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Former Tesla employees sue Elon Musk’s company after alleged ‘mass layoff’ sees 500 workers fired

Elon Musk has said Tesla will look to lay off around 10 per cent of its workforce
Elon Musk has said Tesla will look to lay off around 10 per cent of its workforce   -   Copyright  David Zalubowski/AP
By Euronews  with Reuters, AFP

Former Tesla employees are suing the electric carmaker for an alleged mass firing of workers without the advance notice required by law.

According to the lawsuit being brought by two ex-employees who were fired in June, more than 500 workers were laid off at the company’s gigafactory plant in Sparks, Nevada in the US.

Tesla CEO Elon Musk, the world’s richest person, dismissed the lawsuit as "trivial," telling an audience at the Qatar Economic Forum: "Let's not read too much into a pre-emptive lawsuit that has no standing”.

Tesla shares dropped nearly 10 per cent earlier this month after Musk emailed staff saying the company would look to cut its workforce by 10 per cent.

Musk said he had a “super bad feeling” about the economy, telling the company to pause hiring worldwide.

The lawsuit filed on Monday June 20 alleges Tesla failed to follow federal laws on mass layoffs by failing to provide a 60-day notice under the 1988 Worker Adjustment and Retraining Notification Act.

The two plaintiffs are seeking class action status for all former employees in the US who were fired in May or June without advance notice.

"Tesla has simply notified the employees that their terminations would be effective immediately," the complaint said.

Tesla did not immediately respond to requests made by Reuters for comment about the lawsuit.

More than 20 people identifying themselves as Tesla employees said they were laid off, let go or had positions terminated this month, according to online postings and interviews with Reuters.

The action filed by John Lynch and Daxton Hartsfield, who were fired on June 10 and June 15 respectively, seeks pay and benefits for the 60-day notification period.

"It's pretty shocking that Tesla would just blatantly violate federal labour law by laying off so many workers without providing the required notice," Shannon Liss-Riordan, an attorney representing the workers told Reuters.

She said Tesla is offering some employees only one week of severance, adding that she is preparing an emergency motion with a court to try to block Tesla from trying to get releases from employees in exchange for just one week of severance.

Tesla facing other lawsuits

The company is facing another lawsuit filed by a shareholder who is accusing its board of directors and Musk of overlooking accusations of sexual harrassment and racism made by some employees.

The complaint was filed on June 16 by Solomon Chau in a court in Austin, Texas, where Tesla's headquarters are located.

In a court document, the lawsuit criticises the carmaker for "creating a toxic corporate culture based on racist and sexist abuse and discrimination against its own employees".

"This toxic environment has been building internally for years and the truth about Tesla's culture has only recently emerged, leading to actions by regulators and individuals alike," Chau's lawyers said, expressing concern about "the financial damage and irreparable harm to the company's reputation”.

And an investor who lost money on the memecoin cryptocurrency Dogecoin, which was hyped up by Musk, has filed a lawsuit claiming $258 billion (€244 billion) from the billionaire mogul and his companies Tesla and SpaceX.

Keith Johnson describes himself as an "American citizen who was defrauded by a Dogecoin pyramid scheme set up by the defendants”.

He is seeking to have his complaint, filed in a New York court, classified as a class action on behalf of investors who have taken losses betting on Dogecoin since 2019.

Since Musk began promoting the virtual currency that year, people who invested money in it have lost about $86 billion (€81 billion), he estimates.

He is demanding that this amount be returned and doubled in damages, to $172 billion (€163 billion).

Created in 2013, Dogecoin was traded at less than a cent for most of its history, but a frenzy in early 2021, spurred on by Musk’s comments on social media sent it to over 70 cents by May 2021.

It is now worth just over 6 cents.

Johnson claims Musk "inflated the price, capitalisation and trading volumes" of Dogecoin by advertising it.

Euronews Next has contacted Tesla for comment on the lawsuits.