In recent years, major technology companies have More generous benefits than ever to entice engineers in the seller’s talent market. Layoffs, a rarity in Silicon Valley over the past decade, are often accompanied by the consolation of generous severance packages that often include a month’s pay and healthcare insurance.
Now, that expectation is collapsing — and nowhere faster than at Twitter, where thousands of employees are suddenly faced with the prospect of unemployment amid a cold new job landscape.
Under new owner Elon Musk, the social media platform is preparing to terminate a large portion of its workforce – about half of its 7,500 workers, according to Bloomberg.
In an email shared with the Los Angeles Times, the company said all employees will be notified of whether they have work left by email by 9 a.m. Friday. All offices will be temporarily closed and badge access suspended and any employees at one office asked to return home, the email said.
After completing Musk’s $44 billion takeover a week ago, employees were widely concerned about what severance pay they might receive and how Musk might seek to reduce the expected payout. .
Twitter layoffs news comes during a time of widespread layoffs in the tech industry, with Lyft dismissal notice 13% of employees and Stripe cut 14% of its workforce.
Stripe announced a generous 14-week severance pay plus more for longer tenure, as well as six months of healthcare, a 2022 bonus and accelerated stock competition for fired employees.
It’s unclear what benefits Twitter employees might receive, but in the event of a mass layoff, workers have a number of rights protected by federal and state law, as well as the terms of the agreement. merger between Musk and Twitter.
However, Musk has a long history of pushing for the rule of law in matters related to the surrounding regulations. how Tesla advertises its autonomous driving capabilities, an agreement with the Securities and Exchange Commission get approval of his tweets in advance, a public health order to closing a factory during the COVID-19 lockdown and many more examples.
In the pursuit of Twitter, Musk ignore SEC disclosure requirements and attempted to withdraw from the signed merger agreement.
Staff have a number of guards in terms of that merger agreementwhich states that Musk must provide severance payments and benefits to terminated employees within one year of acquisition “no less favorable” than those applicable before Musk took over.
Ramish Saqib, who worked as a software engineer at Twitter for a year, said he was given a week’s notice and 60 days of severance pay when he was laid off in July. Speaking on a resume, another former employee said the standard severance period for large numbers of layoffs is 60 days with additional pay based on years of service.
Lloyd Greif, chief executive of Greif & Co., said that if Musk doesn’t offer similar severance packages to laid-off employees next year, they will have grounds to sue the company as an employee. third-party beneficiaries under the agreement, said Lloyd Greif, chief executive officer of Greif & Co., an investment. The bank handles mergers and acquisitions.
“It was a company promise to employees that when Elon Musk signed off on the broken line to acquire Twitter, he became the company,” Greif said. “They could bring an action against the company he currently owns … to enforce that promise.”
Mr. Greif said that Musk’s omission of severance packages for laid-off employees would inevitably lead to class action lawsuits against the company under elements of California’s labor code that protect workers in such situations. situations like this.
Under the federal WARN Act, companies with more than 100 employees must give at least 60 days’ notice if they plan to lay off more than a third of the workers at a location or more than 500 employees, regardless of percentage, for a period of 30 days. Employers that violate the notice requirement may be liable for reimbursement for fewer days than the 60-day requirement. Companies often offer 60 days of severance pay in lieu of advance notice.
California’s WARN Act is even more stringent, applying when 50 or more employees are laid off in a 30-day period and employers may be subject to civil penalties in addition to compensation. .
According to several sources close to Twitter, there has been a lot of speculation in recent days among employees that Musk may be trying to use gratuitous penalties to deny severance to many laid-off workers. . Immediately after taking over, Musk set aggressive deadlines for new feature launches; managers reported urge their team to work 12 hours a day and sleep in the office or risk being fired.
Musk ended some of Twitter’s top executives last week, including its chief executive officer and chief financial officer. By classifying them as gratuitous occurrences, he reported seeks to avoid paying the $20 million to $60 million in damages listed in the terms of the merger agreement.
In fact, the WARN Act makes no distinction between employees who are laid off and those who give for cause, said Laura Reathaford, a California employment attorney with Lathrop GPM. Companies are often cautious about layoffs for reasons during periods of large-scale workforce cuts and tend to treat terminations as layoffs to avoid legal scrutiny.
At the same time, WARN regulations are often “cluttered and confusing” to enforce, making litigation about this practice uncommon, says Reathaford.
Tesla, the electric car maker that is the source of much of Musk’s vast fortune, has sued in June by former employees said the company violated the WARN Act by failing to give 60-day notice by laying off more than 500 employees at a Nevada factory.
As reported by Gergely Orosz, a number of software engineers who were laid off during that time due to a 10% cut in the workforce received only one week of severance and were told that they had been laid off in the next few weeks. secret meeting with his manager. Pragmatic engineer.
Orosz said Tesla is trying to circumvent the WARN Act by masquerading as a performance-related termination. Twitter did not immediately respond to a request for comment. Tesla does not maintain a media relations department or respond to media inquiries.
This story originally appeared in LA time.
