A US district court has ordered that Tesla must tell employees about a lawsuit alleging that the auto manufacturer violated state and federal law by requiring workers to sign severance agreements.
Two former Tesla employees filed the suit in July, alleging that the company asked them to sign a discharge in exchange for fewer terminations than required by federal and California law. Lawyers have asked the US District Court for the Western District of Texas to prevent the automaker from requiring laid-off workers to sign returns for just one week of dismissal instead of the eight required by law.
More than 500 other employees of Tesla’s Gigafactory 2 in Sparks, Nevada, have been laid off after CEO Elon Musk announced that the next economic downturn will force the company to lay off 10% of its salaried workforce. Friday’s court order protects workers laid off on or after June 19.
The lawsuit — filed by two employees who were laid off in June from Tesla’s Gigafactory 2 plant in Sparks, Nevada, and another from Tesla’s Palo Alto store — alleges that the company violated Section 1400 of the California Labor Code, as well as amending and retraining federal workers. Layoff Notice Act Without 60 days prior notice.
“Plaintiffs allege that dismissal agreements enforced after this lawsuit was filed are coercive, abusive and misleading because Tesla failed to inform terminated employees/prospective class members about their “pending lawsuit and the rights they are likely to waive,” according to the court order.
Tesla filed a request in August to deny the claims. On Friday, the court ruled that the company must continue to notify its employees of the lawsuit “until the merits of the plaintiffs’ claims are adjudicated in federal court or in arbitration proceedings.”
The court denied the plaintiffs’ request for wages and benefits to be paid within the 60-day notice period.