Historic Tesla Verdict Highlights Employer’s Duty to Stop Harassment

A federal jury’s ruling in favor of a former Tesla employee is a stark reminder to employers that they must take harassment complaints seriously, or pay the price.

The worker, who alleged he was the victim of a racially hostile work environment at the Tesla plant in Fremont, was awarded $137 million by a California jury Oct. 4. 

Tesla claimed that its supervisors adequately responded to the worker’s complaints, but the jury clearly disagreed.

Although he complained several times about the hostile work environment, his suit claimed that Tesla failed to adequately address the racist atmosphere.

Anti-Discrimination Statute

The lawsuit alleged racial harassment under federal statute 42 USC 1981, an anti-discrimination statute similar to Title VII.

In order to prove his case, he needed to show that: (1) he was subjected to verbal or physical conduct because of his race; (2) the conduct he endured was unwelcome; and (3) the conduct was sufficiently severe or pervasive to alter the conditions of his employment and create an abusive work environment.

The verdict is a stark reminder to employers that they must take harassment complaints seriously, or pay the price.

Tesla attempted to defend the suit by claiming that its managers used reasonable care to prevent and correct the harassment.

However, the jury’s verdict, consisting of $6.9 million in compensatory damages and $130 million in punitive damages, suggests that Tesla’s evidence was not convincing.

Key Points for Employers

The verdict highlights several key points that employers must remember:

1. An employer can successfully defend a harassment lawsuit by proving that (1) it “exercised reasonable care” to prevent and correct harassing conduct; and (2) the employee unreasonably failed to take advantage of preventive opportunities.

In other words, the employer had an effective anti-harassment policy, and the employee failed to utilize it. It is crucial for employers to have written, effective, communicated anti-harassment policies in place.

2. An employer cannot avoid liability simply by claiming that it wasn’t aware of the harassing conduct. In addition, in the Tesla case, the company as a whole was found liable for punitive damages based on the conduct of its managers.

The plaintiff alleged that he heard the n-word on a near-daily basis, including from supervisors. The jury found that the managers necessarily must have known about that environment, and that by failing to correct it, those managers ratified the racist conduct on behalf of the company.

3. Employers may be liable for harassment endured by non-employee workers provided by staffing companies.

The plaintiff in the Tesla suit was a contract worker employed by a staffing agency and provided to Tesla on a temporary basis. This is also why the plaintiff could collect such a large judgment, as most regular Tesla employees are required to sign arbitration agreements. 

It is essential that employers take the time to review their anti-harassment policies and ensure that they are effective and disseminated to the entire workforce.

It’s also just as crucial that employers train their managers to pay attention to harassment complaints and to take them seriously.

It’s just too expensive to do otherwise.

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HR problems or issues? Email or call CBIA’s Diane Mokriski at the HR Hotline (860.244.1900) | @HRHotline.