Tesla faces investor test after big jury award over racism

Tesla faces investor test after big jury award over racism
# 06 October 2021 19:29 (UTC +04:00)

A contract worker has won a $137 million jury award over workplace racism against Tesla Inc, raising pressure on the electric vehicle maker whose shareholders will vote on Thursday on a proposal to review how it addresses similar complaints for full-time employees, APA reports citing Reuters.

The nonbinding shareholder resolution asks Tesla's board to study the impact of the company's current use of mandatory arbitration to resolve complaints of harassment and discrimination in its workplace. Tesla opposes the plan.

On Monday, a San Francisco federal jury made the award to former Tesla worker Owen Diaz. “The verdict sends a message to corporate America that you need to make sure that racist conduct is not occurring,” Lawrence Organ, his attorney told Reuters.

Diaz was able to face a public trial because contract workers were not subject to Tesla's mandatory arbitration, which forces employees to resolve disputes outside judiciary courts.
Tesla advised against the resolution because, it said, arbitration "benefits both parties with a fair resolution and a speedier return to their respective priorities without miring them in lengthy litigation."

Some technology companies have scaled back or eliminated mandatory arbitration. Uber and Lyft no longer require mandatory arbitration in cases over sexual harassment. Google ended mandatory arbitration in 2019. In April, nearly half of Goldman Sachs Group Inc shareholders voted in favor of examining the bank's use of mandatory arbitration. read more

Imre Szalai, a law professor at Loyola University New Orleans, said such a verdict against Tesla would create "shaming and awareness" of problems at the company.

"The public becomes aware that Tesla needs to change and increases more pressure for the company, as opposed to confidential arbitration award that doesn't get that much publicity," he said.