On October 27, 2022, Elon Musk – CEO of Tesla and Space X bought Twitter social network for $44 billion. Immediately after becoming the boss of Twitter, Elon Musk proceeded to dismiss 3,500 employees, and plans to dismiss the remaining 75% of Twitter’s employees. Is the action of the boss of Twitter contrary to the law of the United States, as well as the provisions of the WARN Act? Let’s find out with TNPT.
1. What is WARN?
WARN stands for Worker Adjustment and Retraining Notification Act. This is a federal law of the United States born in 1998 with the purpose of requiring employers to give advance notice to employees of the closure or dismissal of employees for the purpose of protecting the legitimate rights and interests of employees against the risk of job loss.
Because WARN is a federal law, different US states may enact WARN of state to match their respective state laws. In the case of Twitter, since California is the state where Twitter is headquartered, the California WARN Act may be applied (“California WARN”).
2. Regulations of California WARN
California WARN requires that employers give workers 60 days advance notice in written before taking measures to cut down 100 or more workers. Mass dismissal actions are defined as dismissal equal to at least 33% of the total workforce owned by the employer. If it breaks this rule, Twitter will face a fine of $500 for each day of the violation.
For this case, if Elon Musk really proceeded to dismiss 3500 employees right in October 2022, it would be a violation of California WARN regulations.
However, there are many reasons for us to believe that Elon Musk well prepared for this situation, as this is not the first time the boss of Twitter has been embroiled in accusations related to dismissal.
3. The reason Elon Musk may not have violated the California WARN
One of the basic provisions of the California WARN is that if a enterprise terminates a contract with 50 or more workers in a day, it must give at least 60 days notice in advance or pay the workers within 60 days.
Thus, in the case that Elon Musk notified 3500 employees of their dismissal but then he continued to pay them for 60 working days, it would not be considered a violation of WARN. Or another case, when 3500 employees received notice of dismissal, but 60 days later, those employees have not been dismissed and continue to work and receive salary at Twitter, then Twitter automatically has the right to suddenly abruptly fired these employees because they had properly performed at least 60 days of notice in advance.
Thus, if Elon Musk dismisses Twitter employees, if based on the principles prescribed by US law, in theory, Elon Musk can dismiss any employee he wants, as long as the dismissal complies with the requirements of the law and is not contrary to California WARN.
Elon Musk’s words and actions often do not go together, this is clearly shown in the way Elon Musk acquired Twitter when this billionaire repeatedly abandoned the agreement but ultimately decided to buy the 2nd largest social network in the world. Therefore, Elon Musk’s statement about the mass dismissal of Twitter employees is causing a stir in the United States, if not accompanied by violations, will not cause any damage to employees at Twitter and will of course not violate California WARN regulations.
Behind every seemingly unusual action Elon Musk is certainly guaranteed by his legal team and lawyers, and maybe every unusual action will also have certain reasons to bring benefits for this billionaire.
In addition, it is impossible not to mention that the employment relationship on a voluntary basis (“At-will”) is applied throughout the United States (except for the state of Montana). Accordingly, an employer in the United States has the right to terminate an employee’s contract at any time for any reason, (except for reasons prohibited by law or without cause) without incurring legal responsibility. Similarly, employees are also free to terminate their employment relationship with their employer at any time, for any reason or even for no reason, without any legal consequences.
Therefore, we believe that Elon Musk and his employees have equal rights and obligations under US law. However, Elon Musk’s employee dismissals are simply more attention-grabbing than Twitter employees’ resignation statements. We will further analyze the labor relations on the voluntary spirit (“At-will”) of the US law in another article.
Above is an article by TNTP analyzing Elon Musk’s dismissal of Twitter employees and the regulations of the WARN Act, hopefully the article will be useful to you.