Tesla Countersues over Race Discrimination Claims

​Tesla and California are at loggerheads over whether the company has engaged in unlawful race discrimination. Tesla has countersued the California Civil Rights Department (CRD), which has sued the carmaker for widespread discrimination and harassment against Black employees at its Fremont, Calif. plant.

In the countersuit, filed Sept. 22, Tesla alleges that the state overstepped its statutory limits and failed to conduct neutral investigations before it sued Tesla. The automaker says the state didn't provide notice about the particulars of its investigations before initiating those investigations and didn't provide information to support its findings against Tesla. It claims the state filed the lawsuit without first engaging in good-faith conciliation and mediation.

Tesla and CRD have already met in court on CRD's accusations. In August, California Superior Court Judge Evelio Grillo rejected Tesla's argument that the case was improperly broad and that CRD failed to notify it about the claims or allow an opportunity to settle before suing. He allowed CRD's lawsuit to proceed.

"This is going to be an expensive and painful learning experience for them that they need to have an HR function that can get the trust of their employees by actually conducting a prompt and objective investigation to the complaints and taking serious remedial actions to prevent further incidents of racial harassment," said Josh Friedman, an attorney with Friedman Houlding, which represents plaintiffs, in New York City. "That's asking a lot because most firms don't live up to that standard."

Race Discrimination Claims

CRD, formerly known as the California Department of Fair Employment and Housing, claims that Tesla:

• Kept Black workers in the lowest-level roles in the company and paid them less than colleagues of other races for substantially similar work.
• Denied Black workers training and promotions and disciplined them more severely than others.
• Assigned Black workers more physically demanding work.
• Ignored complaints from Black workers who said production leads, supervisors and managers frequently used racial slurs.
  
• Retaliated against Black workers who formally complained to HR about racial harassment.
• Moved unreasonably slowly to clean up racist graffiti with swastikas, a White supremacist skull and other hate symbols scrawled in common areas.
  

"After receiving hundreds of complaints from workers and a nearly three-year investigation, the CRD found evidence that Tesla operates a racially segregated workplace where Black workers are subjected to racial slurs and discriminated against in job assignments, discipline, pay and promotion, and therefore filed a government enforcement action in California Superior Court," said Fahizah Alim, spokesperson for the CRD. "Regardless of any countersuits, the CRD will continue to vigorously enforce laws intended to keep California workplaces free from harassment and discrimination."

Tesla has denied wrongdoing, stating on a company blog that the company "has always disciplined and terminated employees who engage in misconduct, including those who use racial slurs or harass others in different ways." The company did not respond to requests for comment. The company's public diversity report shows that 10 percent of its workforce is Black.

Severity of Harassment

To show that racial harassment occurred, "the standard is: Did somebody say something that was because of race? Would a reasonable person consider it offensive? Did the victim actually consider it offensive?" Friedman explained. "Courts look at, was it just a minor slip of the tongue that offended, or was it something that was more serious or more severe? The courts look at how frequently the victim heard the statement."

State laws vary, but some states offer broader protections for employees, compared to federal law.

"Under federal law, unless you can show that the employer was actually aware of the discrimination, it won't be held liable for an employee's racially biased conduct," Friedman noted. "Federal law says that, unless it is severe and pervasive, it's not actionable."

Leadership from the top executives can help to stop racial harassment before it becomes widespread. "Keeping your finger on the pulse of a workplace's culture can be critical to preventing unlawful discrimination," said Adam Sencenbaugh, an attorney with Haynes Boone in Austin, Texas. "What are jokes or horseplay in the eyes of some employees can be unlawful discrimination against their co-workers. Supervisors need to be proactive in spotting and correcting this behavior as soon as it occurs."

Keep in mind that a pattern of assigning people of color to the most dangerous or physically demanding work tasks might be illegal. "Disparate work assignments can be a form of racial harassment. We've seen this," Friedman said.

Responding to Harassment Complaints

When HR receives a racial harassment complaint, "it has to seriously make a record of the people who the victims said were witnesses to the incident," Friedman said.

Then "an employer ought to conduct a bona fide, objective investigation and take remedial action," he added. "It needs to take serious steps because serious racial harassment can cause trauma and make it almost impossible for an African American to continue to work at a plant like that without constantly looking over his back."

He pointed out that manufacturing plants can be a dangerous environment where workers might jeopardize their physical safety if they make complaints against a co-worker.

Employers should make sure employees understand there will be no retaliation against those who file a harassment complaint. One possible solution is to establish an ombudsman or independent third party that workers can bring harassment complaints to, Friedman suggested.

"Many of the allegations against Tesla revolve around employees who claim to have reported unlawful discrimination but say that supervisors retaliated against them following their reporting," Sencenbaugh said. "Those types of allegations highlight the importance of training supervisors to act quickly to both investigate reports of discrimination and take proactive steps to prevent any retaliation against the complaining employee."

In 2021, there were 18,762 charges of race discrimination in 2021, compared to 21,398 in 2020 and 23,976 in 2019, according to the U.S. Equal Employment Opportunity Commission. Over the last 20 years, the number of racial harassment cases hasn't changed a lot, Friedman said.