Tesla Must Defend Foreign Workers’ Trafficking Allegations

Tesla Motors Inc. will have to continue defending a lawsuit in federal court accusing it of working with contractors that exploited foreign workers and engaged in visa fraud.

Tesla and Chief Executive Officer Elon Musk have been vocal in their support for immigrants and opposition to the Trump administration’s immigration policies, including the travel ban and family separation at the southern border. Yet the lawsuit places the company at the center of an alleged fraud scheme that saved thousands in visa fees and wages by bringing in foreign nationals on visas that didn’t allow them to work.

Gregor Lesnik and Stjepan Papes, both foreign workers employed by a subcontractor that supplied labor to Tesla’s Fremont, Calif., facility, made legitimate arguments under the Trafficking Victims Protection Reauthorization Act, Judge Lucy Koh of the U.S. District Court for the Northern District of California said Oct. 1.

The same is true with respect to their claims under California’s forced labor laws, she said.

Although the alleged actions weren’t the work of Tesla or contractor Eisenmann SE, both companies knew or should have known that the subcontractor that employed the workers was violating the law, Koh said.

Most of Lawsuit Tossed

But the judge tossed the rest of the workers’ complaint, which implicates other big-name manufacturers such as Mercedes-Benz U.S. International Inc., Deere & Co., Volkswagen Group of America Chattanooga Operations LLC, and BMW Manufacturing Co.

She did allow the workers to rewrite their complaint to better articulate their other arguments, which include allegations under the False Claims Act, the Fair Labor Standards Act, and the Racketeer Influenced and Corrupt Organizations Act.

The claims involve an alleged conspiracy to bring in foreign workers on B-1 visas, which don’t allow work in the U.S. Lesnik and Papes say they performed unskilled construction work for ISM Vuzem d.o.o., which contracted with Eisenmann to set up paint shop equipment at the Tesla plant.

The workers say they were forced to work long hours and were paid at rates far below the minimum wage. They also say they were threatened with withholding of their pay and visas if they were too sick to work or reported a workplace injury.

Tesla: Subcontractor Booted

“At Tesla, we operate on the principles of fairness, justice and kindness. Whether people work for the company, one of our contractors or a subcontractor, we expect them to act ethically and follow these same principles,” the company said in a statement provided to Bloomberg Law Oct. 3.

Tesla contracted with Eisenmann because of its reputation for providing paint shops and obligated the company to comply with all laws, it said. “While we were not aware at the time, we’ve since learned that a subcontractor they used, ISM Vuzem, was not living up to our expectations. Had we known then that they were not doing the right thing, we would have removed them from our factory immediately,” Tesla said.

The subcontractor no longer works on Tesla projects, and the company has “further improved our supplier contracts and policies to better stop bad behavior,” it said.

A representative for Eisenmann didn’t immediately respond to Bloomberg Law’s request for comment.

The case is Lesnik v. Eisenmann, 2018 BL 362963, N.D. Cal., No. 5:16-cv-01120, 10/1/18.