What Are the Next Steps for the Tesla Lawsuit?

Aron Solomon

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In February, California’s civil rights agency, the Department of Fair Employment and Housing (DFEH), sued Tesla in California Superior Court for violating the state’s Equal Pay Act and the Employment and Housing Act.

Department of Fair Employment and Housing v. Tesla, Inc. et al. has the potential to be a blockbuster lawsuit that is going to draw international attention for four main reasons.

The first is that Elon Musk is the founder of Tesla and also a massive celebrity. Our appetite for celebrity legal cases seems endless, and sometimes good things can come out of our obsession. Musk has become a celebrity and remarkably polarizing person from the time he left PayPal and launched his own ventures, including Tesla and SpaceX. While he has many fans, others see him as a dystopian character, like something out of an Ayn Rand novel.

Comic villain or brilliant visionary, the company that Musk built is obviously a very successful car manufacturer. Tesla has taken electric vehicles to a completely new market space, generating over $53 billion in revenue last year.

Yet Tesla self-identifies as a tech company as much as a car company. This is a critically important distinction because tech companies are justifiably in the spotlight for irresponsible behavior that harms society. A car company powered by technology that many people either don’t understand or simply fear, is perfect for the spotlight of a big lawsuit.

The final reason is that the facts of the case are so egregious and are made worse by the allegation that none of this is actually new.

As stated in the court filing:

As early as 2012, Black and/or African American Tesla workers have complained that Tesla production leads, supervisors, and managers constantly use the n-word and other racial slurs to refer to Black workers. They have complained that swastikas, “KKK,” the n-word, and other racist writing are etched onto walls of restrooms, restroom stalls, lunch tables, and even factory machinery. They have complained that Black and/or African American workers are assigned to more physically demanding posts and the lowest-level contract roles, paid less, and more often terminated from employment than other workers.

That was the beginning, not the end of the harassment. Plaintiffs also allege that the Tesla plant was referred to as the “slave ship” or “plantation” and that Black workers would hear these and related racial slurs up to 100 times a day.

Plaintiffs allege that none of these many employee reports were taken seriously:

Defendants failed to take effective remedial measures in response to complaints of discrimination and harassment. Workers were further discouraged from complaining as they were warned that complaints would be ignored, or perfunctorily acknowledged and then dismissed. Black and/or African American workers also were warned that complaints led to retaliatory harassment, undesirable assignments, and/or termination, especially since Defendants’ human resource personnel charged with addressing the complaints were allegedly close to the harassers.

John Lawlor, a Florida lawyer, argues that the law has to trump corporate culture:

“A case such as this has the potential to send a strong message to powerful companies that they can’t follow their rules and allow an illegal work culture to grow. No matter how powerful a business and no matter how many jobs they create, they have to run their business in a manner consistent with state and federal laws.”

Which Tesla hasn’t done here, if even a fraction of the allegations are proven to be true.

What is also interesting here is the guise under which Elon Musk announced plans, in October during their annual shareholder’s meeting, to move Tesla’s corporate headquarters from California to Texas. In what can now be seen as an effort to get out of California in part to evade laws that are simply stronger than those of Texas when it comes to protecting employees.

Tesla’s response will do them little good in the court of public opinion, while, of course, it won’t affect how the actual case proceeds in California Superior Court. Posted as a blog on their own site, Tesla’s response is that California’s lawsuit is not only misguided, it is "unfair and counterproductive."

In the post, Tesla says that the state’s motivation for the lawsuit is to generate publicity against the company, and they say they will ask the court to pause the case, which is a highly unlikely result.

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Aron Solomon, JD, is the Chief Legal Analyst for Esquire Digital, who has taught entrepreneurship at McGill University and the University of Pennsylvania, and was elected to Fastcase 50, recognizing the top 50 legal innovators in the world.

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