The social network X (formerly Twitter) allegedly violated its contractual commitments by failing to pay annual performance bonuses, a US federal court ruled on Friday.
Mark Schobinger, a former employee, launched a lawsuit against the platform in June, claiming a breach of contract. He argued that employees who stayed with the company until the first quarter of 2023 were verbally assured of a 2022 bonus, despite questions about the company's management following its takeover by Elon Musk.
X attempted to dismiss this claim but it was upheld by the court, which found Schobinger’s complaint of a breach of contract valid under California law.
“Schobinger made a claim for contract breach, valid under California law. He alleges that Twitter verbally promised each employee a portion of the anticipated bonus,” wrote Judge Vince Chhabria. “By refusing to pay the promised bonus to Schobinger, Twitter violated this contract.”
The social network can appeal the court’s decision.
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Now owned by Elon Musk and rebranded as X, the company faces various challenges, including a Brussels probe into misinformation and online hate, criticism in response to recent riots in Dublin and even an exodus of top advertisers.
The company is now worth less than half of the $44 billion that Elon Musk paid for it in October 2022, according to internal documents shared with staff and reported by tech publication The Verge.
