© Reuters. FILE PHOTO: A Tesla car drives past Tesla’s main auto plant in Fremont, California, US, May 11, 2020. REUTERS/Stephen Lamm/File Photo
Written by Daniel Wiesner
(Reuters) – A jury trial begins Monday to determine how much money Tesla (NASDAQ:) Inc. has to pay a black former Tesla Inc factory worker who won a lawsuit accusing the electric-car maker of tolerating severe racial harassment at its Fremont, California assembly plant. . The case is one of several related to working conditions at Tesla and other companies owned by billionaire Elon Musk. Here’s a look at what’s at stake.
What discrimination claims does Tesla face?
Owen Diaz, a former elevator operator at the Fremont factory, won a 2021 trial against Tesla, saying he was subjected to harassment including racial slurs and racist caricatures. A jury awarded Diaz $7 million for emotional distress and $130 million in punitive damages, but a federal judge reduced the total amount to $15 million. Diaz refused to pay the lower damages and opted for a new damages trial.
The US Supreme Court has said that punitive damages should not be more than ten times the awards for emotional distress and other injuries.
Tesla faces similar but broader allegations of tolerance of racist behavior in a proposed class action lawsuit by black workers and a separate lawsuit by the California Civil Rights Agency. These cases are still in their early stages and will not be brought to trial soon. Tesla has denied any wrongdoing and described the agency’s lawsuit as politically motivated.
Is Tesla facing more claims than other major automakers?
The small number of cases pending against Tesla is in line with what any large company can expect. What stands out is the consistency of allegations alleging rampant harassment of black workers at the Tesla factory in Fremont. The lawsuits against most other companies come from individual plaintiffs making claims that vary widely. But all of the cases against Tesla claim that the company’s small human resources team did not have enough staff to handle a series of complaints from black employees.
How big is the financial threat to Tesla and Musk?
Tesla is among the most valuable companies in the world with a market capitalization of over $580 billion, and Musk is the second richest person in the world. So a jury award of tens of millions of dollars for Diaz would upset the company or its founder but not kill them.
Still, the case could prompt investors to scrutinize the hiring practices of Musk’s companies, and raise concerns about pending cases involving more Tesla workers. Last year, a Tesla shareholder sued the company and Musk in a Texas federal court claiming that their failure to address a “toxic workplace culture” caused Tesla to lose quality employees, costs to defend cases and pay fines.
What about other work issues?
Tesla is also fighting a series of sexual harassment lawsuits brought by female workers at the Fremont plant and another plant near Los Angeles. Another complaint filed with the US Department of Labor last year accuses Tesla of wage theft and worker safety violations at its $1.1 billion truck plant in Austin, Texas. In another pending case, a former production manager claimed he was fired for raising concerns about safety issues at the Fremont plant and a plant in Nevada.
Tesla is appealing a US Labor Council decision last August that said the company several years ago illegally barred workers at its Fremont plant from wearing union insignia. In separate cases pending in the Labor Council, former employees of Tesla and SpaceX, Musk’s rocket company, have claimed they were fired for criticizing the companies’ hiring policies.
What did Elon Musk and Tesla say about these claims?
In a 2017 email to Tesla employees in response to Diaz’s lawsuit, Musk stated that “Part of not being such a huge jerk is considering someone’s feeling that they are part of a historically less representative group.” But he added that minorities should be “thick skinned” and accept apologies from co-workers who insult them.
Tesla has said in court filings that it does not tolerate discrimination, takes worker complaints seriously and punishes employees who violate its anti-bias policies. The company also said it regularly updates management and its board members on initiatives aimed at preventing discriminatory behaviour, including in pay and promotions.