Elon Musk and his company, X, have reached a tentative agreement to settle a class action brought by roughly 6,000 laid-off Twitter workers who alleged the company failed to honor a severance plan following Musk’s 2022 acquisition of the platform. The plaintiffs had sought up to $500 million in benefits under a 2019 agreement Law.com reports.

The U.S. Court of Appeals for the Ninth Circuit has agreed to stay oral arguments, which had been scheduled for September 17, while the parties finalize terms. Lawyers informed the court that a settlement agreement in principle was reached on August 19, with negotiations underway for a long-form deal that will outline how funds will be distributed to class members.

Once finalized, the settlement must be approved by the district court. If accepted, it would resolve all pending litigation and moot the appeal. The value of the agreement has not been disclosed in court filings, though the complaint sought $500 million in unpaid severance obligations.

The lawsuit, filed in 2023, alleged that X violated the Employee Retirement Income Security Act (ERISA) by failing to meet the conditions of Twitter’s 2019 severance plan. In July 2024, U.S. District Judge Trina Thompson dismissed the case, finding the claims fell outside ERISA jurisdiction. The plaintiffs appealed, setting up the now-paused arguments before the Ninth Circuit.

The case is one of several high-profile disputes that emerged after Musk’s acquisition and rebranding of Twitter. Beyond the severance litigation, X continues to face regulatory and contractual scrutiny tied to its business restructuring and staffing decisions.

The parties are expected to update the court on the status of negotiations no later than September 17.