The US Equal Employment Opportunity Commission (EEOC) has initiated legal action against Tesla Inc, alleging that the electric vehicle manufacturer has tolerated widespread racial harassment of Black employees at its primary assembly facility in Fremont, California. The lawsuit, which has been filed in a federal court in California, accuses Tesla of permitting an environment where Black workers have been routinely subjected to racist slurs and offensive graffiti, including the display of swastikas and nooses, from 2015 to the present.
According to the EEOC, Tesla has failed to adequately address complaints related to racist behavior and has even taken punitive actions against workers who reported instances of harassment. This lawsuit adds federal charges to previous claims of discrimination brought forth by the state of California and lawsuits initiated by Tesla employees. Settlement discussions with the EEOC broke down following the agency's formal expression of concerns last year. Typically, the EEOC resolves disputes with employers through settlements, and it is relatively uncommon for these cases to proceed to trial.
Tesla is currently grappling with several other race discrimination lawsuits that make similar allegations, including a class-action lawsuit filed by workers at the Fremont plant and a suit initiated by a California civil rights agency. In response to these cases, Tesla has asserted its commitment to preventing discrimination and has emphasized that it takes employee complaints seriously. As of now, Tesla has not issued a response to this latest legal action.
The company's stock price experienced a 2.4% increase on Thursday, reaching $246.38 per share.
Legal experts have noted that the involvement of the federal government in this lawsuit lends credibility to the allegations. Furthermore, major institutional investors like pension funds may become increasingly concerned about Tesla's behavior in light of these developments.
The EEOC's investigation into Tesla was launched after Charlotte Burrows, the chair of the five-member commission, filed an internal complaint, known as a charge, against the company. Last year, the agency determined that there was "reasonable cause" to believe Tesla had violated federal laws prohibiting workplace racial discrimination. Despite its efforts, the EEOC was unable to reach a settlement agreement with Tesla.
The lawsuit filed by the EEOC seeks compensatory and punitive damages for an unspecified number of Black workers. Additionally, it calls for an order mandating Tesla to overhaul its policies regarding discrimination and retaliation prevention.
In parallel, Tesla faces allegations of racial discrimination from the California Civil Rights Department, a state-level counterpart of the EEOC. This department asserts that Tesla discriminated against Black employees in matters related to pay, promotions, and work assignments. While the department's lawsuit involves California state law violations, the EEOC case pertains to violations of federal laws.
Tesla has argued that the California department's lawsuit was politically motivated and has contended that the agency violated state law by initiating legal action without first notifying the company of all claims or offering an opportunity for settlement. A California judge rejected Tesla's motion to dismiss this case last year and is currently addressing pre-trial discovery matters.
Moreover, a former Black elevator operator at the Fremont plant, Owen Diaz, is pursuing a third trial in his 2017 lawsuit, which alleges severe racial harassment. In April, a jury awarded Diaz $3.2 million, though an earlier jury in 2021 had granted him $137 million, an amount subsequently deemed excessive by a federal judge. Consequently, Diaz opted for a new trial instead of accepting a reduced award of $15 million.
Additionally, Tesla is confronting a class-action lawsuit in California state court regarding the alleged mistreatment of Black factory workers. Approximately 240 workers have sought to join this lawsuit.
