Solomon: Elon Musk Triggers WARN Law with Mass Layoffs, Now Facing a Nightmare Situation
For those who thought that $44 billion was going to be Twitter’s final purchasing price, this week is shedding new light on how expensive acquiring the platform will ultimately be for Elon Musk.
On Thursday night, Musk was sued for a violation of the laws surrounding mass firings. As Fox News first reported, Twitter is being sued in the United States District Court in San Francisco in a class action lawsuit that includes five current or former Twitter employees as plaintiffs.
The legislation at issue here is known as the WARN Act, or Worker Adjustment and Retraining Notification Act, enacted in 1988 to protect workers from mass layoffs.
The act is also known as the “60-day notice” law because it requires employers to give their employees at least 60 days’ notice before a mass layoff or plant closing. If an employer does not give this notice, he may be required to provide back pay up until the date when the employees would have received their notice.
As Musk is learning today, the entire point of the WARN Act is to protect workers by giving them time to find new jobs before they lose their current ones. It also protects communities by providing some warning when large numbers of people are being laid off from one company or facility.
So while Musk might have thought it expedient from the business side of things to institute a mass firing of around half the Twitter employees without giving proper notice, from the legal side of things it clearly wasn’t.
I spoke with attorney Tim George on Friday morning about the Twitter suit. “Elon Musk has to deal not only with federal WARN legislation but, given that the Twitter offices are in San Francisco, California’s state WARN legislation, which raises the bar,” he said.
Musk would have had to give notice of the mass firings to San Francisco’s Local Workforce Development Area office as well as the chief elected official of each city and county government within which the terminations occurred, which the legal filing indicates that he did not do.
Again, none of this is a surprise. Those of us who closely follow the ongoing Twitter/Musk made-for-TV drama expected layoffs, just not as quickly or poorly done as was indicated in Twitter’s Thursday night email to employees obtained by NBC News.
Ultimately, Musk can do whatever he wants with Twitter, as his words and actions have proved from the moment he became a shareholder of the social media giant. But when he chooses to do things in the worst possible way, as he often seems to, there is a real and reputational cost associated with his actions.
Here, Musk will settle or lose the class action lawsuit. Either way, it’s going to cost him and add to the real acquisition cost of the company, which will eventually significantly eclipse the $44 billion purchase price.
All of this comes in a week that must have seemed like a month to Musk. From his real-time run-ins with Stephen King and Rep. Alexandria Ocasio-Cortez to whether regulators decide to investigate the details of his acquisition of Twitter, Musk is either charting his own very unique course or a tire fire in the making.
What is worse for Musk is that if he continues to anger Twitter’s users, the courts, legislators, the media, and pretty much everyone save for those who are his work or personal friends and hope to also profit from Musk’s ownership of Twitter, the more rocky a road he’s creating for the company he just bought and hopes to transform into something profitable.
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