A federal judge ruled on Friday that Twitter, now known as X, violated a contract with employees when it failed to pay tens of millions of dollars worth of bonuses, denying the social media company’s attempt to get the case tossed.
The decision follows the filing of a lawsuit by Mark Schobinger, Twitter’s senior director of compensation until his departure in May. In the complaint, Schobinger claims that company executives reneged on delivering bonuses they verbally promised their employees last year.
Both before and after Elon Musk bought Twitter last October, Schobinger alleges, Twitter’s workforce was told they would receive 50 percent of their target bonuses if they remained with the company through the first quarter of 2023. Schobinger said that he and other employees who remained past that date were never paid, despite being covered by the bonus plan.
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The suit, which is seeking class action status, was filed on behalf of nearly 2,000 other current and former employees, and asks for damages in excess of $5 million. It claims breach of contract under California law, an argument that the judge ruled was plausible on Friday.
“Once Schobinger did what Twitter asked, Twitter’s offer to pay him a bonus in return became a binding contract under California law,” he wrote in a three-page opinion. “And by allegedly refusing to pay Schobinger his promised bonus, Twitter violated that contract.”
The company has hemorrhaged advertisers and cratered in revenue since Elon Musk’s takeover and rebrand.
