Tesla Employee Lawsuit Alleges Violation of Federal Law Amidst Layoffs

Tesla’s mass electric layoffs spark a lawsuit.



According to reports, more than 500 Tesla employees have been let go from the Nevada gigafactory. Two laid off employees have filed a lawsuit against Tesla alleging that the electric carmaker violated federal law by failing to provide sufficient notice and benefits. The former employees are entitled to 60 days of pay and benefits. The Tesla employee lawsuit outlines how unjustly the layoffs were carried out by the company and demands due reparations.

tesla laying off employees

Musk’s predictions about the US economy combined with sudden layoffs trigger a lawsuit by laid off employees over lack of notice.

Tesla Employee Lawsuit and the WARN Act

The lawsuit states that Pursuant to the WARN Act, Tesla is required to provide Plaintiffs and Class Members with the required sixty (60) days advance written notice of a mass layoff. However, in connection with the recent mass layoffs… Tesla has failed to give Plaintiffs and the Class Members any advance written notice of their terminations.” They are seeking a class action suit on behalf of Tesla employees who were laid off between May and June. They allege that “Tesla has simply notified the employees that their terminations would be effective immediately.”

The Worker Adjustment and Retraining Notification (WARN) Act that was passed in 1988 requires employers to give workers sufficient notice in case of confirmed mass layoffs of 50 or more people from the same site. The employees claim that Tesla laying off employees like this is in direct violation of the WARN Act. Attorney Shannon Liss-Riordan who represents the aggrieved employees told Bloomberg, “Tesla started laying people off in blatant disregard for the WARN act” and only offered one week of severance pay. She revealed that she is preparing an emergency motion to prevent Tesla from going ahead with the layoffs under the current plan. She also expressed her displeasure at Tesla’s misdemeanor, telling Reuters, “it’s pretty shocking that Tesla would just blatantly violate federal labor law by laying off so many workers without providing the required notice.”

John Lynch and Daxton Hartsfield, who worked at the plant for about five years, filed the lawsuit as they were believe they were wrongly terminated. Tesla laying off employees has impacted workers across divisions from human resources to engineering. The plaintiffs are seeking 60 days of compensation and benefits for all those who have been laid off, along with attorney fees and costs.

Musk’s Layoff Plan

At the start of June, Musk warned of a potential recession and vaguely mentioned that he will take steps to safeguard his companies. He had also emailed Tesla executives that he had a “super bad feeling” about where the US economy is headed. 

Earlier, Musk had revealed that he might reduce Tesla’s workforce by almost 10% as the economy seems headed for trouble. According to the lawsuit, thousands of Tesla employees across the US have been let go without proper communication, in clear violation of the rules. As Tesla laying off employees comes after Musk’s comments about the economy, most believe that this was a planned move and they should’ve been given fair notice.

After the lawsuit was filed, Musk told CNBC in an email that Tesla will lay off nearly 10% of its salaried employees in time and increase the number of hourly employees. He also added that, “A year from now, I think our headcount will be higher in both salary and obviously in hourly.” But almost two-thirds of Tesla employees are salaried workers. The layoffs will reduce its salaried workforce by nearly 3.5%. He also admitted that the lawsuit was a minor consequence. He did not give it much weightage, commenting, “anything that relates to Tesla gets big headlines, whether it is a bicycle accident or something much more serious.”

On the other hand, a Tesla employee lawsuit by a former Black worker, Owen Diaz, has reached an impasse after the ex-worker rejected the $15 million payout. Diaz’s rejection means that the case will head for a fresh trial. Furthermore, another Tesla employee lawsuit alleges racial discrimination and harassment at the electric carmaker’s Fremont facility, which the company maintains is unlawful.

Christy Gren
Christy Gren is an Industry Specialist Reporter at Industry Leaders Magazine she enjoys writing about Unicorns, Silicon Valley, Startups, Business Leaders and Innovators. Her articles provide an insight about the Power Players in the field of Technology, Auto, Manufacturing, and F&B.

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