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Tesla accused of violating federal law over ‘mass layoffs’ at Gigafactory

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Two former employees are suing Tesla for allegedly failing to provide 60 days’ notice of a mass layoff

Photo by Sean O’Kane / The Verge

Two former Tesla employees have filed a lawsuit claiming the company violated federal law for failing to provide 60 days’ notice for a mass layoff.

The lawsuit, which was filed on Sunday, follows the news that Tesla plans on laying off hourly workers, after Tesla CEO Elon Musk initially stated that the hourly workers were likely to be unaffected by the layoffs.

The lawsuit was filed by John Lynch and Daxton Hartsfield, both of whom worked at Tesla’s Gigafactory in Sparks, Nevada, when the layoffs began in early June. The two former employees allege they were among “more than 500” Gigafactory employees who were terminated.

According to Lynch and Hartsfield, the mass layoff violates the Worker Adjustment and Retraining Notification (WARN) Act, which requires employers to notify workers at least 60 calendar days in advance before shutting down a facility or laying off 50 or more workers from the same site.

“Tesla has failed to give Plaintiffs and the Class Members any advance written notice of their terminations,” the lawsuit reads. “Instead, Tesla has simply notified the employees that their terminations would be effective immediately. Tesla has also failed to provide a statement of the basis for reducing the notification period to zero days advance notice.”

The former employees are seeking 60 days’ worth of pay and benefits. They are also requesting class-action status for their lawsuit for those who were terminated in May and June without the legally required notice.

This followed a company-wide email by Musk detailing a worldwide hiring freeze and a plan to slash the company’s workforce by about 10 percent. In the email, Musk said the layoffs were because he had a “super bad feeling” about the US economy.

Initially, it appeared that Tesla’s hourly workers would be spared from the layoffs. The company-wide email, sent June 3rd, said that “Tesla will be reducing salaried headcount by 10% as we have become overstaffed in many areas.”

A day later, Musk tweeted that “total headcount will increase, but salaried should be fairly flat,” in response to a statement about Tesla’s staffing over the next 12 months. Reports that the layoffs would also include hourly workers began trickling out this past weekend.

This is the second time that a company run by Musk may have run afoul of US labor laws. Last week, SpaceX fired a group of employees who were involved in writing an open letter criticizing Musk’s behavior. The firings may have violated federal law protecting employee speech related to working conditions, several labor lawyers told The Verge.