Twitter Violated Contract That Failed to Pay Bonuses To Employees



A federal judge ruled late Friday afternoon that Twitter, now known as X, violated a contract when it failed to pay what amounts to tens of millions of dollars in bonuses that the company had orally promised its employees, Courthouse News Service reported.

Mark Schobinger, the former senior director of compensation for Twitter, filed suit against the social media company on behalf of himself and other current and former Twitter employees in June.

Schobinger, who is based in Texas, claims that employees were not paid a portion of their 2022 bonuses when they were due in the first quarter of 2023, despite repeated promises from senior executives at the company, including Ned Segal, the former chief financial officer of the company. This bonus was to be paid to employees who stayed with the company until the first quarter of 2023.

According to Schobinger, these promises were made both before and after Elon Musk acquired the social media platform in October 2022. Schobinger also said employees took these promises into consideration when deciding whether or not they wanted to leave their jobs with the social media company and that he turned down opportunities from other companies at the time because of the promised bonus.

U.S. District Judge Vincent Chhabria, in a brisk three-page opinion, wrote that California law governs the case because of the choice-of-law provision in the California Civil Code “applies only to matters of contract interpretation, not to matters of contract validity or enforceability. Because Twitter doesn’t even try to argue that Texas law should apply under the governmental interest approach, California law governs by default.”

Reuters reported Twitter violated contracts by failing to pay millions of dollars in bonuses that the social media company, now called X Corp, had promised its employees, a federal judge ruled on Friday.

Mark Schobinger, who was Twitter’s senior director of compensation before leaving Elon Musk’s company in May, sued Twitter in June, claiming breach of contract.

Schobinger’s suit alleged that before and after billionaire Musk bought Twitter last year, it promised employees 50% of their 2022 target bonuses but never made those payments happen.

In denying Twitter’s motion to dismiss the case, U.S. District Judge Chhabria ruled that Schobinger plausibly stated a breach of contract claim under California law and he was covered by a bonus plan.

X no longer has a media relations office. The company did not immediately respond to a request for comment to its X account outside business hours.

In my opinion, it appears that Twitter may have intentionally told employees that they would get a bonus if they stuck around. Eventually, it became clear that this offer was a lie.