Tesla Discriminated Against Black Workers at Fremont Factory, State Lawsuit Says

Updated 5:20 p.m.

California regulators have sued Tesla Inc., alleging the electric carmaker has been discriminating against Black employees at the Bay Area factory where most of its vehicles are made.

The lawsuit seems likely to widen a rift between Tesla CEO Elon Musk, the world's wealthiest person, and the state where he launched the company. Tesla is now worth more than $900 billion, less than 20 years after Musk set out to transform the auto industry.

Musk moved Tesla's headquarters from Palo Alto to Austin, Texas, last year after publicly feuding with Alameda County officials over whether Tesla's Fremont factory should remain shut down during the spring of 2020 while the coronavirus pandemic was still in its early stages (Musk reopened the factory in defiance of county health orders).

The discrimination lawsuit, filed late Wednesday in Alameda County Superior Court by California's Department of Fair Employment and Housing, was sparked by hundreds of worker complaints, said Kevin Kish, the agency's head.

The department, which enforces state civil rights laws, "found evidence that Tesla's Fremont factory is a racially segregated workplace where Black workers are subjected to racial slurs and discriminated against in job assignments, discipline, pay, and promotion creating a hostile work environment," Kish said in a statement reported by The Wall Street Journal and Bloomberg.

In its 39-page complaint filed Wednesday, the state alleges that Black workers at Tesla's Fremont factory have reported since 2012 that supervisors and managers "constantly use the n-word and other racial slurs to refer to Black workers."

Black workers have also complained "that swastikas, 'KKK,' the n-word, and other racist writing are etched onto walls of restrooms, restroom stalls, lunch tables, and even factory machinery," and have said they are often assigned more physically demanding work, paid less than other workers and often denied advancement opportunities, the filing reads.

The lawsuit frames Tesla's move to Texas as an attempt to evade accountability for turning “a blind eye to years of complaints from Black workers who protest commonplace use of racial slurs on the assembly line."

In response to the complaints, the lawsuit alleges Musk has told workers to be “thick-skinned" about racial harassment, contributing to the culture that's slow to clean up racist graffiti and other hateful symbols scrawled around the factory.

Besides the N-word, other racist language used in the factory included "porch monkey" and "hood rat" and entreaties that Black workers "go back to Africa," according to the lawsuit. The complaint also alleges the factory was racially segregated, and that the area where Black workers labored was derided as the "slave ship," or "the plantation."

Even before the agency filed the lawsuit, Tesla preemptively posted a statement on its website lashing out at what it called an "unfair and counterproductive" lawsuit.

The company asserted that the agency has been asked on nearly 50 occasions during the past five years to look into allegations of discrimination and harassment, and closed each investigation without finding any evidence of misconduct.

"It therefore strains credibility for the agency to now allege, after a three-year investigation, that systematic racial discrimination and harassment somehow existed at Tesla," the company wrote, while trying to frame the lawsuit as a publicity stunt.

But this isn't the first time that Tesla's treatment of the roughly 10,000 employees at its Fremont factory has come under scrutiny. The factory remains Tesla's biggest manufacturer of electric cars, even as the company has opened additional plants, including a new one in Texas.

Last October, a federal jury awarded $137 million in damages to a Black former elevator operator who had alleged he faced daily racist slurs and other forms of harassment while working at the Fremont plant in 2015 and 2016 before quitting. Tesla is appealing that verdict and has denied any knowledge of racist conduct that the former elevator operator, Owen Diaz, said took place at the plant.

And then more than a half dozen current and former Tesla employees filed another lawsuit, alleging the company didn't take adequate steps to protect them against sexual harassment. Tesla is seeking to shift those complaints into arbitration.

About 10% of Tesla's U.S. employees are Black and 21% are women, according to the company's latest employment breakdown.

This story includes reporting from KQED's David Marks.