Tesla owes Owen Diaz $137 million after a jury found that the Black former worker was subjected to racial abuse that the electric vehicle company insufficiently addressed during his tenure.
Diaz, an elevator operator at the company’s Fremont factory for nine months from 2015 to 2016, had been called racial epithets by coworkers, was told to “go back to Africa,” and saw racist graffiti in the bathrooms. The trial lasted a little over a week, and the jury found that Tesla had not taken reasonable steps to prevent racial harassment.
“It shines a light on what’s going on inside of Tesla’s factory,” Diaz told The Wall Street Journal. “Elon Musk, you’ve been put on notice. Clean that factory up.”
The automaker’s defense hinged on the fact that many of the approximately 10,000 workers at its Fremont plant are contractors hired through external staffing agencies. Because of that, company lawyers claimed that there was no evidence that Tesla employees were directly responsible for the racial slurs and graffiti.
The federal jury didn’t buy the argument, though. Diaz and his attorneys had brought three claims against Tesla—that the company subjected him to a racially hostile workplace, that it failed to provide a workplace free from harassment, and that it was negligent in its supervision of employees—and the jury found in favor of the plaintiff on all claims. It ordered Tesla to pay Diaz $6.9 million in compensatory damages and $130 million in punitive damages, amounts far in excess of what his attorneys requested.
The group of eight jurors reached its decision after about four hours of deliberation.
Arbitration clauses questioned
Activist shareholders have been pressing Tesla to evaluate the practice of mandatory arbitration. Nia Impact Capital said in a shareholder proposal, “The use of mandatory arbitration provisions limits employees’ remedies for wrongdoing, precludes employees from suing in court when discrimination and harassment occur, and can keep underlying facts, misconduct, or case outcomes secret and thereby prevent employees from learning about and acting on shared concerns.”
Tesla’s reliance on contractors was part of what allowed the lawsuit to proceed in the first place. Because Diaz had been employed by a staffing agency, he never had to sign the company’s arbitration agreement. That freed him to sue the company in court—apparently the first time a worker lawsuit against Tesla has gone to trial.
Other workers, such as Melvin Berry, have been forced into arbitration. In Berry’s case, an arbitrator found that Tesla had failed to stop racial discrimination at its Fremont factory, where supervisors had called him racial slurs. Yet partly because Berry’s case went to arbitration, the judgment was far less—just $1 million.
In a blog post published on Tesla’s website last night, Vice President of People Valerie Capers Workman said that the company had turned a new leaf. “The Tesla of 2015 and 2016 (when Mr. Diaz worked in the Fremont factory) is not the same as the Tesla of today,” she wrote. “We acknowledge that we still have work to do to ensure that every employee feels that they can bring their whole self to work at Tesla.”
Tesla has not said whether it plans to appeal the verdict. The company is facing another similar lawsuit in California state court, where the plaintiffs are seeking class certification. There, Marcus Vaughn and others allege that Tesla created a hostile workplace for Black workers.
