It looks like Elon Musk might be in hot water again. Some former employees of Tesla are suing for recent mass layoffs that the company underwent. The employees allege that carrying out the mass layoff went against federal law, citing the need for advanced notice to layoff employees under the Worker Adjustment and Retraining Notification Act. According to the suit, Tesla would have needed to give the employees a 60-day notice for termination to avoid violating federal law.
Reportedly, some of the laid-off Tesla employees are only receiving one week of severance. The suit states that over 500 employees were laid off from the Sparks, Nevada Tesla factory. The workers coming forth are seeking class-action status for filing the lawsuit. At this time, Tesla has not commented on the layoffs. However, CEO Elon Musk has commented on the lawsuit during the Qatar Economic Forum organized by Bloomberg. Musk mentioned that Tesla news gets a lot of clicks whether the news is trivial or significant. In reference to the lawsuit, he said he would classify it as “trivial.”
As the richest person in the world, Elon Musks’ comments can often seem out of touch, considering the workers who had been laid off wouldn’t likely consider the lawsuit (or their livelihoods) trivial in any sense. According to Reuters, they had previously seen an email where Musk mentioned that Tesla would need to cut employees by up to 10% due to the weakening economy. If there is truth to that email, it seems like these mass layoffs would be the first step Musk has taken to reduce staff. However, if Tesla is indeed violating the Worker Adjustment and Retraining Notification Act, they may need to rethink the way they’re making those 10% cuts. Musk further clarified this email when speaking at the Bloomberg event, saying that Tesla was looking to reduce its salaried workforce by 3.5% while increasing its hourly workforce.
The lawsuit was filed by former employees John Lynch and Daxton Hartsfield. The two were fired on June 10 and June 15, respectively. Their lawsuit seeks to recover the pay and benefits they would have received if they were given the 60-day notification period, rather than the reported one week of severance the employees are getting. Shannon Liss-Riordan, an attorney for the laid-off workers, told Reuters that it is “shocking that Tesla would just blatantly violate federal labor law by laying off so many workers without providing the required notice.”
It remains to be seen how this lawsuit plays out. If Tesla is violating the aforementioned act, it does seem like this would be a pretty easy win for the employees. This isn’t the first time that Elon Musk has been under fire for treatment of workers, with recent examples being emails saying that workers should come in at least 40 hours a week or leave. Musk has also called into question remote work, saying those wanting to work remotely should “pretend to work somewhere else.” With inflation rates at an all-time high, the Federal Reserve making a historic increase to interest rates, and the looming possibility of a recession, the world will continue to watch what CEOs like Elon Musk choose to do in response.