Tesla is sued by former employees who say mass layoffs violate federal law

Tesla is being sued by two former employees from its Sparks, Nevada factory over mass layoffs, Reuters reported. They allege that more than 500 workers were laid off at the factory without 60-day notice, in violation of federal law. “Tesla has only notified employees that termination of their contracts will be effective immediately,” the complaint states. They are seeking class action status on behalf of any Tesla US employee laid off in May or June without notice.

The US WARN Act requires companies to provide 60 days’ notice before any mass layoffs, according to certain circumstances. The idea is to give employees enough time to find another job or retrain. One of the workers who filed the lawsuit, John Lynch, said he was notified June 10 that he would be terminated from his contract effective immediately.

“Tesla started firing people for disregarding the WARN Act,” said attorney Shannon Liss-Riordan, who represents the workers. Bloomberg – added that Tesla only offered one week of severance pay to some employees. She’s preparing an emergency offer in an effort to stop Tesla from trying to get employees back in exchange for a week of severance pay.

After news of the lawsuit, Musk told CNBC in an email that Tesla will reduce the number of salaried employees by 10% while increasing its hourly workforce. Salaried employees make up about two-thirds of Tesla’s employees, so the layoffs will affect about 3.5 percent of total workers, he said. “One year from now, I think our headcount will be higher both by salary and obviously by the hour,” Musk added.

Earlier this month, Musk signaled that job losses were imminent after he told Tesla executives about the aforementioned plan to cut 10% of the workforce, saying he had a “super bad feeling“about the economy. Thousands of Tesla workers have reported were recently sent around the United States, and many suffered “devastating economic impact,” according to the lawsuit.

However, Musk told CNBC that the case is not important. “It’s a small lawsuit with minor consequences,” he said. “Anything related to Tesla gets big headlines, whether it’s a bicycle accident or something much more serious.”

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