Tesla Warns of Possible California Suit Over Race Harassment

Tesla Inc. said a California agency informed the electric automaker that it has grounds for a civil complaint, following an investigation into racial harassment.

The California Department of Fair Employment and Housing issued a so-called notice of cause finding and mandatory dispute resolution to Tesla on Jan. 3, the company said Monday in a regulatory filing. The investigation involved “undisclosed allegations of race discrimination and harassment at unspecified Tesla locations.”

Tesla has faced numerous complaints and lawsuits from former workers at its auto plant in Fremont, California, about racial discrimination and sexual harassment in recent years. Many complaints never make it to court because Tesla’s full-time employees sign agreements requiring workplace disputes to be handled in closed-door arbitration.

In October, one former worker was awarded $137 million by a federal jury in San Francisco — the largest such verdict of its kind. Tesla is now appealing the size of the award.

“It’s a very positive development that the DFEH has made this finding and is willing to pursue a civil case if they can’t reach a resolution with Tesla,” said Larry Organ, a Bay Area civil rights attorney who represents several former Black employees and contract workers.

Tesla’s acting general counsel didn’t respond to a request for comment. The California fair-employment agency also didn’t respond.

The California DFEH filed a lawsuit against video game developer Activision Blizzard Inc. in July for promoting a culture of “constant sexual harassment.” The department also reached a settlement with Riot Games over sexual harassment and discrimination claims.

Since 2014, workers have filed over 100 complaints with the DFEH alleging discrimination at Tesla on the basis of race, age, gender, disability, medical leave, pregnancy, sexual orientation or national origin, according to a synopsis provided by the agency after a California Public Records Act request. The state shares jurisdiction with the federal Equal Employment Opportunity Commission over such cases.

A notice of cause finding from the DFEH signals that the agency believes an employer has violated the California Fair Employment and Housing Act, said Catherine Fisk, a law professor at University of California, Berkeley. “It is a warning that the agency intends to sue the company unless the matter can be settled out of court.”

Tesla’s shares were little changed at 3:18 p.m. in New York.

About the photo: A Tesla dealership in Colma, California, U.S., on Wednesday, Jan. 26, 2022. U.S. auto sales will climb just 3.4% this year to 15.4 million cars and trucks as the semiconductor shortages continue to constrain vehicle inventory, auto dealers predict. Photographer: David Paul Morris/Bloomberg