Twitter avoids class action lawsuit regarding its missing notice for the mass layoff in November 2022. The judge, U.S. District Judge James Donato, ruled on Friday “that five former Twitter employees pursuing a proposed class action accusing the company of failing to give adequate notice before laying them off after its acquisition by Elon Musk must pursue their claims in private arbitration.” That’s according to CNBC. So what does that mean for the company, Elon Musk, and the former employees?
Twitter Avoids Class Action Lawsuit And Ex-Employees Will Go Through Arbitration Instead
The court ruled “laid-off workers suing over their termination to pursue their claims via individual arbitration than a class-action lawsuit.” Because these ex-employees signed employment contracts with this agreement. Even though those agreements fell under the previous Twitter leadership, they transferred over to Elon Musk when he purchased the company on October 28, 2022.
What Is Private Arbitration?
Private arbitration clauses are pretty common in employment contracts. Per FindLaw employees cannot pursue legal action against their employer and must go through a private hearing. This is an alternative solution than going through the court system with a judge and jury. According to FindLaw there are many downsides to private arbitration:
- A third-party called the arbitrator handles the disputes, and their decision usually follows the law.
- Both parties get to request less evidence and documents, which can hurt an employee’s case as usually employees have more evidence and documents.
- Arbitration decisions cannot go through appeal, so if an employee dislikes a decision there’s no one else to turn for review.
What Happens Now?
The lawyer for the ex-employees, Shannon Liss-Riordan, already filed 300 demands for arbitration. And she’s not done as she said she will file hundreds more. This means Twitter will have to handle each demand individual with an arbitrator, which can be costly. Because the company will have to pay the arbitrator to listen to each individual and go through the evidence. In addition, Twitter will have to prepare its defense and find evidence for each case. Thus, I expect the company’s legal team will be busy for quite some time. Unless they hire additional help for these cases.