A federal judge on Friday gave the green light to a lawsuit against social media company X, formerly known as Twitter, in which workers claim the company promised millions of dollars in bonuses but never paid them.
In June, Mark Schobinger, a former senior compensation manager at Twitter who lives in Texas, File a lawsuit against the company, claiming breach of contract under California law. The company's headquarters are located in San Francisco.
Mr. Schobinger said that before and after billionaire Elon Musk bought Twitter last year, the company verbally promised employees 50 percent of their targeted 2022 bonuses if they remained with the company in the first quarter of 2023. However, the bonuses paid were never implemented, according to the lawsuit.
Mr. Schöbinger filed the lawsuit on behalf of himself and on behalf of nearly 2,000 current and former workers. The amount in dispute is more than $5 million, according to court records.
In a three-page opinion Judge Vince Chhabria of the U.S. District Court for the Northern District of California denied the company's motion to dismiss the case, ruling that Mr. Schobinger “reasonably stated a claim for breach of contract” under California law.
Mr. Schöbinger confirmed that he was covered by the bonus plan and that he remained with the company until the potential final pay date.
“Once Schobinger did what Twitter requested, Twitter’s offer to pay him a reward in return became a binding contract under California law,” the judge wrote. “By refusing to pay Schöbinger the promised bonus, Twitter has violated this contract.”
The performance bonus plan “is not an enforceable contract because it provides only a discretionary bonus,” the company's lawyers said.
The judge wrote that Mr. Schobinger was not suing to enforce the discretionary bonus plan but “to enforce Twitter’s alleged subsequent verbal promise that employees would, in effect, receive a percentage of the annual bonus set forth in the plan if they remained with the company.”
The company argued that an oral promise was not a contract and that Texas law should apply, but the judge found that California law governed the case. But the judge wrote: “All of Twitter's opposing arguments fail.”
The company could not be reached on Sunday for comment.
Shannon Lees Riordan, Mr. Schobinger's lawyer, said in a statement that she was pleased with the judge's decision.
“The court denied Twitter’s motion to dismiss our claim that Twitter failed to pay promised bonuses to continuing employees,” it said. “We can now move forward with the case, which Twitter was trying to dismiss, so a ruling on the merits has not yet been made.”
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