Tesla ordered to pay worker $185.9 million for racism at plant

The case marked a rare instance in which Tesla had to defend itself in a courtroom trial in public. PHOTO: REUTERS

NEW YORK (BLOOMBERG, NYTIMES) - Tesla lost a trial with a black former elevator operator and must pay him US$137 million (S$185.9 million) for having turned a blind eye to racial taunts and offensive graffiti he endured at the electric car maker's northern California plant, according to the man's lawyer.

Mr Owen Diaz, a former contract worker hired at the company in 2015 through a staffing agency, was subjected to a racially hostile work environment, a jury in San Francisco decided on Monday (Oct 4), according to Mr Lawrence Organ, a lawyer for Mr Diaz. The verdict could not immediately be confirmed in electronic court records.

In his initial lawsuit, Mr Diaz said he worked as an elevator operator at Tesla's factory in Fremont, California, for about a year in 2015 and 2016. There, he said, a supervisor and other colleagues repeatedly referred to him using a racial slur. He also said employees had left drawings of derogatory caricatures of black children around the factory.

After deliberating for about four hours, the jury agreed with Mr Diaz's assertion that Tesla had created a hostile work environment by failing to address the racism he faced, Mr Organ said. The vast majority of the award - US$130 million - was punitive damages for the company.

Despite the abuse he faced, Mr Diaz said in the lawsuit, he reached a breaking point only when he witnessed similar racist epithets directed at his son Demetric, who secured a job at the company with Mr Diaz's help.

"My son watched his father being broken in front of him," Mr Diaz said on Monday.

Mr Diaz quit in May 2016. He sued Tesla alongside his son and another black former employee, but only the elder Diaz's claims made it to trial.

His case marked a rare instance in which Tesla, which typically uses mandatory arbitration to resolve employee disputes, had to defend itself in a courtroom trial in public. The company almost never loses workplace arbitrations, though it was hit with a US$1 million award in May in a case brought by another former worker that was similar to Mr Diaz's.

The trial's outcome could embolden shareholder activists who have pushed Tesla's board, so far without success, to adopt more transparency about its use of arbitration to resolve complaints about sexual harassment and racial discrimination. The board is urging investors to vote down such a proposal at a shareholder meeting for Thursday (Oct 7) even as other big Silicon Valley companies, from Alphabet to Uber Technologies, have backed off the use of mandatory arbitration.

Tesla did not immediately respond to a request for comment.

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