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Tesla counter sues California agency that alleged racial discrimination at Fremont plant

Tesla claims the California Civil Rights Department is subverting the law in its handling of a lawsuit that did not give the electric car company a chance to settle out of court.

SAN FRANCISCO (CN) — Tesla Inc. countersued Thursday a California agency accusing the Silicon Valley auto giant of allowing and enabling widespread race discrimination at its Fremont assembly plant.

The California Civil Rights Department (CRD) filed a petition Wednesday against Tesla alleging it failed to comply with its ongoing investigation, having sued in February alleging Black employees at the electric car manufacturer’s factory in the San Francisco area faced discrimination and harassment.

In a subsequent complaint filed in Alameda County Superior Court, Tesla says the department adopted "underground regulations" allowing it to file the lawsuit without notifying Tesla or giving the company a chance to settle.

The civil rights agency — charged with protecting Californians from employment discrimination — said in its 39-page complaint filed last spring that Tesla’s marketing of its vehicles to “environmentally conscious, socially responsible” buyers “masks the reality of a company that profits from an army of production workers, many of whom are people of color, working under egregious conditions.”

According to the lawsuit, Tesla’s Fremont factory east of San Francisco racially segregates Black workers to the “lowest levels,” asserting that they comprise approximately 20% of the factory operatives, but none of the executives and only about 3% of the plant’s professionals. The complaint attributes the alleged segregation and lack of Black leadership to a culture where complaints of racism were left unaddressed for years on end.

These include claims that managers and supervisors repeatedly used the most racist and incendiary slurs to refer to Black workers and called the factory the “slaveship” or “the plantation.” One Black worker estimates in the complaint that they heard these racial slurs and remarks 50 to 100 times per day.

The complaint further asserts that swastikas, slurs and racist messages are “etched onto walls of restrooms, restroom stalls, lunch tables and even factory machinery” and Black workers face more severe discipline and physically strenuous duties with fewer opportunities for advancement, less pay and lower-level roles. Complaints about disparate treatment and racism within the workplace were ignored or resulted in the firing of the worker in retaliation, according to the lawsuit.

Tesla blasted the complaint as “misguided” and minimized the claims as “alleged misconduct by production associates” that occurred between 2015 and 2019. But the company has been embroiled in several recent controversies, including a slate of recalls on hundreds of thousands of vehicles for violations of federal motor vehicle safety standards and software errors. The manufacturer is also facing a series of race and sex discrimination cases by workers largely from the Fremont plant.

Tesla's counter-lawsuit Thursday alleges that the department violated state law by not seeking public comment before adopting procedures for investigating and suing employers.  The company argues the state agency’s procedures ignore the legal requirement to disclose details of investigations to employers and attempt to settle claims out of court before suing.

The agency served Tesla on Jan. 3 this year with a one-page finding, which Tesla said had no additional information relaying the charges of misconduct or any evidence to justify the agency’s finding or reason to sue. The civil complaint followed on Feb. 9 with causes for action filed March 11. Tesla said these successive actions subverted the statutory and regulatory framework of the California Fair Employment and Housing Act.

The company alleges these “underground” standards enable the agency to carry out actions such as initiating employer investigations without disclosing a factual basis, issuing “cause” determinations against employers without any additional information or file civil suits against employers without first engaging in good faith conciliation and mediation.

“Although the Fair Employment and Housing Act grants CRD authority to initiate civil litigation against employers for alleged discriminatory conduct, CRD may file suit only after it has complied with all of the statutory pre-suit obligations imposed on it by the Fair Employment and Housing Act and engaged in a ‘mandatory dispute resolution process’ through the DFEH’s internal mediation division,” Tesla wrote. 

The company also said complaints from the agency did not name any Tesla employee who allegedly experienced or engaged in racial harassment or retaliation, nor provide a date, location or context for alleged harassment or retaliation. Tesla claims that despite a multi-year investigation, the agency did not interview any members of Tesla’s management, human resources or employee relations teams and did not physically inspect Tesla’s Fremont facility to observe working conditions in real time.

“The truth is that CRD did not engage in meaningful conciliation efforts or good faith mediation with Tesla, consistent with its underground regulation that no such pre-suit obligations apply to it under the Fair Employment and Housing Act,” Tesla argued. 

Tesla seeks a judgment that the agency’s conduct was “invalid and unlawful” and asks that an order be issued to bar the agency from following those procedures while investigating an employer and require it to adopt new regulations through a formal rulemaking process.

‘’No state agency may function outside the law,” Tesla said. 

Tesla has also attempted to use similar claims to ask a judge to dismiss the California agency's lawsuit, a request denied by a state judge last month. In June, the Silicon Valley giant asked the state’s Office of Administrative Law to investigate the department’s alleged adoption of unlawful policies. The OAL declined to review Tesla's petition, according to Reuters.

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