Recently, in Elon Musk’s “what not to do moments,” Part 3, I blogged about a series of tweets by Musk back in May 2018, that an administrative law judge of the National Labor Relations Board (NLRB) concluded had created an “unlawful threat” under the National Labor Relations Act (NLRA) because Tesla employees could reasonably have concluded from the tweets that Musk was threatening them with economic reprisals if the employees supported the formation of a union. Musk’s tweets came in the middle of what the U.S. Fifth Circuit Court of Appeals described as a “tense union campaign” by the United Auto Workers (UAW) at Tesla’s electric vehicle manufacturing plant in Freemont, California.

Now it seems clear that the unionization effort by the UAW was not the only tension that had been brewing at Tesla’s flagship manufacturing plant in Freemont, California. Last week, a California jury awarded Owen Diaz, a former elevator operator at Tesla’s Freemont facility, $3.2 million in damages for racial harassment perpetrated by Tesla supervisors and coworkers. While the damages award on retrial was down significantly from the original jury verdict in favor of Diaz for $6.9 million in compensatory damages and $130 million in punitive damages, there is no high ground for Tesla to claim in this dispute, given the deplorable facts that came to light during the legal proceedings.

The federal district judge overseeing the retrial called the evidence of racial discrimination and hostility against Tesla “disturbing,” characterizing the company’s Freemont, California, factory as “saturated with racism.” It was that, and more, beginning as early as Diaz’s second day of work at Tesla’s Freemont factory. The Court continued:

Diaz faced frequent racial abuse, including the N-word and other slurs. Other employees harassed him. His supervisors, and Tesla’s broader management structure, did little or nothing to respond. And supervisors even joined in on the abuse, one going as far as to threaten Diaz and draw a racist caricature near his workstation.

Two different California federal juries entered verdicts in favor of Diaz, with the jury on retrial finding, among other things, that (1) Tesla supervisors and coworkers had subjected Diaz to a racially hostile work environment; (2) Tesla had violated Diaz’s civil rights under 42 U.S.C. § 1981; and Tesla had failed to take all reasonable steps necessary to prevent Diaz from being subjected to racial harassment.

Diaz is not an outlier as to the racial animus he experienced while working at Tesla’s Freemont factory. After receiving “hundreds of complaints from workers and a nearly three-year investigation, the California Department of Fair Employment and Housing (DFEH) filed a lawsuit against Tesla under state law, alleging that the company “discriminated against Black workers in California, including segregating them to the lowest levels of the workforce across the state” and subjecting Black workers to “racial slurs . . . and discrimination in job assignments, discipline, pay, and promotion[.]” Tesla has denied the allegations and has counter-sued the DFEH.

Under federal law, an employer is strictly liable for workplace harassment perpetrated by a supervisory employee that results in a tangible adverse employment action. The only affirmative defense to liability an employer has is that it exercised reasonable care to prevent and correct the harassing behavior and the employee unreasonably failed to take advantage of the employer’s corrective measures. Employer liability for workplace harassment by a non-supervisory coworker is the familiar negligence standard of care, e.g., that the employer knew or should have known about the harassment but failed to take corrective action to stop it.

For employers, the takeaway from this Elon Musk Freemont, California factory “what not to do moment” is to be sure to have a policy in place laying out the company’s prohibition against discrimination and harassment, implement a clear employee complaint process, and train all of your supervisors to report and/or take action on all reports of employee harassment, whether by a supervisor or a coworker (and, if you have any reason to think it is needed, inform your supervisors that it is not lawful under any circumstances to harass a subordinate on the basis of race or any other protected characteristic). Turning a blind eye to ongoing workplace harassment, as Tesla was found to have done in the case of Owen Diaz, can have serious consequences, including seven-figure jury verdicts. 

If you have questions about your policies and practices to ensure compliance with federal and state employment discrimination laws or other workforce laws, please contact Doug Taylor, at rdougtaylor@beankinney.com or (703) 525-4000.

This article is for informational purposes only and does not contain or convey legal advice. Consult a lawyer. Any views or opinions expressed herein are those of the author and are not necessarily the views of any client.