Twitter has lost a key ruling over its decision to withhold some pay from former employees.
A California judge ruled that the social media company now referred to by its owner as "X" was in violation of the law when it withheld bonus pay from workers that were dismissed following the takeover of Elon Musk.
The case, filed by former director of compensation Mark Schobinger, argues that Twitter had promised bonus pay to those employees were dismissed as part of the massive staff culling following Musk's purchase of the company.
The plaintiffs say they had an oral agreement to receive the pay, while X had sought to dismiss the case arguing that deal was not a valid contract and that it was allowed to withhold the money under its bonus agreement,
In his Friday ruling, US District Judge Vince Chhabria denied that motion to dismiss, paving the way for the case to continue and, presumably, increasing the likelihood that the two sides will reach a settlement deal out of court.
"Twitter's contrary arguments all fail. Twitter argues that the Performance Bonus Plan is not an enforceable contract, because it provides only for a discretionary bonus," Chhabria said in rejecting the motion to dismiss.
"But Schobinger is not suing to enforce Twitter’s discretionary bonus plan. He is suing to enforce Twitter’s alleged subsequent oral promise that employees would in fact receive a percentage of the annual bonus contemplated by the plan if they stayed with the company."
The ruling was not a complete victory for the plaintiffs, however. The Judge ordered that part of the complaint citing the premise of Promissory Estoppel would be "reluctantly dismissed" with an order to refile.
"Because Schobinger hasn’t tried to allege why he could end up being unable to recover under his breach of contract claim, his promissory estoppel claim must be dismissed with leave to amend," Chhabria explained.
"Presumably it will be an easy fix."