Five former Twitter employees who were laid off have been forced to drop their class-action lawsuit against the company and were instead ordered by a judge to file individual claims for arbitration.
U.S. District Judge James Donato ruled in Twitter's favor Friday, arguing that the former workers had signed arbitration agreements as part of their employment contracts with Twitter, which said they would bring legal disputes against the company in arbitration rather than in court and included a class-action waiver.
"Twitter provided signed copies of the agreements, and they are all clear and straightforward, Donato wrote in his order, adding that the five initial plaintiffs who filed their complaint on November 3 "are ordered to arbitration on an individual basis."
Since Elon Musk bought out the company in late October, Twitter has laid off thousands of workers as part of an effort to trim costs and replace its progressive culture.
Musk allegedly told former employees ahead of the acquisition they would receive three months of severance pay while the lawsuit says he repeatedly assured staff that if it went through they would still get separation packages at least as good as those previously promised by the company, including two months of severance pay.
However, laid-off staff claim they have not received this, instead being offered only one month of severance and no significant separation package. The class-action lawsuit accused Twitter of breach of contract, arguing that it should provide laid-off employees with two months of severance pay in addition to the two months of non-working pay they have already received as part of Twitter's efforts to comply with the WARN Act, which requires that companies give advanced notice of mass layoffs.
The dispute-resolution agreements, given to the workers alongside their employment contracts, state that termination disputes must be "resolved only by an arbitrator through final and binding arbitration and not by way of court or jury trial."
"You and the company agree to bring any dispute in arbitration on an individual basis only, and not on a class, collective, or private attorney general representative action basis," the agreement adds. "Arbitration is not a mandatory condition of employee's employment at the company" and say that workers can sign a separate form to opt-out."
Shannon Liss-Riordan, the attorney representing the laid-off Twitter workers, told Business Insider that she had anticipated the ruling and had already filed 500 individual arbitration demands.
"We also have plaintiffs in the lawsuits already who opted out of arbitration, so those cases will continue as class actions in court, but only employees who opted out of arbitration may be class members covered by the cases," she said. "Mass arbitrations are incredibly costly for companies to defend and many employers have found themselves sorry about what they wished for when they insisted that employees would have to pursue their claims one by one."
