filed by ousted executives such as former CEO Parag Agrawal, CFO Ned Segal, and top legal officer Vijaya Gadde, who allege Musk personally withheld tens of millions in promised payouts.

In another case, workers claimed Musk’s team failed to provide proper notice under the federal WARN Act, which requires advance warning in cases of mass layoffs.

Despite the ongoing litigation, Musk has publicly brushed off the controversy, insisting that bold action was required to reinvent the struggling platform.

“You don’t turn a bloated company into a lean, innovative force by doing nothing,” he said during a tech summit earlier this year, adding with a laugh, “Sometimes people forget — survival is optional.”

The news of the tentative deal comes as Musk continues to expand his business empire far beyond rockets and electric cars.

Just this summer, he opened his much-hyped Tesla Diner in Hollywood, a retro-inspired eatery complete with charging stations, which quickly drew long lines of curious fans.

Meanwhile, his space company SpaceX announced a \$2 billion investment into his artificial intelligence venture xAI, underscoring his ambition to dominate not only transportation and space but also the rapidly growing AI sector.

Yet even as Musk juggles new ventures, the lawsuits from his Twitter purchase linger like an unresolved storm cloud. The San Francisco layoffs left a deep mark on the city’s tech culture, with many former employees still seeking work in a cooling job market.

At the same time, questions remain about whether Musk’s vision for X — a so-called “everything app” combining social networking, payments, and streaming — can succeed while its workforce and leadership remain in constant flux.

For the former employees, the tentative settlement offers a measure of closure after nearly two years of legal wrangling.

“It doesn’t undo the damage, but it’s something,” one ex-employee wrote on social media after news of the deal broke. Another quipped in a group chat of former staffers, “Maybe now I can finally delete Slack from my phone.”

The class action lawsuit originally filed by McMillian and Cooper was dismissed by a federal judge last year, but the pair appealed to the 9th Circuit, breathing new life into their claims.

Legal analysts noted that while settlements are common in employment disputes of this scale, the publicity around Musk’s role made the case particularly high-profile.

“Anytime Elon Musk is involved, the stakes are bigger,” said one labor law professor. “He is not just any CEO — he is a global figure whose actions ripple across industries.”

Though the details of the settlement are still being finalized, it could mark the first major concession Musk has made since taking over Twitter. Whether it signals a broader shift in his approach to employee relations remains uncertain.

For now, it represents a rare moment where Musk — known for his defiant standoffs with regulators, investors, and even entire governments — appears to have chosen compromise over combat.

As the ink dries on the tentative deal, the bigger question looms: will this resolution pave the way for X to stabilize and grow, or is it just another pause in the ongoing turbulence that has defined Musk’s stewardship?

For thousands of former employees still waiting for justice, the answer can’t come soon enough.