X Lawsuit Over Unpaid Employee Bonuses Can Proceed, Judge Rules

A federal judge put the potential for sizable payouts under the Christmas tree for about 2,000 current and former staffers of X, ruling Friday that a lawsuit demanding unpaid bonuses can proceed against the social media company.

The ruling came down on a lawsuit filed in June by Mark Schobinger, the former senior director of compensation for X, the social media platform formerly known as Twitter. Schobinger, seeking class action status, claimed that before and after Elon Musk bought the platform in October 2022, the company’s executives promised that 2022 bonuses would be paid out under its adopted bonus plan, which used a staffer’s salary to determine the amount of each bonus.

Former CFO Ned Segal is specifically named in the suit as repeatedly promising that the bonuses would be paid.

“Plaintiff and other Twitter employees relied upon the promise that they would receive their 2022 bonus when choosing to remain employed by Twitter following Musk’s acquisition of the company and/or deciding to forgo other employment opportunities,” the suit claims.

It states that the company funded the bonuses and the cash was available to be paid out during the first quarter of 2023. Twitter, prior to Musk, typically paid out its bonuses in March.

“However, rather than pay employees who remained employed by Twitter the
annual bonus promised to them, the company refused to pay any employees their 2022 annual bonus,” the original suit states.

Schobinger left the company in May “based on Twitter’s reneging on various promises it had made to employees, including its failure to pay promised bonuses,” the suit states.

Twitter, now X, argued the promises made to staffers did not amount to an enforceable contract.

U.S. District Judge Vince Chhabria in a three-page ruling found that Schobinger “plausibly stated a breach of contract claim under California law,” over the promises because he stayed with the company and performed his job while waiting for the bonus.

“As alleged, once Schobinger did what Twitter asked, Twitter’s offer to
pay him a bonus in return became a binding contract under California law,” Chhabria ruled. “And by allegedly refusing to pay Schobinger his promised bonus,
Twitter violated that contract.”

A spokesman for X did not immediately respond to a request for comment Tuesday beyond the company’s automatic, “Busy now, please check back later” auto-reply to queries sent to its communications team.

In a statement to the New York Times, Schobinger’s lawyer, Shannon Liss-Riordan, praised the decision.

“The court denied Twitter’s motion to dismiss our claim that Twitter failed to pay promised bonuses to continuing employees,” she said. “We can now go forward with the case, which Twitter was trying to throw out — so it’s not yet a ruling on the merits.”

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