A federal judge has ruled that Tesla (NASDAQ:TSLA) must pay a former worker $1.5 million for racial discrimination and abuse. That wasn’t the only discrimination lawsuit that Tesla is facing. So, while Elon Musk’s potential takeover of Twitter (NYSE:TWTR) moves stock prices, it may be workplace issues that really move prices soon.
A recent article from arstechnica.com highlighted serious issues that existed and may still exist within Tesla. The article began by highlighting the fact that U.S. District Judge William Orrick awarded Owen Diaz $1.5 million in damages after denying Tesla’s claims that it wasn’t responsible for racially based attacks on Diaz.
Tesla claimed that because Diaz was hired and paid through a staffing agency that he wasn’t entitled to sue the firm. However, his training and certification for operating a forklift did come from Tesla. He was employed at Tesla’s Fremont factory between June 2015 and May 2016.
While Diaz worked at the Fremont factory he was frequently subjected to slurs. Management did little to stop the abuse and evidence stated that a racist caricature was drawn by one of Diaz’s supervisors near his workstation.
Diaz can accept the $15 million ruling or appeal it in a federal appeals court. His case isn’t the only discrimination suit facing Tesla, however. The California Department of fair Employment and Housing is suing Tesla on multiple counts of racial segregation against black employees in the same Fremont factory. Multiple women are also suing Tesla on grounds of sexual harassment at the Fremont factory.
The allegations paint a picture of a workplace that has been likened to a frat house environment with alleged abuse documented to be currently occurring.
So, while the broader market worries how the Twitter takeover will pan out, Tesla has other issues. It could lose money in potential payouts of course. But the reputational damage could be far more damning.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
