The settlement was reported in a joint request to the US appeals court in San Francisco to defer a hearing while the involved parties finalize the details. Approximately 6,000 employees were dismissed as part of Musk’s restructuring efforts at the company, which was previously known as Twitter. The job cuts represented over 50% of the workforce, triggering the lawsuit led by Courtney McMillian, a former employee.

According to court documents, the agreement is still not finalized, and further details have yet to be disclosed pending court approval. The lawsuit alleged that many employees were unjustly denied benefits under the company’s severance plans, asserting that most only received one month of redundancy pay or none at all, instead of the up to six months they were entitled to.

Following Musk's acquisition, considerable downsizing occurred across various teams within the company, including trust and safety and human rights departments. These layoffs are among the initial moves in a broader trend of tech companies scaling back personnel in response to economic pressures post-pandemic.

Musk’s experience with mass layoffs extends beyond X, as seen in similar actions during his previous leadership role to reduce federal workforce expenditures.

Additional reporting by Lily Jamali.