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Update: Musk claims Twitter losing $4M per day as widespread layoffs begin

Questions swirl around legality of Twitter layoffs
Questions swirl around legality of Twitter layoffs 01:53

SAN FRANCISCO -- New Twitter owner Elon Musk on Friday claimed the company was losing $4 million per day and had to reduce its workforce amid widespread layoffs.

Musk made the claim in a tweet Friday afternoon in defense of the layoffs.

"Regarding Twitter's reduction in force, unfortunately there is no choice when the company is losing over $4M/day," the tweet read.

He also said laid off employees were offered three months of severance pay. Musk also claimed that amount "is 50% more than legally required."     

Twitter began widespread layoffs Friday as new owner Musk continued his overhaul of the social media platform.

The company had told employees by email that they would find out by 9 a.m. if they had been laid off. The email did not say how many of the roughly 7,500 employees would lose their jobs.

Musk didn't confirm or correct investor Ron Baron at a conference in New York on Friday when he asked the billionaire Tesla CEO how much money he would save after he "fired half of Twitter."

Twitter headquarters in San Francisco
Twitter headquarters in San Francisco. AP Photo

Musk, speaking at Baron's annual investment conference, responded by talking about Twitter's ongoing cost and revenue challenges and blamed activists who this week called on big companies to halt advertising on the platform. Musk hasn't commented on the layoffs themselves.

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"The activist groups have been successful in causing a massive drop in Twitter advertising revenue, and we've done our absolute best to appease them and nothing is working," Musk said.

Some employees of the San Francisco-based company tweeted earlier that they had already lost access to their work accounts. They and others tweeted messages of support using the hashtag #OneTeam. The email to staff said job reductions were "necessary to ensure the company's success moving forward."

Twitter's employees have been expecting layoffs since Musk took the helm of the company. Already, he has fired top executives, including CEO Parag Agrawal, on his first day as Twitter's owner.

Musk also had removed the company's board of directors and installed himself as the sole board member. On Thursday night, many Twitter employees took to the platform to express support for each other -- often simply tweeting blue heart emojis to signify Twitter's blue bird logo -- and salute emojis in replies to each other.

ALSO READ: Looming staff cuts create tense atmosphere around Twitter HQ

Some Twitter employees have filed a class action lawsuit alleging the layoffs violated state and federal labor laws.

The suit filed Thursday in federal court in San Francisco by attorney Shannon Liss-Riordan on behalf of Twitter employees in the company's offices in San Francisco and Cambridge, Massachusetts, alleges that Musk's plans to lay off thousands of employees is not allowed under the federal Worker Adjustment and Retraining Notification (WARN) Act, as well as the state's WARN Act.

The federal law requires employers with 100 or more full-time employees to provide at least 60 calendar days' notice of a closure or layoff affecting 500 or more employees at a single site of employment.

One employee included in the lawsuit was notified earlier this week of his termination, while others were locked out of their accounts and more widespread layoffs were expected Friday.

Some had already been locked out of company accounts by the time the lawsuit was filed – an indication they would soon be formally terminated. 

"A little bit premature. We don't know yet what the employer is going to do. So I say this is somewhat of a preemptive or early strike by the attorney filing the suit on behalf of all the workers," said labor and employment attorney Bob Eassa. 

Eassa is a partner at Duane Morris LLP. 

"My suspicion in this case is that Twitter's got lawyers. They're going to know how the law works and that they'll put severance packages together. My speculation... they'll put severance packages together that will comply with the WARN Act and pay these people a minimum 60 days, plus all for their benefits," he said. 

The suit says another Musk-owned company, the electric carmaker Tesla, engaged in similar violations earlier this year when he made mass layoffs there without advanced written notice.

Twitter should be subject to "notice and back pay requirements" under the labor laws, according to the suit.

The plans to lay off roughly half of Twitter's workforce were criticized by local politicians, including state Sen. Scott Wiener, D-San Francisco, who called Musk's moves "deeply concerning."

Wiener said, "While companies periodically engage in layoffs to acknowledge economic realities, firing a full half of employees goes well beyond that. Combined with Musk's signals that he will allow toxic accounts back onto the platform -- thus leading to targeting and incitement of violence against LGBTQ people, Jews, people or color, and others -- I see trouble ahead for Twitter, its users, and our democracy."

State Assemblymember Matt Haney, D-San Francisco, said, "Slashing jobs by the thousands without notice at Twitter, a hostile 'nightmare' work environment, creating instability on a site that people use to access critical information just days before an election--don't defend or justify it, it's wrong, mean & dangerous."

Haney said, "We don't live in a country or state where private companies can do whatever they want at a whim. Laws do apply within the workplace."

The sweeping layoffs will jeopardize content moderation standards, according to a coalition of civil rights groups, who escalated their calls Friday for brands to pause advertising buys on the platform. The layoffs are particularly dangerous ahead of the elections, the groups warned, and for transgender users and other marginalized groups who face violence inspired by hate speech that proliferates online.

On Friday's press call, leaders with the organizations Free Press and Color of Change said they spoke with Musk on Tuesday. The leaders said Musk promised to retain and enforce the election integrity measures already in place. But the mass layoffs suggest otherwise, according to Jessica González, co-CEO of Free Press.

González pushed back on Musk's assertion that content moderation rules — an operation she said was already "dangerously under-resourced" — had not changed since his takeover.

"When you lay off reportedly 50% of your staff — including teams who are in charge of actually tracking, monitoring and enforcing content moderation and rules — that necessarily means that content moderation has changed," González said. "He cannot enforce content moderation if he doesn't have the staff to do so. AI alone cannot solve this problem."

As of Friday, Musk and Twitter had given no public notice of the coming layoffs, according to a spokesperson for California's Employment Development Department. That's even though the Worker Adjustment and Retraining Notification statute requires employers with at least 100 workers to disclose layoffs involving 500 or more employees, regardless of whether a company is publicly traded or privately held.

The layoffs come at a tough time for social media companies, as advertisers are scaling back and newcomers -- mainly TikTok -- are threatening the older platforms like Twitter and Facebook.

In a tweet Friday while employees were learning if they'd lost their jobs, Musk blamed activists for what he described as a "massive drop in revenue" since he took over Twitter late last week. He did not say how much revenue had dropped.

Big companies including General Motors, General Mills and Audi have all paused ads on Twitter due to questions about how it will operate under Musk. Volkswagen Group said Friday it is recommending its brands, which include Skoda, Seat, Cupra, Audi, Lamborghini, Bentley, Porsche and Ducati, pause paid activities until Twitter issues revised brand safety guidelines.

Musk has tried to appease advertisers, but they remain concerned about whether content moderation will remain as stringent and whether staying on Twitter might tarnish their brands.

In his tweet blaming activists for a drop in revenue, Musk said "nothing has changed with content moderation."

Insider Intelligence analyst Jasmine Enberg said there is "little Musk can say to appease advertisers when he's keeping the company in a constant state of uncertainty and turmoil, and appears indifferent to Twitter employees and the law."

"Musk needs advertisers more than they need him," she said. "Pulling ads from Twitter is a quick and painless decision for most brands."

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