A federal lawsuit against Elon Musk’s X Corp has ended with a settlement that requires the company to pay $500 million in severance to thousands of former Twitter employees. The lawsuit, filed in the U.S. District Court for the Northern District of California, accused X of violating federal labor laws by refusing to provide severance pay after Musk’s acquisition of Twitter in October 2022. The company, now known simply as “X,” terminated over half of its workforce in the weeks after Musk completed his $44 billion purchase.

How did a deal that was supposed to redefine social media turn into a legal battle over unpaid severance? The question surfaces from the scale and speed of Twitter’s layoffs and the way those exits were handled. When Musk took control of Twitter, he slashed roughly 6,000 jobs across the company. Many of those employees said they were promised specific severance packages under the previous ownership. The lawsuit, led by former Twitter employee Courtney McMillian, alleged that Musk and his team chose to ignore those agreements and instead offered significantly reduced exit terms.