A federal judge ruled that Twitter violated its contract by not paying tens of millions of dollars in bonuses the social media company verbally promised its employees.
In June, Mark Schobinger, Twitter's former chief compensation officer, filed a lawsuit against the social media company on behalf of himself and other current and former employees of the company.
Schobinger's lawsuit alleges that employees did not receive a portion of their 2022 bonuses when they were scheduled to vest in the first quarter of 2023.
The bonus will be paid to employees who remain with the company until the first quarter of 2023.
The lawsuit alleges that employees were repeatedly promised by company executives, including Ned Segal, the company's former chief financial officer.
Schobinger also said that employees took these promises into consideration when they decided to leave the social media company, as they turned down jobs at other companies because of the promised bonuses.
The company, now called X Employees before billionaire Musk bought the company last year and after the purchase were required to pay about 50 percent of their target bonuses for 2022, although they never made those payments.
The company moved to dismiss the case, insisting that the oral statement was unenforceable because it conflicted with the terms of a performance bonus plan and did not satisfy California's requirements for oral modifications to a written contract.
U.S. District Judge Vince Chhabria ruled that Schobinger legitimately brought a breach of contract claim under California law, was protected by the bounty program and followed all of Twitter's instructions.
“After Schobinger responded to Twitter’s request, the company’s offer to pay him became a binding contract under California law,” the judge wrote. The company violated the contract by depriving Schöbinger of the promised bonus. "
Twitter's lawyers argued that the promise was oral, not a contract, and that Texas law should be governed by California Civil Code Section 1646, which states that contracts must be construed in accordance with the laws and customs of the place where the contract is performed.
The judge ruled that the case was governed by California law because the choice of law provisions in the California Civil Code applied to questions of contract interpretation, not to questions of the validity or enforceability of a contract. a contract.
X has been the subject of numerous lawsuits from former employees and executives since Musk bought the company and laid off more than half of its employees.
The lawsuits include a number of allegations, including that X discriminated against older workers, women and workers with disabilities, and failed to notify workers in advance of mass layoffs.
The company denied any wrongdoing.