Twitter Tries to Bail on Bonusses

San Francisco, CAX.Corp, formerly Twitter Inc., asked a California federal judge at the beginning of August to dismiss a proposed California labor class action alleging the company illegally denied bonuses. The social media company argued that it decides whether to pay or deny extra incentive pay. But Twitter employees who were told that they would receive their bonus for 2022 disagree. The lawsuit represents employees who worked for Twitter during the first quarter of 2023 and were covered by Twitter's bonus plan but did not receive any incentive pay for 2022.

Mark Schobinger, formerly Twitter's senior director of compensation, filed the lawsuit in June in a San Francisco federal court – shortly after he resigned. Last April, after Elon Musk announced that he was acquiring Twitter, “many employees raised concerns” over the fate of “their compensation and annual bonus” if and when the deal closed, reports CNN. According to his lawsuit, company executives -- including Ned Segal, the company's former chief financial officer -- repeatedly promised employees that 2022 bonuses would be paid out at 50 percent of the target. That promise was repeated following Musk’s acquisition last October. Schobinger resigned from the social media company following it “reneging on various promises it had made to employees, including its failure to pay promised bonuses.”

And the promise is still broken. Business Insider reported that in the first quarter of 2023 when the bonuses were due to be handed out, Twitter refused to pay them to employees who remained at the company. Schobinger said he turned down calls from recruiters and companies regarding other work opportunities because of the promised bonus, which is calculated annually using each Twitter employee's base pay and is funded through the year. Historically the company has paid out at least 50 percent of that targeted funding. He further added that many employees relied on this promise of bonusses and remained at Twitter, only to find that they wouldn't be receiving any financial incentives.

However, Twitter said all bonuses outlined in the company's Global Discretionary Performance Bonus Plan could be changed or revoked by the company whenever it pleased.

Schobinger’s lawsuit is just one of several filed by former Twitter employees after the company terminated 80 percent of staff in order to cut costs. Just over a year ago The New York Times reported that Twitter warned its employees by email that they might receive only half of their typical annual bonuses as the social media company grapples with economic uncertainty. And Business Insider reported that Twitter informed employees in May 2023  that cash bonuses would no longer be given to anyone at the company.

Schobinger’s attorney, Shannon Liss-Riordan, told Business Insider that the bonuses Twitter owed to “about a couple thousand employees would have been eligible for the bonuses” amounted to "tens of millions of dollars." She told Law360 that her client's claims can't be dismissed before discovery and that the promises workers received about bonuses can't be overridden by earlier agreements. "Regardless of what the prior terms of the bonus plan said, Twitter employees were told that they would receive their bonus for 2022.”