A new lawsuit seeking class-action status claims Tesla violated federal law by abruptly laying off thousands of workers and denying them two months’ pay. The lawsuit is the latest in a series of allegations aimed at the electric carmaker as it navigates what could be difficult times amid supply chain issues and other economic troubles.
Former Tesla employees John Lynch and Daxton Hartsfield say they were among thousands of workers laid off recently as part of company-wide cuts. Earlier this month, CEO Elon Musk emailed executives saying he had a ‘super bad feeling’ about the economy and that Tesla would cut 10% of workers, Reuters reported.
The lawsuit filed Sunday in federal court in Texas, where Musk’s electric car company is headquartered after it moved from Palo Alto late last year, alleges the layoffs violated federal WARN law requirements. that workers are given 60 days written notice before being laid off en masse. . Additionally, because the workers allegedly received no such notice, Tesla also owes them 60 days of wages, according to the suit.
The US WARN Act applies to companies with 100 or more full-time employees or 100 or more employees who collectively work at least 4,000 hours per week, excluding overtime. Like California’s WARN law, which covers companies with 75 or more employees, it aims to give workers advance notice that they will lose their jobs in the event of mass layoffs or plant closures.
“Tesla did not act in good faith or on reasonable grounds to believe that its acts and omissions did not violate the WARN Act,” the lawsuit alleged.
The workers involved suffered a “devastating economic impact”, according to the lawsuit.
Tesla did not immediately respond to questions about the lawsuit claims and which facilities may see job losses. The company, by far the largest producer of electric vehicles in the country, operates a large factory in Fremont that Musk said in April could be significantly expanded.
Lynch and Hartsfield’s lawsuit follows a storm of lawsuits in recent years over working conditions at Tesla facilities. California’s civil rights regulator is suing the company, alleging that black workers at Tesla’s Fremont factory were paid less than white workers, were denied advancements and faced daily racist abuse. Tesla called the lawsuit the “misguided” result of a “summary investigation” and said the automaker “strongly opposes all forms of discrimination and harassment.” Last week, Tesla shareholder Solomon Chau filed a lawsuit against the company, citing a dozen lawsuits against workers and alleging that Tesla has “a toxic work culture based on abuse and discrimination. racism and sexism against its own employees,” which would have exposed Tesla to hundreds of millions. dollars in potential liability for violations of state and federal laws. Tesla did not immediately respond to a request for comment on that lawsuit.
Lynch and Hartsfield worked at Tesla’s battery plant in Nevada, where they were among more than 500 workers expelled, according to the lawsuit. Lynch was fired on June 10, Hartsfield was fired on June 15, and they and the other terminated workers were notified that their dismissal was “effective immediately,” according to the suit.
The plaintiffs are seeking to bring thousands of allegedly terminated Tesla workers into the lawsuit via class action certification, and they want each worker to receive 60 calendar days of Tesla’s wages, commissions, bonuses and benefits, as well as all medical expenses. incurred. within 60 days of their dismissal, which would have been paid under their company’s health insurance plans.
A confluence of economic issues ranging from inflation to COVID is plaguing Bay Area businesses, including Tesla. Area tech companies cut 3,300 jobs in May — 1,400 in the San Francisco-San Mateo area, 1,000 in Santa Clara County and 700 in the East Bay, according Beacon economy. In April, payment company PayPal laid off 83 workers in San Jose. San Francisco online fashion and styling company Stitch Fix announced this month that it would cut 330 jobs.
For Tesla, the COVID lockdowns in China, where it operates a major manufacturing plant, have been a “punch”, said Dan Ives, an analyst at Wedbush Securities.
For Tesla investors, the Lynch and Hartsfield lawsuit “just adds more noise to a noisy situation,” Ives added.