Lawsuit: Tesla violated US law by failing to provide 60 days’ notice prior to the mass layoffs

Aerial view of cars parked in a Tesla factory lot.  A Tesla logo is painted on the concrete.
Enlarge / Cars parked at the Tesla Fremont Factory in Fremont, California on February 10, 2022.

Getty Images | Josh Edelson

A lawsuit filed by laid-off Tesla workers accused the company of violating federal law by not providing notice before the layoffs, and said the former employees are entitled to 60 days of pay and benefits. Tesla’s actions violated the Worker Adjustment and Retraining Notification (WARN) Act, claimed the lawsuit filed Sunday in U.S. District Court for the Western District of Texas.

“Under the WARN Act, Tesla is required to provide plaintiffs and group members with required sixty (60) days’ written notice of a mass layoff,” the lawsuit reads. “However, in connection with the recent mass layoffs…Tesla failed to provide the plaintiffs and the group members with prior written notice of their terminations.”

“Instead, Tesla simply notified employees that their terminations would take effect immediately,” the lawsuit continued.

The WARN Act was enacted in 1988. It requires companies with 100 or more employees to provide “at least 60 calendar days’ written notice of any plant closure and mass layoff of 50 or more workers in a single location,” according to the US Department of Labor. The law “makes certain exceptions to the requirements when layoffs occur due to unforeseen business circumstances, faltering businesses and natural disasters.”

The WARN Act’s notice requirement applies to managers, supervisors, hourly workers and employees, except “those who have worked less than six months in the past 12 months and those who work an average of less than 20 hours per week,” the DOL says . The text of the law states that laid-off workers who do not receive the required notice period have 60 days to sue for back pay and benefits.

Layoffs at Tesla Gigafactory

Lead plaintiffs John Lynch and Daxton Hartsfield worked at a Tesla Gigafactory in Sparks, Nevada. The lawsuit seeks class-action status on behalf of all former Tesla employees across the country who were fired in May or June 2022 without the required notice.

The group members should “receive sixty (60) days of damages and benefits for each of them as a result of Tesla’s violation of their rights under the WARN Act,” the lawsuit reads. This includes “their respective wages, salaries, commissions, bonuses and accrued salaries for vacation and personal days” as well as fringe benefits and medical expenses, the lawsuit states.

The lawsuit states that “Tesla has laid off more than 500 employees at its Gigafactory 2 facility in Sparks, Nevada alone” and has laid off thousands of other employees worldwide.

Tesla CEO Elon Musk unveiled a plan in early June to cut 10 percent of jobs at the electric carmaker, which employed over 99,000 people by the end of 2021.

Musk: Lawsuit is ‘trivial’

Musk dismissed the lawsuit as “trivial,” according to a Reuters article. “Let’s not read too much into a preemptive lawsuit that doesn’t stand,” Musk told Bloomberg’s Qatar Economic Forum. According to a CNBC article, Musk called it “a minor lawsuit of little consequence.”

“I find it very concerning that the richest man in the world considers it ‘trivial’ for his company to blatantly violate federal labor laws [enacted] protect workers,” plaintiffs’ attorney Shannon Liss-Riordan told WRAL TechWire. “For two months [of] The pay certainly doesn’t matter to him, but it is very important to the employees who have made his company what it is.

According to Reuters, Liss-Riordan said that “Tesla is only offering some employees a week’s severance pay, adding that she is preparing an urgent petition to a court to try and stop Tesla from attempting layoffs in exchange for just a week.” to receive the severance pay from employees.”

“There’s a reason we have worker protection laws in this country — because billionaires and CEOs don’t do their workers justice when they’re left to their own devices,” Liss-Riordan said, according to WRAL TechWire.

Tesla is separately facing seven lawsuits from women alleging the company failed to stop rampant sexual harassment at factories in Fremont, California and service centers in the Los Angeles area. Tesla was recently ordered by a judge to pay an ex-worker $15 million for the “disturbing” racial abuse he witnessed.

Musk predicts more headcount in a year

Musk clarified Tesla’s layoff plans on the Bloomberg forums. “Musk said Tesla will reduce its salaried workforce by 10 percent over the next three months while increasing its hourly workforce,” CNBC wrote.

Musk said the layoffs would affect about 3.5 percent of Tesla’s total workforce, but “I think a year from now our headcount will be higher both in salary and hourly wages,” according to CNBC.

Tesla is reportedly firing both hourly and salaried workers. A Friday report from Electrek, citing anonymous sources, said: “Tesla yesterday started another wave of layoffs that included many hourly workers in its sales and delivery teams across North America.”