Musk's Tesla: The High Cost of Ignoring Discrimination in Workplace Culture

“Welcome to the plantation.” “Welcome to the slave house.” 

These are the words that a manager allegedly used when greeting workers at Tesla, according to a Black employee who installed latches on car doors at the pioneering company founded by billionaire Elon Musk.

Raina Pierce, who worked at Tesla’s Fremont, Calif., plant, the largest auto factory in the U.S., also claimed she faced gender harassment, racial slurs scrawled on plant walls, and unequal discipline compared to non-Black coworkers. Pierce took Tesla to court in 2022 and her lawsuit was settled for an undisclosed amount with Musk in federal court in San Francisco earlier this month, according to Reuters.

A History of Ongoing Racism at Tesla

This isn’t the first racial discrimination lawsuit against the electric car maker.

In 2017, former contractor Marcus Vaughn filed a class-action lawsuit that has been joined by at least 6,000 current and former workers, some declaring under oath to regularly being called “n—,” “porch monkey,” and “boy,” and seeing swastikas and other hateful symbols in the bathrooms and shop floor. Vaughn said Tesla placed Black workers in the hardest, lowest-paid, and most dangerous jobs, the Mercury News reported. He formally complained about the racist behavior after only three months on the job and was fired later that year for “not having a positive attitude,” according to the San Francisco Chronicle. The case is expected to go to trial before the end of this year. 

In 2021, Owen Diaz, a Black elevator operator at Tesla, filed suit alleging racial harassment that included the use of the n-word and being told to “go back to Africa,” according to NPR. A judge reduced the jury’s $137 million award to $15 million, leading Diaz to reject the reduced amount and seek a retrial. In 2023, a new jury awarded him $3.2 million, and a final, binding settlement (the terms of which were not made public) was reached last year, AP news reported. 

In 2022, California’s Department of Fair Employment and Housing filed suit alleging that at the Tesla’s Fremont plant, Black workers earned less than their white counterparts, were denied promotions, and subjected to daily racism, including drawings of nooses, lynching references, and racial slurs in the bathroom, according to the Mercury News. Tesla officials have reportedly characterized the lawsuit, set for jury trial in September, as “misguided” and “unfair.”

And in April 2023, California’s state Supreme Court granted Black employees the right to request a court order mandating the company to recognize a discriminatory environment and take necessary actions to eliminate it, the San Francisco Chronicle reported. Tesla had argued that workers should resolve individual discrimination claims through arbitration, under terms of the contracts they signed. Such contracts are typically private and favor companies. 

The Human Cost of Harassment

The ongoing lawsuits point to a systemic problem at Tesla — that persistent harassment is tolerated within company culture and it’s OK to devalue people who contribute to the company’s success. It’s a clear example of the high cost of ignoring discrimination in workplace culture, a cost that ripples out to other employees, their families, and the communities they live in.

After the 2021 verdict in the Diaz case, Tesla executive Valerie Capers Workman wrote in a note to employees that Tesla janitors removed racial slurs from plant walls and that the automaker’s staffing agencies fired two contractors and suspended another. She also noted that although workers who testified under oath “agreed that the use of the n-word was not appropriate in the workplace, they also agreed that most of the time they thought the language was used in a ‘friendly’ manner and usually by African-American colleagues.”

Downplaying the severity of the situation overlooks a critical point: The impact of harmful language isn’t defined by the speaker's intent, but by how it affects both those on the receiving end and the overall work culture.

A respectful work environment is not a trivial or peripheral concern, but a key factor in a company’s financial performance. Research shows that employees who feel respected in the workplace are more satisfied, productive, and less prone to turnover, according to Forbes.  It follows that they’d also be less likely to sue.  

Key Takeaways from Tesla’s Lawsuits

• The Cost of Harassment Extends Beyond the Courtroom: While Tesla paid significant settlements in the Pierce and Diaz cases, the broader financial toll of harassment and abuse extends beyond the courtroom and Tesla’s factory walls.  Discrimination, bullying, sexual harassment and other types of misconduct in the workplace cost U.S. companies $20.2 billion in replacement costs alone, not including legal fees or compensation, according to Forbes.  

• Discrimination Isn’t Always Obvious: In Tesla’s case, much of the harassment was verbal and occurred in interactions between workers. Not all harmful behavior is immediately visible. Ethical leadership means creating a culture where all forms of harmful behavior, whether verbal or written, are addressed and prevented.

• Prevention is Cheaper Than Legal Fees and Damages Awarded by Juries: Being proactive is more cost-effective than dealing with the consequences after the fact. Providing employees with the tools to recognize and report harmful behavior, along with a clear reporting system, can help organizations avoid costly lawsuits, reputational damage, and workplace disruptions.

  
  

The Bottom Line: Ethical Leadership is Essential

Tesla has four factories in the U.S. and others abroad. We’ve outlined the legal and reputational costs that just one plant has accumulated. Now consider how much these costs could add up for companies across the country — there are thousands of businesses with similar risks. For organizations that rely on email and digital communication, tools like HarmCheck can help identify harmful language early and reduce the chance of it spreading. It flags miscommunication and provides a system of accountability across the entire organization.

Why not buckle up? HarmCheck is a seatbelt for reducing the risk of harmful language before it leads to a crash that affects your bottom line.

Book a free demo with HarmCheck today: http://harmcheck.ai/demo

Carolyne Zinko is the editorial director and AI editor at Alphy.

HarmCheck by Alphy is an AI communication compliance solution that detects and flags language that is harmful, unlawful, and unethical in digital communication. Alphy was founded to reduce the risk of litigation from harmful and discriminatory communication while helping employees communicate more effectively. For more information: www.harmcheck.ai.