Opinion
So Musk wants his former employees’ money back. Is that legal?
Victoria Devine
Money columnistIf you think being mistakenly overpaid by your employer and having them ask you to return the money is bad, spare a thought for the Australians who are currently facing that very request from the world’s richest person, Elon Musk.
Earlier this week, this masthead revealed at least six former employees of Musk’s social media platform X (née Twitter) have received legal notices requesting they repay between $1500 and $70,000 in overpayments dating back to January 2023.
Can an employer ask you to pay back wages? And more importantly, should they?Credit: Dionne Gain
The overpayments, according to X, were the result of a currency conversion mix-up when moving from US to Australian dollars, meaning the employees (who had just been made redundant) had their entitlements paid out at a conversion rate above what they were expecting. If there were ever to be a silver lining to being made redundant, surely this would have been it.
But now, X has come knocking for the money and is warning the former employees that if they don’t play nice and comply with the request, the Australian arm of the company reserves the right to begin legal proceedings to obtain not just the overpayments, but also any interest accrued on the amount owing.
Immediately, two questions spring to mind: can an employer do this, and should an employer do this?
Like so many things involving Musk, arguably the internet’s least favourite 1 per cent-er, neither question has an easy answer.
Retrieving payments they made to their former employees may well be legal, but Musk and X will pay a reputational price.
Under the Fair Work Act 2009 (Cth), any Australian who receives an overpayment isn’t legally required to return it, which is great for the employee. Not completely without recourse, employers can – in limited circumstances – withhold money from future pay to make up for the error and recoup the loss. In the instance of the X employees, this option wasn’t available because they had already been made redundant.
Another complication lies in the fact that the overpayments relate to employee shares, not their standard take-home pay. For tech companies like X, these kinds of employee schemes are not uncommon.
Staff are issued with a number of shares upon joining the business, and the amount ultimately paid out depends on various factors like years spent at the company and any additional shares that were acquired or sold before the end of the working relationship.
In January 2023, when the Australian employees were let go as part of a much broader round of redundancies ordered by Musk, the share price was $US54.20 (or $82), which is why some employees owe as little as $1500 while others owe up to $70,000.
Elon Musk’s bid to recoup overpayments is unlikely to win him many fans.Credit: Getty
Considering it’s not immediately clear if the employees are entitled to keep any money from the overpayment and the legal threat from the company – who unquestionably has more money and litigation power than any of its former employees, even as a collective – the simplest option would be to pay back the money.
But this is where the question of should an employer request an overpayment be returned comes into play.
Despite having a personal net worth of $US208.4 billion, it’s no secret that since buying Twitter for a record $US44 billion and transforming it into X, both Musk personally and the company have been haemorrhaging money.
Within a month of the deal being finalised in October 2022, the Tesla chief executive began laying off 3700 employees – an equivalent of half their entire workforce. By January 2024, the company value had dropped by a staggering 71.5 per cent due to controversial decisions like reinstating the accounts of previously banned users like Donald Trump and Jordan Peterson and relaxing regulations around hate speech, which saw a mass departure from advertisers. X now has an estimated value of just $US12.5 billion.
Considering the financial woes facing the company less than two years into its new world order under Musk, you can see the argument for asking former employees to return their overpayments.
X is, after all, well within its legal rights to make the request, and a company recording losses into the billions shouldn’t be in the business of giving away money where it doesn’t have to.
But with the amounts ranging between $1500 to $70,000 for six people, at the absolute most, X’s retrieval mission will bring no more than $420,000 to the tables. For the average business or business owner, that’s a huge amount of money and one that would be worth any potential reputational fallout that may come with the unpopular move.
But Musk is not your average business owner, and X is not your average business.
The 52-year-old is currently being reviewed by the Federal Appeals Court in the US after the National Labour Relations Board found he illegally threatened Tesla employees wanting to unionise would lose their benefits and is fighting to pay the legal bare minimum in child support for three of his 11 children despite, dare I say it again, being the richest person on the planet.
He also has a litany of other controversies, including his baseless accusations against one of the heroic Thai Cave rescuers after his idea to build a mini-submarine was ridiculed. I could go on (and on and on).
What’s more, the reputation X once enjoyed in Australia is long gone, not least since it refused to remove footage showing Sydney Bishop Mar Mari Emmanuel being attacked from its platform on the basis that the graphic and disturbing content didn’t breach its guidelines.
Musk’s decision to call eSafety Commissioner Julie Inman Grant, who was seeking the removal of the footage, a “censorship commissar” subsequently saw his supporters troll Inman Grant to the point where NSW and federal police were contacted over concerns for her and her family.
All of this means that for both Musk and X, retrieving payments made to their former employees may well be legal. But the price of doing so will almost certainly be another nail in their reputational coffin.
Victoria Devine is an award-winning retired financial adviser, best-selling author and host of Australia’s No.1 finance podcast, She’s on the Money. Victoria is also the founder and director of Zella Money.
- Advice given in this article is general in nature and not intended to influence readers’ decisions about investing or financial products. They should always seek their own professional advice that takes into account their personal circumstances before making any financial decisions.
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