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A federal court in San Francisco has ruled that Tesla should pay former worker Owen Diaz about $ 137 million after he suffered racist abuse while working for the company, his lawyers told CNBC on Monday. The jury awarded more than the lawyers sought for their client, including $ 130 million in punitive damages and $ 6.9 million for emotional distress.
Bloomberg first reported on the decision.
Diaz, a former contractor who was hired at Elon Musk’s electric vehicle business through a recruiting agency in 2015, faced a hostile work environment in which he said. told in court, colleagues used epithets to denigrate him and other black workers, told him to “go back to Africa” and left racist graffiti in the toilets and a racist cartoon in his workspace.
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 could only move forward because the worker did not have signed one of Tesla’s mandatory mandates. arbitration agreements.
Tesla uses compulsory arbitration to force employees to resolve disputes behind closed doors rather than in a public trial.
Like other companies that use compulsory arbitration, Tesla rarely faces significant damage or rarely takes deep corrective action after arbitrators have settled a dispute. However, Tesla had to pay $ 1 million – following an arbitration agreement – to another former worker, Melvin Berry, who also suffered a racist and hostile workplace at Tesla.
A class action lawsuit pending in Alameda County, California – Vaughn v. Tesla Inc. – also alleges that Tesla suffers from racist discrimination and harassment.
“We were able to put the jury in our client’s shoes,” Alexander told CNBC. “When Tesla came to court and tried to say they had zero tolerance and fulfilled their duty? The jury was just offended by that because it was actually zero liability.”
Activist shareholder, Nia Impact Capital, urges Tesla’s board of directors to study the effects of binding arbitration on their own employees and their culture.
In particular, the Oakland-based social impact fund fears that compulsory arbitration could allow and mask sexual harassment and racist discrimination from Tesla stakeholders, ultimately harming employees, weakening morale and productivity as well as weighing on the results.
In a recent shareholder proposal, Nia Impact Capital wrote:
“The use of mandatory arbitration provisions limits employees’ remedies for wrongdoing, prevents employees from suing in court cases of discrimination and harassment, and can keep underlying facts, wrongdoing a secret. or the results of the case and thus prevent employees from learning and acting on common concerns. “
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 launched such a proposal.
This year, as it did last year, Tesla’s board of directors advised shareholders to vote against reports on the impacts of binding arbitration on employees.
Tesla’s annual meeting of shareholders is scheduled for October 7 and will take place at Tesla’s new vehicle assembly plant under construction outside of Austin, Texas.
Tesla did not immediately respond to a request for comment.
However, the company published a blog post aimed at the general public on Monday evening, which it said had been distributed internally to employees earlier by Tesla’s vice president of People Valerie Capers Workman. In the post, she downplayed the seriousness of the racist discrimination described by Diaz.
For example, Workman’s letter read:
In addition to Mr. Diaz, three other witnesses (all non-Tesla contract employees) told the trial that they regularly hear racist slurs (including the n-word) at the Fremont factory. all agreed that the use of n-word was not appropriate in the workplace, they also agreed that most of the time they believed that the language was used in a “friendly” manner and generally by Afro colleagues -Americans. “
She also pointed out that Tesla had made changes since 2016, when Diaz last worked for the company, including adding a Diversity, Equity and Inclusion team, and replacing an “Anti-Manual Manual” with a more traditional employee handbook where HR policies are collected in one place.
Workman’s statement did not specify if or when Tesla planned to appeal.
Read Tesla’s full statement here.
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