Former Twitter employees laid off after Elon Musk’s October 2022 takeover received word in October 2026 that their severance class action against X Corp. and Musk had reached a settlement in principle. No amount has been disclosed, the court has not approved anything, and there is nothing to file yet.
Allegations Only · Settlement Not Yet Final
This article describes a class action complaint and a settlement in principle that has not been finalized or approved. The statements about the defendants’ conduct are unproven allegations. X Corp., its parent companies and Elon Musk have not been found liable, no class has been certified, and there is nothing to claim at this time. This page is informational and is not legal advice.
What Is This About?
Former Twitter employees suing over unpaid severance told a federal court on October 9, 2026 that they have reached a settlement in principle with X Corp. (formerly Twitter), X Holdings Corp., X.AI Holdings Corp. and Elon Musk. The case is Ye v. Musk, No. 3:25-cv-09501-TLT, in the U.S. District Court for the Northern District of California, before Judge Trina L. Thompson.According to the parties’ joint status report, the deal came out of a private mediation on September 28, 2026, and if finalized and approved it would resolve the entire case. The parties are still negotiating the full written agreement. They asked the court to pause every remaining deadline and hearing and to give the plaintiffs until January 15, 2027 to file a motion asking the court to approve the settlement.
The report does not disclose a settlement amount, and no settlement website, administrator or claim form exists yet.
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What the Lawsuit Alleges
The suit was filed in November 2025 under ERISA, the federal law that governs employee benefit plans. It alleges that Twitter ran a formal severance plan since at least 2019, with a matrix that set each departing employee’s package by level, tenure and reason for leaving. According to the complaint, the package for a position elimination included at least two months of base pay, a prorated bonus, the cash value of stock awards that would have vested over the next three to six months, a payment toward continued health coverage and outplacement services.The complaint points to the April 2022 merger agreement between Musk and Twitter, which it says required the new owner to provide severance “no less favorable” than Twitter’s existing benefits for a year after the deal closed, and to company FAQs and emails that repeated that promise to employees. Musk took control on October 27, 2022, and Twitter laid off about 3,700 employees on November 4, 2022, followed by further cuts. The plaintiffs allege terminated employees were offered one month of pay in exchange for a release of claims, far less than the plan provided, and that the defendants misled employees about the plan.
The complaint seeks an order requiring the defendants to fund the plan and pay the benefits, which it puts at no less than $500 million, and to hold Musk personally liable as a plan fiduciary. The defendants moved to dismiss the amended complaint in March 2026. That motion had not been decided when the parties reported the settlement in principle, and none of the allegations has been proven.
Who Would Be Covered
The complaint proposes a class of all participants and beneficiaries of the Twitter Severance Plan who were terminated from Twitter from Musk’s October 27, 2022 takeover through the date of judgment. The complaint says at least 4,000 employees were let go after the takeover. No class has been certified, and the final class definition will be whatever the settlement agreement and the court’s approval order say.What Happens Next
The parties first have to finish the written settlement agreement. The plaintiffs would then file a motion for preliminary approval, which the parties proposed doing by January 15, 2027. If the judge grants preliminary approval, a settlement administrator would send notice to class members describing the amount, how payments would be calculated, any claim process and the deadlines to object or opt out. A final approval hearing would follow before any money is paid.Before the settlement, the court had stayed discovery in July 2026 while the motion to dismiss was pending, set a further case management conference for October 22, 2026, and scheduled a jury trial for May 2028. The joint motion asks the court to set all of those dates aside.
How This Case Relates to Earlier Twitter Severance Suits
This is not the first lawsuit over Twitter severance. The court has treated Ye v. Musk as related to McMillian v. Musk, No. 3:23-cv-03461-TLT, an earlier ERISA case over the same severance plan, and reassigned it to the same judge in February 2026. According to the new complaint, the plaintiffs in that earlier case moved to dismiss their appeal to the Ninth Circuit in October 2025. The settlement in principle reported here covers only Ye v. Musk.Questions
How much is the Twitter severance settlement?
No amount has been disclosed. The October 9, 2026 joint status report says only that the parties reached a settlement in principle at a September 28 mediation and are negotiating a long-form agreement. The complaint alleged that terminated employees were owed no less than $500 million, but that is the plaintiffs’ claim, not a settlement figure.
Do former Twitter employees need to file anything now?
There is nothing to file. No settlement agreement, claim form or settlement administrator exists yet. If the court grants preliminary approval, class members would receive a notice explaining any claim process, deadlines and the right to object or opt out.
Is this the same case as the earlier Twitter severance lawsuits?
No. This case, Ye v. Musk, was filed in November 2025 under ERISA on behalf of terminated participants in the Twitter Severance Plan. The court treats it as related to McMillian v. Musk, an earlier ERISA case from 2023 whose plaintiffs dropped their appeal in October 2025, and both are before the same judge.
Did Elon Musk or X admit wrongdoing?
No. The defendants had moved to dismiss the amended complaint, and that motion was never decided. A settlement in principle is not a finding of liability, and the allegations in the complaint have not been proven.
Sources
- CourtListener docket — Ye v. Musk, No. 3:25-cv-09501 (N.D. Cal.)
- Joint status report and motion to stay — October 9, 2026 (Dkt. 59)
- Class action complaint — November 4, 2025 (Dkt. 1)
