US court rules Twitter breached contract over failure to pay annual performance bonuses

A US federal court ruled on Friday that social media company Twitter, now branded X, violated contracts by failing to pay annual performance bonuses it orally promised its workers.

A US federal court ruled that Twitter (now X) violated contracts by failing to pay annual performance bonuses promised to its workers. (REUTERS)

A US federal court ruled on Friday that social media company Twitter, now branded X, violated contracts by failing to pay annual performance bonuses it orally promised its workers.

The breach-of-contract lawsuit was brought by former employer Mark Schobinger in June.

The lawsuit said Twitter had promised workers a 2022 performance bonus if they stayed with the company through the final possible payout date, which was the first quarter of this year.

The court threw out Twitter's attempts to have the case dismissed, ruling that Schobinger's claim of breach of contract under California law was valid.

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"Schobinger has plausibly stated a breach of contract claim under California law. He alleges that Twitter orally promised to pay each employee a portion of the bonus contemplated," wrote US District Judge Vince Chhabria.

"And by allegedly refusing to pay Schobinger his promised bonus, Twitter violated that contract," said the judge.

X can still appeal the court's decision.

The social network now owned by Elon Musk, is currently facing multiple headwinds, including an EU probe under a law designed to combat disinformation and hate, criticism of the platform's response to recent rioting in Dublin, and an exodus of big-name advertisers.

The company is now worth less than half of the $44 billion he paid for it in October 2022, according to internal documents sent to staff and reported by tech publication The Verge.