Former Tesla workers John Lynch and Daxton Hartsfield filed the lawsuit on June 19th in Texas federal court on behalf of employees of the electric vehicle maker who have been terminated without cause as a part of mass layoffs beginning in approximately May or June of 2022. Lynch and Hartsfield, who worked at Tesla's Gigafactory 2 plant in Sparks, allege they received a notice of termination that was “effective immediately” rather than receive 60 days advanced notice, as the WARN act stipulates. The lawsuit also alleges that Tesla also failed to provide a statement explaining the basis for reducing the notification period to zero days advance notice.
"Tesla has failed to pay plaintiffs and other similarly situated employees their respective wages, salary, commissions, bonuses, accrued holiday pay, and accrued vacation for 60 working days following their respective terminations, and failed to make the pension and 401(k) contributions, provide other employee benefits under ERISA, and pay their medical expenses for sixty calendar days from and after the dates of their respective terminations," according to the lawsuit.
Tesla CEO Elon Musk told the company's top executives that the company needed to eliminate 10 percent of its total workforce, reported Reuters. Thousands of workers were laid off nationwide, including more than 500 at the Nevada plant. Over 500 lay-offs is the magic number for WARN Act violations.
Under the Worker Adjustment and Retraining Notification Act (WARN), employers are required to provide 60 days advance written notice prior to a "mass layoff," but Tesla failed to provide such a warning.
The Worker Adjustment and Retraining Notification Act (WARN)
- Requires an employer with 100 or more full-time employees to provide advanced notice of a mass layoff affecting 50-499 employees at least 60 calendar days before termination.
- Does not count employees who have worked for the employer for less than six months.
- The 60-day requirement applies if the employees affected by the mass layoff represent at least 33% of the employer’s workforce and a single employment site during any 30 or 90-day period.
Musk Calls Lawsuit “Trivial”
According to Reuters, Musk dismissed the lawsuit as “trivial” and at Bloomberg’s Qatar Economic forum he said it was a “small lawsuit of minor consequence, reported CNBC. At the event Musk said Tesla would reduce its salaried workforce by 10 percent in the next three months, while at the same time growing the number of hourly employees.
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DOL's Employment and Training Administration administers WARN but has no enforcement role in seeking damages for workers who did not receive adequate notice of a layoff or received no notice at all. Some states also have their own plant closure laws.
Employers considering a layoff can contact the State Dislocated Worker Unit to find out more information on notice requirements in their state.