Tesla Loses Bid to End EEOC Racial Harassment, Retaliation Suit

Tesla Inc. must face EEOC allegations that the automaker subjected Black employees at its Fremont, California, manufacturing facilities to severe racial harassment since May 2015, a federal judge ruled.

The US Equal Employment Opportunity Commission’s factual allegations are sufficient to support the inference the alleged racial harassment was severe enough to “pollute” Tesla’s Fremont plant and create an abusive workplace for Black employees, Judge Jacqueline Scott Corley of the US District Court for the Northern District of California said in a decision released late Friday.

The ruling, which came one day after a hearing on Tesla’s request to dismiss the lawsuit brought by the federal agency, is the latest setback involving race bias allegations against the automaker.

A federal jury in San Francisco awarded an individual Tesla worker $3.2 million in damages in April 2023 over similar discrimination claims. Owen Diaz won a $137 million jury verdict in 2021 in the original trial in his case, but asked for a redo after the judge slashed the damages award.

The EEOC sued last year, alleging that Tesla maintained a racially hostile work environment at the plant, where the N-word and other racial slurs, epithets, and stereotyping “permeated Tesla’s Fremont Factory.”

In her Friday ruling, Corley denied Tesla’s motion to dismiss for failure to state a claim as well as its request to stay the case pending “virtually identical” state court proceedings.

The EEOC’s allegations of “frequent direct verbal racial attacks against Black Tesla employees” at the facility and the “constant presence of racist graffiti evocative of lynchings” support an inference the Tesla plant has been “permeated with discriminatory intimidation, ridicule, and insult,” Corley said.

The state court cases, “regardless of outcome, will not resolve this case,” Corley said. Tesla failed to show that the state court proceedings will completely and promptly resolve the issues between the parties, the judge said.

Corley also rejected Tesla’s argument that the EEOC failed to engage Tesla in the pre-suit conciliation required by Title VII of the 1964 Civil Rights Act and US Supreme Court precedent.

The EEOC informed Tesla of the specific allegations against it and the class of employees who suffered as a result, Corley said. The EEOC engaged in conciliation efforts between July 2022 and June 2023, including a seven-hour, in-person conciliation session, the judge said.

Holland & Knight LLP and Reed Smith LLP represent Tesla. A representative for the company didn’t immediately respond to a request for comment.

The case is Equal Employment Opportunity Comm’n v. Tesla, Inc., N.D. Cal., No. 3:23-cv-04984, 3/29/24.