Tesla heads to court over allegations of racism on factory floor

By BLOOMBERG | 24 September 2021

Owen Diaz and his son Demetric in Oakland, California, in 2018. — Bloomberg

SAN FRANCISCO: Roughly 10,000 people work at Tesla’s auto plant in Fremont, California. The Bay area is a diverse region of the country, and Tesla’s factory floor reflects this.

For years, Tesla has been dogged by allegations of racism at the Fremont plant, particularly as it pertains to black workers.

The case of Owen Diaz, a contract worker who sued Tesla alleging a pattern of racial discrimination, is about to provide a rare window into those allegations: his case is going to trial in federal court next week.

The vast majority of Tesla employees sign arbitration agreements that make it nearly impossible for them to get their day in court.

But not everyone who works at Tesla is a direct employee. Some, like Diaz, are contract workers hired via staffing agencies and don’t sign arbitration agreements.

Along with racial slurs, Diaz claims co-workers told him to “go back to Africa” and drew racist caricatures in bathroom stalls and on bales of cardboard.

Jury selection begins today and opening arguments are set for Sept 29 before US district judge William Orrick.

The proceeding will subject greater scrutiny to the culture at Tesla’s factory and the treatment of subcontracted staff who have played key roles in making the company the most valuable automaker in the world. It’s also an important case for contract workers more broadly.

Tesla’s issues predate the rise of "Black Lives Matter" and the murder of George Floyd.

In November 2017, a black former worker named Marcus Vaughn alleged that employees and supervisors at the Fremont plant regularly used racial slurs and that the plant was a “hotbed” of racism.

Tesla posted a lengthy blog post responding to that lawsuit that included an email Musk sent to employees in May 2017. Some considered it tone deaf; others applauded its frankness.

“In fairness, if someone is a jerk to you, but sincerely apologises, it is important to be thick-skinned and accept that apology,” Musk wrote.

“If you are part of a less-represented group, you don’t get a free pass on being a jerk yourself. We have had a few cases at Tesla where someone in a less-represented group was actually given a job or promoted over more-qualified highly represented candidates and then decided to sue Tesla for millions of dollars because they felt they weren’t promoted enough. That obviously is not cool.”

Vaughn’s case is moving forward in state court in Oakland, California.

Last month, Bloomberg reported that Tesla paid more than US$1 million to Melvin Berry, a black former employee who won a ruling that Tesla failed to stop his supervisors from calling him the “N-word” at the Fremont plant.

The public disclosure of this award was unusual because the case never went to court; it was handled in arbitration. Arbitrator Elaine Rushing found Tesla liable for harassment because it was perpetuated by Berry’s supervisors.

Judge Orrick has rejected Tesla’s effort to dismiss the claims in the Diaz case, and the fact that it’s actually gotten to trial is uncommon.

While Tesla is by no means the only automaker that has had issues with racism in its plants, shareholders who’ve already taken interest in its handling of these matters are likely to keep watching closely.