Tesla might be in trouble in a court of law for its recent mass layoff.
The popular automaking company is being sued by two of its former employees for violating federal laws regarding mass layoffs, according to a recent Reuters report.
Tesla CEO Elon Musk remarked to CNBC in an email that the lawsuit is small and, as such, is only of a minor consequence to him and the company.
Tesla Mass Layoff Facts
Tesla reportedly let go of more than 500 workers at its Sparks, Nevada gigafactory due to Musk's wish to reduce its salaried workforce by 10% in the next three months while growing the number of hourly employees at the same time.
According to Shannon Liss-Riordan, the lawyer representing the two workers, Tesla started letting people go while only offering one week of severance pay to some employees. Most of the employees, like John Lynch, were terminated immediately on June 10 after the mass layoff was announced, with Tesla allegedly notifying the 500 employees that their terminations would be effective immediately.
Meanwhile, Lynch's fellow former Tesla co-worker, Daxton Hartsfield, mentioned that he was terminated five days after Lynch, but like him, Hartsfield's termination was effective immediately, per Business Insider.
In the legal complaint, the two former Tesla employees also said that Tesla also failed to provide a statement of the basis for reducing the notification period to days advance notice.
Lynch is one of the two Tesla employees that sued the company.
Liss-Riordan found that Tesla's mass layoff was in blatant disregard for the Work Adjustment and Retraining Notification Act, which states that companies that plan to do mass layoffs are required to give affected employees a 60-day notification period. The two-month period gives the affected employees a chance to find a new job or retrain themselves for one.
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The act is also applicable to companies that plan to close factories or plants.
"it's pretty shocking that Tesla would just blatantly violate federal labor law by laying off so many workers without providing the required notice," Liss-Riordan said.
Monster.com mentioned in its article that employees who were not given the two-month notice could seek damages for back pay and benefits for up to two months - the same period the law requires employers to give employees affected by mass layoffs.
Lynch and Hartsfield are seeking to claim the same exact pay and benefits from Tesla on behalf of any US Tesla employees laid off in May or June with advance notice.
Liss-Riordan is currently preparing an emergency motion to block Tesla from trying to get releases from employees in exchange for a week of severance pay.
Elon Musk's Response
Although Tesla, as a company, has not commented on the numbers of layoffs nor on the lawsuit, its CEO, Elon Musk, did.
Musk mentioned to CNBC that the lawsuit has "no standing" and that it is a "small lawsuit of minor consequence." He also hinted that the workers may only be serving the lawsuit to gain attention, commenting that "anything that relates to Tesla gets big headlines, whether it is a bicycle accident or something much more serious."
Musk allegedly did the layoffs due to a hunch, with him saying that he has a "super bad feeling" about the economy.
He also wanted to reduce Tesla's salaried headcount by 10% and increase its hourly staffing.
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