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Musk's Stock-Option Tweet May Invite Federal Labor Complaint

Bloomberg logoBloomberg 5/23/2018 Dana Hull and Josh Eidelson
Elon Musk, co-founder and chief executive officer of Tesla Inc., speaks during a Boring Co. event in Los Angeles, California, U.S., on Thursday, May 17, 2018.© Bloomberg Elon Musk

The United Auto Workers has been Elon Musk’s target for days of derision on Twitter, and his posts may open Tesla Inc. up to trouble with U.S. labor regulators.

The Tesla chief executive officer wrote Tuesday that the union drove General Motors and Chrysler into bankruptcy in 2009 and compromised the jobs of more than 200,000 workers. “UAW destroyed once great US auto industry & everyone knows it,” he said in one post.

The UAW, which is actively trying to organize Tesla’s California assembly plant, has fired back with tweets of its own. But the more consequential outcome from the spat on the social-networking service may come in the form of unfair labor practice allegations made to the National Labor Relations Board, according to Wilma Liebman, who led the agency during the early years of the Obama administration.

Musk posted earlier this week that nothing was stopping Tesla employees in Fremont, California, from voting to join a union. But, he wrote, “Why pay union dues & give up stock options for nothing?” Liebman read this as a warning that the company would take away workers’ stock options if they succeeded in organizing the factory.

“If you threaten to take away benefits because people unionize, that’s an out-and-out violation of the labor law,” Liebman, who’s done legal work for the UAW in the past, said in an interview.

Musk’s tweet was meant to reflect that UAW members working for other automakers don’t get stock options or restricted stock units, a spokesman said Wednesday. Tesla’s compensation is the highest in the industry because of the options, but UAW organizers dismiss the value of the equity, according to the company.

Related video: Elon Musk criticizes media in new tweets (provided by CNBC)

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Many Silicon Valley companies give employees shares that fully vest over a four-year period, which has made equity in fast-growing companies a critical part of employees’ compensation packages. The National Labor Relations Act forbids employers from threatening employees with loss of jobs or benefits if they join or vote for a union.

“This is an interesting example of an employer using social media for purposes of campaigning and sharing its views with employees before they vote to decide on representation,” Steven Swirsky, a former NLRB attorney who’s represented companies including Volkswagen AG, said Tuesday in an interview. “I can foresee the union claiming that this is a threat that the company will discontinue this benefit if the workers chose to be represented.”

Musk would have been on safer legal ground, Liebman said, if he had just described collective bargaining as a give-and-take proposition and warned workers that they may lose benefits in the process.

If the NLRB were to investigate an allegation that Tesla violated the National Labor Relations Act, the agency’s prosecutors would consider management’s comments from the perspective of the employee. In this case, she said, “the employee is going to hear it as, ‘If I vote to unionize, stock options will no longer be an option.’”


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