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Musk Sued Over Tesla’s Alleged ‘Toxic Workplace’: Just The Latest In A Rough Week

Forbes logo Forbes 6/17/2022 Madeline Halpert, Forbes Staff

Topline

A Tesla investor filed a suit against CEO Elon Musk on Thursday over claims the company failed to respond to harassment and discrimination complaints, the latest in a tough week for the billionaire, who fired a handful of employees who complained about Musk’s “embarrass[ing]” behavior, and faced off with Twitter employees in their first meeting since the site’s board approved Musk’s $44 billion takeover bid.

Elon Musk speaks at a conference. Getty Images © Provided by Forbes Elon Musk speaks at a conference. Getty Images

Key Facts

Tesla shareholder Solomon Chau alleged Tesla has “created a toxic workplace grounded in racist and sexist abuse and discrimination” against its employees in a suit filed in federal court in the Western District of Texas.

The complaint comes after California’s Department of Fair Employment and Housing filed a suit against Tesla in February alleging Black workers at a plant in Fremont, Calif. faced “rampant” racism.

Musk faced a separate lawsuit in federal court this week for $258 billion for allegedly manipulating the price of Dogecoin.

SpaceX, where Musk serves as CEO, also fired some employees this week who signed off on a letter calling the billionaire “a frequent source of distraction and embarrassment.”

On Thursday, Musk faced dozens of questions from anxious Twitter employees who were concerned about his policies on remote work and potential layoffs.

Musk did not respond to a request for comment from Forbes.

Big Number

$14 billion. That’s how much the wealth of Musk—the richest person in the world—shrunk Thursday as shares of Tesla fell 8.5%.

Research

Key Background

Tesla has had a difficult quarter due to decreased production in China because of Covid restrictions, job cuts and a slide in the value of its shares. Musk said earlier this month he wanted to cut 10% of salaried staff at Tesla because of a “super bad feeling” about the economy. But those cuts may now also include hourly workers, Electrek reported Friday. Musk has also sparked controversy this month with his comments on remote work after he told Tesla employees in an email they must work from the office “for a minimum (and I mean *minimum*) of 40 hours a week” or leave the company. That concern was front and center for Twitter employees who met virtually with Musk in their first town hall meeting, where he hinted at potential layoffs, telling workers the company needs to “get healthy,” while adding “excellent” employees may be able to work from home.

Tangent

Tesla has faced a series of lawsuits alleging discrimination and racism in the workplace over several years. The company has been ordered to pay a former Tesla elevator operator $15 million after he alleged employees called him the N-word and told him to “go back to Africa.” A federal jury originally awarded the employee $137 million, but a judge cut those funds to $15 million after Tesla challenged the verdict. The California Department of Fair Employment and Housing suit against Tesla is based on dozens of claims from Black workers who allege they were subjected to racial slurs, were assigned lower-level jobs and were less likely to be promoted to higher positions. Tesla has called the suit “misguided” and said it “strongly opposes” all forms of discrimination and harassment.

Further Reading

Why Elon Musk Is $14 Billion Poorer Thursday (Forbes)

SpaceX Reportedly Fires Employees Over Open Letter Denouncing Elon Musk (Forbes)

Elon Musk, SpaceX And Tesla Sued For $258 Billion In Alleged Dogecoin ‘Pyramid Scheme’ (Forbes)

Black workers accused Tesla of racism for years. Now California is stepping in (The Guardian)

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