Twitter is facing criticism as a group of its employees has filed a lawsuit against the social media company, alleging that it failed to fulfil its promise of paying their 2022 bonuses. Despite assurances that the bonuses would be paid out at 50% of the target amounts, the employees claim that the company reneged on its commitment.
The lawsuit, which claims a breach of contract and promissory estoppel, has been filed as a proposed class-action complaint on behalf of both current and former Twitter employees who worked during the first quarter of 2023 but did not receive their bonuses. The legal action was initiated by Mark Shobinger who held the position of senior director of compensation at Twitter until recently.
Twitter has had a practice of providing employees with a cash performance bonus plan, known as the “PBP” or “Bonus Plan,” which was traditionally disbursed on an annual basis. Under this plan, individuals covered by the bonus scheme would receive their annual bonus for the preceding year if they were employed by the company when the bonuses were typically paid out, usually in March.
However, the employees involved in the lawsuit contend that they did not receive any bonus for 2022 despite being reassured by executives, including former Chief Financial Officer Ned Segal, that the bonuses would be disbursed. The plaintiffs also highlight that the promise to pay the bonuses was before and even after Elon Musk’s acquisition.
According to the petitioners, the social media company has fallen short of its agreement. Part of their claims read:
Despite Twitter’s promises that it would pay 2022 bonuses at fifty percent (50%) of target, Twitter refused to pay employees who remained employed by the company in the first quarter of 2023, any bonus.
The lawsuit in the section “Statement of facts” further said:
“Specifically, consistent with its past practice and the promises made by management to its employees, Twitter did in fact fund the Bonus Plan at fifty percent (50%) of targeted employee bonuses for 2022. The money for employees’ annual bonuses under the Bonus Plan was accounted for by Twitter’s financial team and was available to be paid to Twitter’s employees during the first quarter of 2023.“
Twitter’s struggle since Elon Musk’s acquisition
Since Elon Musk took over, Twitter has been struggling to get its feet back in the game. Recall, that the company shed more than 75% of its employees either through layoffs or resignations including some of its C-level executives.
The new administration has struggled with platform glitches, and indecisiveness in its product actions. It has also been hit with numerous lawsuits for allegedly failing to pay its bills, including rent, and by former employees for severance and back pay.
This month, a group of 17 music publishers sued Twitter for copyright infringement on about 1,700 songs and is seeking as much as $250 million in damages. Also, since Elon Musk’s takeover, Twitter has faced different lawsuits from landlords of its offices for unpaid rent. Its U.S. advertising revenue, went down by 59%, a huge decline from the previous year.
Although,
During the acquisition period, not all of these factors were prominently visible or emphasized. However, Elon Musk has frequently expressed his commitment to cost-cutting measures, saving money, and generating revenue in various contexts.
He has often emphasized the importance of efficient resource management and reducing unnecessary expenses and has been very vocal about implementing measures to streamline operations, optimize processes, and drive financial sustainability for Twitter.
This has influenced some of the decision-making processes in recent times. However, specific details regarding this lawsuit are still unclear as Twitter has not made any comment or responded to requests especially as in March, its PR department was confirmed inactive.
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