Ex-Employee Says Tesla Broke Law With Mass Layoffs: Lawsuit

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A recently terminated Tesla employee filed a lawsuit against the company Tuesday, claiming the automaker violated a California state law by failing to give proper notice when it allegedly laid off hundreds of workers this month.

The situation dates to earlier this month, when Tesla confirmed that it was firing hundreds of employees at departments across the company. Tesla said it was due to annual performance reviews, but employees have since claimed they were blindsided by the decision.


That includes Abraham Duarte. In a six-page complaint filed in Alameda County Superior Court on Tuesday, Duarte says he and “other similarly situated employees” were dismissed by Tesla as part of a layoff ordered by the automaker. The suit claims Tesla “acted intentionally and with deliberate indifference” to the employees by failing to provide proper note of the mass terminations under California’s WARN Act.

State law requires an employer like Tesla to provide 60 days notice if it intends to layoff more than 50 employees, said Duarte’s attorney, Nick Rosenthal. “We understand that Tesla’s, presumably, going to say, ‘No, this isn’t a layoff, it wasn’t due to a lack of work, it was because they were bad employees,’” Rosenthal told Jalopnik.


Rosenthal said he believed Tesla was using the excuse of performance reviews as a way to “cover up the fact this was a layoff.”

“We know that, in the case of our client, that certainly wasn’t true,” he said. “He was an excellent employee. That’s why we believe they’re just using this excuse, ‘Oh, these employees are underperforming.”


Tesla said it’s confident the WARN Act doesn’t apply to the current situation and asserted these were firings, not layoffs, that happened over performance.

“Like all companies, Tesla conducts an annual performance review during which a manager and employee discuss the results that were achieved, as well as how those results were achieved, during the performance period,” a Tesla spokesperson said in a statement.


“This includes both constructive feedback and recognition of top performers with additional compensation and equity awards, as well as promotions in many cases. As with any company, especially one of over 33,000 employees, performance reviews also occasionally result in employee departures. Tesla is continuing to grow and hire new employees around the world.”

Still, the terminations come at a crucial moment for the automaker, which is trying to climb out of its so-called “production hell” for the all-electric Model 3. Tesla missed its production target for the new sedan, forcing CEO Elon Musk to delay the reveal of the company’s new semi-truck.


Reports have suggested anywhere from 400 to 1,200 employees lost their jobs, but Tesla hasn’t confirmed a number to date. Anderson estimated about 500 employees have been laid off, before declining to elaborate.

Additional dismissals was reported on Tuesday by CNBC, which said the latest round occurred at Tesla’s SolarCity subsidiary, again for “performance reasons.” CNBC reports those employees dispute that account, as well, saying no reviews have been conducted since Solar City was fully acquired by Tesla in late 2016.


Tesla has also been dogged in recent weeks by a spate of lawsuits filed by former employees who claim they suffered racial discrimination and faced anti-LGBT threats. The automaker has disputed the charges, telling The Guardian last week: “There is no company on earth with a better track record than Tesla.”

The company also took aim at plaintiffs’ lawyers, claiming they file suit against Tesla knowing “it maximizes the changes of generating publicity for their case.”


“They abuse our name, because they know it is catnip for journalists,” Tesla told The Guardian. “Tesla takes any and every form of discrimination or harassment extremely serious.”

Employees this year have levied complaints about pay, safety, and workers rights violations, spurring a unionization effort at Tesla’s Fremont, California, factory that remains ongoing. Musk has said he opposes the United Auto Workers’ effort to organize the plant.


Tesla’s also facing a complaint from the National Labor Relations Board, an independent government agency that seeks to enforce U.S. labor laws. The complaint says the NLRB found merit in employee claims that Tesla is interfering with union activities at the Fremont plant and has violated workers’ rights by requiring them to sign a broad confidentiality agreement. Tesla has said the allegations are baseless. A hearing in that case is scheduled for November 14.

Duarte’s suit requests class-action status, and Rosenthal said if the complaint is certified, he’ll be asking for two months of pay for every affected employees, as well as attorney’s fees.


Update: This story has been updated to clarify the claims of whether these were firings or layoffs, and to correct a quote from Duarte’s attorney.