Tesla has to pay ex-workers $ 137 million over hostile work surroundings and racism

Tesla Chief Executive Office Elon Musk speaks at his company’s Fremont, California factory.

Noah Berger | Reuters

A federal court in San Francisco ruled that Tesla must pay a former worker, Owen Diaz, around $ 137 million after suffering racist abuse while working for the company, his lawyers told CNBC on Monday. The jury awarded their client more than attorneys asked, including $ 130 million in punitive damages and $ 6.9 million for emotional distress.

Bloomberg first reported on the decision.

Diaz, a former contract worker hired through a recruitment agency at Elon Musk’s electric vehicle company in 2015, faced a hostile work environment in which, he told the court, coworkers used nicknames to denigrate him and other black workers, and himself called for “go back to Africa” ​​and left racist graffiti on the toilets and a racist drawing in his work area.

According to Diaz attorneys J. Bernard Alexander of Alexander Morrison + Fehr LLP in Los Angeles and Larry Organ of the California Civil Rights Law Group in San Anselmo, the only way the case could move forward was because the worker had not signed any of Tesla’s mandatory arbitration agreements .

Tesla is using mandatory arbitration to force employees to resolve disputes behind closed doors rather than in public.

Like other companies that use mandatory arbitration, Tesla rarely suffers significant damage or takes profound corrective action after arbitrators settle a dispute. However, Tesla had to pay $ 1 million to another former worker, Melvin Berry, under an arbitration agreement, who also endured a racist, hostile job at Tesla.

A pending class action lawsuit in Alameda County, California – Vaughn v. Tesla Inc. – Also claims that Tesla is marked by racial discrimination and harassment.

“We were able to put the jury in the position of our customer,” said Alexander CNBC. “When Tesla came to court and tried to say that they were zero tolerance and doing their duty? The jury was only offended because it was actually zero responsibility.”

A shareholder activist, Nia Impact Capital, calls on Tesla’s board of directors to investigate the impact of mandatory arbitration on their own people and culture.

In particular, the Oakland-based Social Impact Fund is concerned that mandatory arbitration can enable and hide sexual harassment and racial discrimination by Tesla stakeholders, which ultimately harms employees, dampens morale and productivity, and weighs on the bottom line.

In a recent shareholder proposal, Nia Impact Capital wrote:

“The application of mandatory arbitration provisions restricts employees’ legal remedies in the event of misconduct, prevents employees from bringing legal action against discrimination and harassment in court, and can keep underlying facts, misconduct or case results secret, thereby preventing employees from learning about common concerns and accordingly Act. “

Institutional Shareholder Services, the proxy advisory firm, recommended that shareholders vote for Nia’s proposal, noting that Tesla has faced many serious allegations of sexual and racial harassment and discrimination over the years.

This is the second year in a row that Nia Impact Capital has made such a proposal.

This year, like last year, Tesla’s board of directors advised shareholders to vote against reporting on the impact of mandatory arbitration on employees.

Tesla’s annual stockholders’ meeting is scheduled for October 7th and will be held at Tesla’s new vehicle assembly plant outside Austin, Texas, which is under construction.

Tesla did not immediately respond to a request for comment.

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