Tesla will have to pay $137 million to ex-worker over the hostile work environment, racism

October 6, 2021: -On Monday, a San Francisco federal court decided that Tesla must pay a former worker, Owen Diaz, nearly $137 million after he endured racist abuse working for the company, the attorneys told CNBC. The jury awarded over attorneys asked for their client, including $130 million in punitive damages and $6.9 million for emotional distress.

Diaz, a former contract worker who was hired at Elon Musk’s electric vehicle company through a staffing agency in the year 2015, which is facing a hostile work environment in which, he told the court, colleagues used epithets to denigrate him and other Black workers, told him to “go back to Africa,” and the racist graffiti was left in the restrooms and a racist drawing in his workspace.

The case could only move forward because the worker had not signed one of Tesla’s mandatory arbitration agreements with J. Bernard Alexander with Alexander Morrison + Fehr LLP in Los Angeles and Larry Organ with the California Civil Rights Law Group in San Anselmo, according to the attorneys.

Tesla has always used mandatory arbitration to compel employees to resolve disputes behind closed doors rather than public trials.

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

Institutional Shareholder Services, the proxy advisory firm, recommended shareholders vote for Nia’s proposal, noting that Tesla has faced many severe sexual and racial harassment and discrimination allegations over the years.

This is one more year in a row that Nia Impact Capital has floated such a proposal.

Even this year, Tesla’s board has advised shareholders to vote against reporting on the impacts of mandatory arbitration on employees.

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

However, the company issued a blog post late Monday to the general public, which it said had been distributed internally to employees earlier by Tesla VP of People Valerie Capers Workman. In the post, she downplayed the severity of the racist discrimination Diaz described.