Tesla must pay $137 million to ex-worker over hostile work environment, racism

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  • A federal court in San Francisco decided Monday that Tesla must pay a former worker, Owen Diaz, about $137 million after he accused a hostile work environment and racist abuse working there as an elevator operator. tolerated.
  • According to his lawyers, the case was only able to proceed because Diaz had not signed one of Tesla’s mandatory arbitration agreements, which the company uses to force employees to resolve disputes without a public trial. .
  • Nia Impact Capital, a shareholder activist, has asked Tesla’s board to study the effects of mandatory arbitration agreements on the company, expressing concerns that they enable harassment and other problems.

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A federal court in San Francisco decided that Tesla must pay a former worker, Owen Diaz, about $137 million after enduring racist abuse who worked for the company, his lawyers told Businesshala on Monday. The jury awarded more than the attorneys sought for their client, including $130 million in punitive damages and $6.9 million for emotional distress.

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Businesshala first reported the decision.

Diaz, a former contract employee who was hired at Elon Musk’s electric vehicle company through a staffing agency in 2015, faced a hostile work environment, in which, she told the court, aides harassed her and others. Used adjectives to denigrate black workers, told him to “go back to Africa” ​​and left racist graffiti in restrooms and a racist portrait in his workspace.

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According to Diaz’s attorneys, Jay Bernard Alexander with Alexander Morrison + Fehr LLP in Los Angeles and Larry Organ with California Civil Rights Law Group in San Anselmo, the case was only able to move forward because the activist took action on one of Tesla’s essentials. was not signed. arbitration agreement.

Tesla uses mandatory arbitration to force employees to settle disputes behind closed doors instead of a public trial.

Like other companies that use mandatory arbitration, Tesla rarely faces significant damages or takes deep corrective action after arbitrators settle a dispute. However, Tesla was required to pay $1 million to another former worker, Melvin Berry — as a result of an arbitration agreement — who also endured a racist, hostile workplace at Tesla.

A pending class-action lawsuit in Alameda County in California — Vaughan v Tesla Inc. — also alleges that Tesla is replete with racist discrimination and harassment.

“We were able to put the jury in our client’s shoes,” Alexander told Businesshala. “When Tesla came to court and tried to say they were zero tolerance and they were doing their duty? The jury was outraged because it was really zero responsibility.”

Nia Impact Capital, a shareholder activist, is urging Tesla’s board to study the effects of mandatory arbitration on its employees and culture.

In particular, the Oakland-based Social Impact Fund is concerned that mandated arbitration could enable and conceal sexual harassment and racist discrimination from Tesla stakeholders, ultimately harming employees, lowering morale and productivity as well as lowering costs. Can weigh on the line.

recently shareholder offer Nia Impact Capital wrote:

“The use of mandatory arbitration provisions limits employees’ remedies for wrongdoing, prevents employees from suing in court when discrimination and harassment occur, and may keep the underlying facts, misconduct or results of the case secret and as such.” Prevents employees from learning and acting on shared concerns.”

Institutional Shareholder Services, a proxy advisory firm, recommended shareholders vote for Nia’s proposal, noting that Tesla has faced several 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 an offer.

This year, as it did last year, Tesla’s board has advised shareholders to vote against reporting on the effects of mandatory arbitration on employees.

Tesla’s annual shareholder meeting is scheduled for October 7th and will take place at Tesla’s new vehicle assembly plant under construction outside Austin, Texas.

Tesla did not immediately respond to a request for comment.

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