Elon Musk's X will face a lawsuit for withholding staff bonuses

After employees accused X, formerly Twitter, of not paying bonuses, a federal judge ordered a lawsuit. X's motion to dismiss was denied Friday by the judge.

According to a June 2023 lawsuit filed by employees, X failed to pay annual bonuses to staff after its October 2022 acquisition by billionaire Elon Musk, despite executives' repeated assurances.

After leaving X in May, senior director of compensation Mark Schobinger filed the lawsuit in San Francisco federal court. Class action status is sought for former and current X employees who did not receive their 2022 bonus.

A federal judge allowed Schobinger's case against X to proceed late last week.

“Twitter’s offer to pay him a bonus in return became a binding contract under California law,” US District Judge Vince Chhabria said in a ruling Friday.

According to the complaint, company executives repeatedly promised employees 50% of the target for 2022 bonuses in the months leading up to Musk's acquisition of X. “The promise was repeated following Musk’s acquisition,” the complaint said.

The lawsuit claims X did not pay bonuses despite promises. The complaint states that Schobinger left Twitter in May due to “Twitter's reneging on various promises it had made to employees, including its failure to pay promised bonuses.”