Tesla sued by former employees over 'mass layoff'

Elon Musk, Tesla CEO, right, at the opening of the Tesla factory Berlin Brandenburg in Gruenheide, Germany, on March 22, 2022. (Patrick Pleul/Pool via AP)

Former Tesla Inc employees have filed a lawsuit against the U.S. electric car company alleging its decision to carry out a "mass layoff" violated federal law as the company did not provide advance notice of the job cuts.

The lawsuit was filed late Sunday in Texas by two workers who said they were terminated from Tesla's gigafactory plant in Sparks, Nevada, in June.

According to the suit, more than 500 employees were terminated at the Nevada factory.

The workers allege the company failed to adhere to federal laws on mass layoffs that require a 60-day notification period under the Worker Adjustment and Retraining Notification Act, according to the lawsuit.

They are seeking class action status for all former Tesla employees throughout the United States who were laid off in May or June without advance notice.

"Tesla has simply notified the employees that their terminations would be effective immediately," the complaint said.

Tesla, which has not commented on numbers of layoffs, did not immediately respond to requests for comment about the lawsuit.

Tesla CEO Elon Musk, the world's richest person, said earlier this month he had a "super bad feeling" about the economy and that Tesla needed to cut staff by about 10%, according to an email seen by Reuters.

More than 20 people identifying themselves as Tesla employees said they were laid off, let go or had positions terminated this month, according to online postings and interviews with Reuters.

The action filed by John Lynch and Daxton Hartsfield, who were fired on June 10 and June 15 respectively, seeks pay and benefits for the 60-day notification period.

"It's pretty shocking that Tesla would just blatantly violate federal labor law by laying off so many workers without providing the required notice," Shannon Liss-Riordan, an attorney representing the workers told Reuters.

She said Tesla is offering some employees only one week of severance, adding that she is preparing an emergency motion with a court to try to block Tesla from trying to get releases from employees in exchange for just one week of severance.

Musk played down the lawsuit as "trivial."

"Let's not read too much into a pre-emptive lawsuit that has no standing," he said at the Qatar Economic Forum organized by Bloomberg.

"It seems like anything related to Tesla gets a lot of clicks, whether it is trivial or significant. I would put that lawsuit you're referring to in the trivial category."

The suit was filed in the U.S. District Court, Western District of Texas.

Reporting by Akriti Sharma in Bengaluru and Hyunjoo Jin in San Francisco; editing by Richard Pullin and Jason Neely