A U.S. District Court has mandated that Tesla inform staff members about a lawsuit that claims the manufacturer forced staff members to sign separation agreements in violation of state and federal law.
The lawsuit was brought in July by two former Tesla employees who claimed that they were given less severance pay than what is needed by federal and California state law in exchange for signing releases. Attorneys requested that the Western District of Texas U.S. District Court forbid the automaker from requiring laid-off employees to sign releases in exchange for just one week of severance rather than the eight weeks required by law.
Following CEO Elon Musk’s warning that the business would be forced to lay off 10% of its salaried workers due to an impending economic slump, more than 500 additional employees were fired from Tesla’s Gigafactory 2 in Sparks, Nevada. Workers laid off on or after June 19 are protected by the court order delivered on Friday.
The lawsuit asserts that by terminating employees without providing them with 60 days’ notice, the company violated both Section 1400 of the California Labor Code and the federal Worker Adjustment and Retraining Notification Act. It was brought by two employees who lost their jobs in June at Tesla’s Gigafactory 2 in Sparks, Nevada, and the Palo Alto store.
According to the court ruling, “Plaintiffs argue that Tesla failed to inform terminated employees/potential class members about “the existing action and the rights that they are possibly giving up” in separation agreements that were signed after this complaint was filed.
In August, Tesla submitted a motion to dismiss the allegations. The Court decided on Friday that the business must keep its staff informed of the lawsuit “until the merits of Plaintiffs’ claims are determined in federal court or in arbitration processes.”
The plaintiffs’ request for salary and benefits for the 60-day notification period was rejected by the court.