After two former Tesla employees filed a lawsuit alleging the auto company violated U.S. labor rules by allegedly taking massive layoffs, Elon Musk explained on Tuesday, June 21, how many company employees would lose their jobs alone.
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GRUENHEIDE, GERMANY – MARCH 22: Tesla CEO Elon Musk attends the official opening of Tesla’s new electric car factory on March 22, 2022 near Gruenheide, Germany.
Tesla’s layoffs
As first reported by CNBC, the billionaire said at a Bloomberg event Tuesday that Tesla would cut employment by 10% over the next three months, but also increase the number of employees per hour at the same time.
Reuters reported earlier this month that Tesla CEO Elon Musk planned to cut 10% of the company’s workforce, citing an email in which Musk apparently expressed his pessimism about the economy.
But according to an email obtained by CNBC, Musk clarified that Tesla would cut salaried pay by just 10% and increase the hourly staff. The layoffs affect about 3.5 percent of the company’s total workforce.
Musk also said on Tuesday that the exact number of workers to be laid off is not “super material,” adding that salaried workers make up only two-thirds of the company’s employees.
The CEO also noted that the number of both salaried and hourly workers could increase after a year.
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the lawsuit
Two former Tesla employees filed a lawsuit on Sunday, saying the company violated federal regulations surrounding mass layoffs.
The lawsuit alleges more than 500 workers have been laid off at the automaker’s Nevada plant. The workers who filed the case are seeking class action status for former Tesla employees who were unemployed in the United States in May or June without warning.
At least 20 Tesla employees claimed they were fired without notice this June, according to Reuters. The complainants said the carmaker only said their unemployment “would take effect immediately”.
Under the Worker Adjustment and Retraining Notification Act, employers are required to provide 60 days’ notice of mass layoff or factory closure.
However, Musk downplayed the suit’s significance, claiming it was just a minor “minor” lawsuit, noting that any news that accompanies Tesla’s name automatically turns into a major headline.
Tesla’s dealings with its employees have been in hot water lately. Musk has instructed the carmaker’s staff to work at least 40 hours a week or they will be fired.
The pessimism of Elon Musk
Musk decided to fire some of his employees because of his “bad feeling” about the economy.
Despite recent forecasts of a recession, demand for Tesla cars and other electric vehicles has remained strong, and many of the classic indicators of a slowdown, such as increased dealer inventories in the United States, have yet to materialize.
Tesla has struggled to restart production at its Shanghai factory after recent COVID-19 lockdowns in China caused significant setbacks.
Musk’s bearish forecast matches that of JPMorgan Chase & Co (JPM.N) CEO Jamie Dimon and Goldman Sachs President John Waldron.
Inflation in the United States is hitting its 40-year high, Americans’ cost of living is soaring, while the Federal Reserve has the difficult task of dampening demand enough to avoid a recession.
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Written by Joaquin Victor Tacla
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