Tesla must pay $137 million to ex-worker over hostile work environment, racism
Elon Musk is the Chief Executive of Tesla at Fremont’s Factory in California.
Noah Berger | Reuters
The decision was made by a federal court in San Francisco TeslaHis attorneys said Monday that Owen Diaz was owed $137 million by the jury after he suffered racist abuse while working at the company. CNBC reported that the jury awarded Owen Diaz more damages than his attorneys requested, with $130 Million in punitive damages for him and $6.9M for emotional distress.
Bloomberg was the first to report on this decision.
Diaz, an ex-contract worker, was employed by Elon Musk’s electric vehicle firm through a staffing company in 2015. He said that his coworkers used epithets to make fun of him and other Black employees, and told him “go back home to Africa”. They also left graffiti and a drawing in their workspaces.
According to Diaz’s attorneys, J. Bernard Alexander with Alexander Morrison + Fehr LLP in Los Angeles and Larry Organ with the California Civil Rights Law Group in San Anselmo, the case was only able to move forward because the worker had not signed one of Tesla’s mandatory arbitration agreements.
Tesla makes use of mandatory arbitration in order to make employees resolve disputes privately rather than during a public trial.
Tesla is not like other mandatory arbitrators. They rarely face significant damages and take no remedial actions once a dispute has been settled. However, Tesla was required to pay $1 million — as the result of an arbitration agreement — to another former worker, Melvin Berry, who also endured a racist, hostile workplace at Tesla.
pending class-action lawsuit in Alameda County in California — Vaughn v. Tesla Inc. — also alleges that Tesla is rife with racist discrimination and harassment.
Alexander said to CNBC that Alexander was able “to put the jury in our client’s shoes.” “When Tesla appeared before the court, he tried to tell them that they were zero tolerance. They were doing their duty.” It was zero responsibility, so the jury wasn’t offended.”
A shareholder activist, Nia Impact Capital, is urging Tesla’s board to study the effects of mandatory arbitration on their own employees and culture.
The Oakland-based social investment fund, particularly, is worried that Tesla’s mandatory arbitration could enable and conceal sexual harassment and racism from Tesla stakeholders. This would ultimately hurt employees and negatively impact productivity, as well as the bottom line.
Recent research has shown that shareholder proposalNia Impact capital wrote:
Mandatory arbitration can limit employees’ recourses for wrongdoing. Employees are not allowed to sue in court for discrimination or harassment. The underlying facts of cases and their outcomes may be kept secret. This could prevent employees from sharing concerns with each other and hinder them from acting.
Institutional Shareholder Services (the proxy advisory company) recommended that shareholders vote in favor of Nia’s proposition, noting the many allegations against Tesla regarding sexual harassment, discrimination, and racism over the years.
It is the second consecutive year that Nia Impact Capital proposes such a plan.
Tesla’s board has advised its shareholders, just like last year to not report on the impact of mandatory arbitration on employees.
The annual shareholders meeting of Tesla is set for October 7, and it will be held at Tesla’s newly constructed vehicle assembly plant outside Austin, Texas.
Tesla has not yet responded to my request for comment.