Former Workers Sue Tesla Claiming Violation of Mass Layoff Laws
Shortly after company CEO Elon Musk said Tesla needed to cut 10% of its staff, two laid-off staff from its Nevada said they didn't receive the federally mandated notice period for a mass layoff.
Grace Lieberman
Grace Lieberman
Jun. 21, 2022 19:51
Former Workers Sue Tesla Claiming Violation of Mass Layoff Laws

(CapitalWatch, June 21, New York) Two former workers from Tesla's Nevada factory are suing the electric vehicle maker, alleging that the company violated the federal law.

Earlier this month, Tesla (Nasdaq: TSLA) CEO Elon Musk said in an internal email, per Reuters, that he had a "super bad feeling" about the economy and Tesla will need to cut down 10% of its staff. 

The two plaintiffs, John Lynch and Daxton Hartsfield, said they were let go from the Tesla Giga Nevada facility shortly after reports of Musk's plans. They claim in court filings that around 500 others were laid off from the same facility in the same time period.

Lynch said he was notified of his immediate dismissal on June 10, and Hartsfield said he was both notified and terminated on June 15. The two are attempting to make the case a class action suit involving other employees laid off in May and June. 

According to the filings, the plaintiffs allege that Tesla violated the Worker Adjustment and Retraining Notification (WARN) Act that requires companies to give 60 calendar days' notice before closing a facility permanently or laying off 50 or more workers from one site. The plaintiffs are seeking to claim 60 days of pay and benefits.

This is the second company run by Musk to have come under fire for potentially violating U.S. labor laws this month. SpaceX axed a group of employees that wrote an open letter criticizing Musk's behavior. The terminations could go against federal laws protecting employees' free speech about their working conditions.

Although the terminations are said to be a response to economic conditions, Tesla reported $3 billion in profit in the first quarter of this year as demand for EVs continues to outpace supply. Those conditions aren't stopping Musk moving forward with his deal to buy Twitter (NYSE: TWTR), either.

Tesla stock was up nearly 12% Tuesday afternoon in New York. It's taken a beating this year from its own controversies and Musk's bid to buy Twitter as well as a broader tech sell-off. 

Tesla shares are down 44% so far this year and have lost 33% so far this quarter.

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