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Tesla to pay $137 million to a former contractor for racial harassment

On Behalf of | Oct 27, 2021 | Race Discrimination

Earlier this month, a federal jury told Tesla to pay a former Black contractor, Owen Diaz, $137 million for racial harassment. $6.9 million of the award is for emotional distress, and $130 million is for punitive damages. One of Diaz’s lawyers, Larry Organ, said he believes that this may be the largest racial harassment verdict ever awarded to a single plaintiff.

Diaz’s Experience at Tesla

Diaz was a contract worker at Tesla’s Fremont, California factory from 2015-2016. He described the factory environment as a “scene straight out of the Jim Crow era.” Diaz reported suffering a series of racially hostile incidents, including:

  • Hearing himself and others referred to as the N-word
  • Being told to “go back to Africa”
  • Seeing racially insensitive images drawn by other employees

Tesla’s Vice President of People, Valerie Capers Workman, responded that no one witnessed Diaz being called the N-word. She admitted that other employees reported hearing the racially derogative slur on the factory floor, but that it was used in a “friendly” manner, and predominantly between African-American workers. Organ commented that Workman’s response highlights Tesla’s racial insensitivity.

Will Tesla Pay the Full $137 Million?

If Tesla appeals the verdict, there is a good chance that they will not pay the entire $137 million awarded to Diaz. The final verdict may be significantly lower given the incredibly high punitive damages. Many interpret the current punitive damages as a loud message from the jury that this kind of workplace behavior will not be tolerated. Companies will be punished if they fail to protect their workers from racial harassment.

Workman spoke out immediately after the jury verdict. She published a blog that pointed to supposed holes in the verdict, signaling that the company may appeal. Many people found fault with Tesla’s response. They saw Tesla’s arguments as a refusal to accept responsibility for a racially-hostile environment that repeatedly failed to support Black employees.

Shareholders Press for Diversity Data

After the jury verdict, 57% of Tesla shareholders voted for the company to release workforce demographic data. Investors see healthy diversity as a key indicator of a company’s long-term success.

Shareholders requested that Tesla release its EEO-1 report. This report provides a comprehensive breakdown of the company’s workforce by both race and gender by job category. Tesla files the report with the Equal Employment Opportunity Commission each year. It remains private unless the company decides to publish the information. As of this blog’s publication date, Tesla has not released its EEO-1 data.

Where will Tesla go from here?

Tesla employees, shareholders, and the public will closely monitor Tesla’s actions in the upcoming months. The company may appeal the $137 million verdict, and continue to downplay racially problematic events. Or, Tesla may embrace diversity and actively push for a more inclusive work environment. This is the direction that most shareholders appear to favor, but it is up to Tesla to make that vision a reality.

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