Tesla and the US Equal Employment Opportunities Commission have agreed to enter mediation talks over a 2023 lawsuit from the federal agency which describes pervasive racial abuse and retaliation against black employees at the company’s Fremont, CA plant.
The settlement talks come after Tesla CEO Elon Musk said that Tesla will only seek settlements in cases against the company that are “just.”
Tesla has gotten itself in hot water over racism several times over the years, with multiple lawsuits against the company for race-based harassment at its plant in California, both from individuals and from governments.
These lawsuits have described black workers being subject to racial epithets (you know the main one, though there were others), managers knowing about the behavior and failing to take steps to stop it, and Tesla firing black workers who complained about being subject to racial harassment.
After several individual their way to court and were settled by Tesla – including one which led to a $137 million penalty (which was later reduced) – the feds stepped in. The US EEOC sent a letter to Tesla in 2022 stating that it was aware of these violations and requesting to work with the company to find a solution for them.
The EEOC says Tesla was offered numerous opportunities to agree to remedies that would stop the violations, but that the two sides were never able to find a satisfactory agreement.
As a result, it filed a lawsuit against Tesla in 2023. The complaints are quite extensive, you can read more in points 16-43.
That lawsuit is now in settlement talks, with the two sides working to find a mediator and hoping to begin settlement negotiations in March or April. The judge presiding over the case has set a deadline of June 17 to hear a proposal from the two sides on what to do next.
The announcement of settlement talks comes after Tesla CEO Elon Musk previously stated that Tesla would never settle cases it finds unjust, and would never fight against cases it finds to be just.
He said this while trying to recruit a “hardcore litigation department,” a phrase that Musk has used multiple times over Tesla’s history.
Since that tweet, Tesla has settled many claims against the company, most notably claims regarding racism at its facilities and wrongful death lawsuits related to the use of the company’s Autopilot/Full Self-Driving software (neither of which are capable of full autonomy).
Tesla can still be sued by individual workers for racism, though over 6,000 black workers had also attempted to file a class action lawsuit against the company covering all of their claims. However, a judge ruled that lawsuit could not proceed because too many of the randomly-selected workers who were called to testify were not willing to take the risk of doing so – which simply serves to underline the alleged culture of retaliation.
Electrek’s Take
Look, anyone could have said that was a stupid tweet by Musk, even the moment he wrote it. There’s a reason that companies settle lawsuits, and it’s not because the lawsuit is right, it’s because it saves them money.
Sure, settling a case against a company for doing something bad may sometimes create some headlines, or a perception among the public that the company admits to doing the bad thing. But it’s likely to blow over, or to only be seen by people who already had an axe to grind against the company.
But when your CEO very publicly states that every time we settle, that means the lawsuit was morally correct, you remove any of the doubt, and you create a much larger PR problem for yourself.
Another point adding to the public perception of this lawsuit is Musk’s personal behavior himself. It is quite apparent to anyone paying attention that he is an avowed white supremacist.
In recent years, he’s made statements that require a deep understanding of white supremacist lore to even encounter, supported German neo-Nazis, agreed with a defense of Hitler’s actions in the Holocaust, and of course there were the two back-to-back unambiguous Nazi salutes. He has shown time and time again that he sees the world through a racial lens, with the world’s richest man behaving as if his skin color is the most important thing about him.
Given the pervasive racism that Musk shows in his own personal dealings, it’s not a big surprise that some of it would rub off on his companies. When someone acts like this in public, it’s hard to look at a racism lawsuit and think that it’s anything other than valid.
All of this has gotten Tesla into big trouble with dropping public perception and falling sales, even to the point where Tesla itself has had to tell Musk to knock it off. And yet, despite showing one moment of lucidity, Musk continues to ignore his negative effect on Tesla sales.
But I think the bottom line here is quite simple: A good CEO would not make racist public statements every few days, and would not openly admit that lawsuits against the company for being racist are “just.” Only a bad CEO would do that.
The other wrinkle to this case is whether the EEOC’s settlement request is even in good faith to begin with.
We’ve seen this before, where the government has a good case against a company and then, after a change in government, the company gets a slap on the wrist. Given that a white supremacist (who cannot legally hold office in the US) is currently squatting as head of US government, this could be another instance of prosecutors being directed to be lenient on criminals for political reasons.
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