Some Tesla investors want the company’s board to craft a report that reviews the impact of mandatory arbitration on employees and workplace culture.
The resolution by Kristin Hull, CEO and founder of Nia Impact Capital, cites News 4 Investigates reporting on what some former Tesla workers described as a hostile work environment inside the Buffalo plant at RiverBend. A chief complaint was that management favored whites for most promotions and discriminated against people of color.
The resolution also cites reporting from The Guardian, Protocol and the LA Times.
“The report should evaluate the impact of Tesla’s current use of arbitration on the prevalence of harassment and discrimination in its workplace and on employees’ ability to seek redress should harassment and discrimination occur,” states the resolution.
The investors said shareholders should support their request because companies benefit from diverse and inclusive workplaces and that broad concerns exist around Tesla’s workplace practices regarding allegations of harassment and racism.
Specifically, Hull cites a News 4 Investigates article about how allegations of racism out of Tesla’s plant in Buffalo prompted labor and environmental groups to release a public letter which stated: “Tesla needs to acknowledge the workplace culture of racism and discrimination end the abuse and repair the harm done, to workers of color in their facilities.”
The shareholders state that the company could be significantly harmed by indications that its corporate policies protect “those who harass and discriminate.”
In November 2019, News 4 Investigates reported that six former Tesla workers in Buffalo filed complaints with both the U.S. Equal Employment Opportunity Commission and the state Division of Human Rights, alleging favoritism, racism and a hostile work environment.
The shareholders cite News 4 Investigates Feb. 3 follow-up story which reported six more former workers came forward since then to report similar behaviors at the plant.
The complaints prompted the Office of the Attorney General to interview the six complainants for a “pending investigation.”
While Tesla has disputed the allegations, the resolution states that the “pattern of allegations is difficult for reasonable investors to ignore.”
“Given that Tesla is known to have issues that have been covered by the media, to say no to this, it’ll be interesting,” Hull said.
“And we are in some very interesting times where I believe investors are waking up to their responsibility for helping corporate America be more racially just.”
Meredith Benton, who is principal and founder of the consultancy firm Whistle Stop Capital that invests in Tesla, told News 4 Investigates that she supports the resolution.
She said investors are becoming more concerned with how arbitration impacts employee morale, fairness and transparency. Arbitration, she said, too often comes with caveats, such as non-disclosure forms that keep the resolution secret.
“When an employee uses an arbitrator, there are some studies that indicate that there is a bias that exists because that employee is a single individual bringing a case in front of an arbitrator that is used by a company often,” Benton said.
“We have some indications that there may exist a culture of harassment and discrimination on the basis of race and gender within Tesla’s facilities. As external investors, , it’s very concerning that arbitration is in place because it means that we don’t have an eye into what’s happening at the company.”
Assemblyman Sean Ryan, D-Buffalo, said the investor resolution makes sense. He has met with Tesla managers on a few occasions to discuss the Buffalo facility and the allegations of discrimination inside the plant.
The state invested almost a billion dollars of taxpayer money to build and equip the sprawling facility in South Buffalo, where Tesla builds solar roof panels, electric car chargers and other car-related products.
Ryan told News 4 that too many companies force employees to go to arbitration with an arbitrator they choose and require confidentiality.
“So, nobody really ever knows how these cases turn out,” Ryan said. “The shareholders themselves aren’t even privy to this information, so that’s a good step, returning power to shareholders and away from the chief executive officers is the better way to go.”
In this instance, the CEO of Tesla is Elon Musk, a mercurial figure whose Twitter feed has gotten him in trouble with regulators.
Musk addressed some of the racial tensions inside his plant in a companywide email that both Hull and Benton described as “appalling.” Specifically, Musk wrote in the 2017 email that employees should never intentionally “allow someone to feel excluded, uncomfortable, or unfairly treated. Sometimes these things happen unintentionally, in which case you should apologize.”
“In fairness, if someone is a jerk to you, but sincerely apologizes, it is important to be thick-skinned and accept that apology,” Musk wrote.
“If you are part of a less represented group, you don’t get a free pass on being a jerk yourself.”
Hull and Benton said that response was viewed by some as being dismissive of employees’ concerns.
“And it shows a lack of leadership,” Hull said, “which we’re really counting on this CEO and this Board to show extreme leadership and to be out in front when it comes to diversity and inclusion, and they have some work to do, and we as investors are here to support them in that work.”
On May 17, Musk tweeted “Take the red pill” with an image of a rose. The investors said the concept is “strongly associated with anti-feminist and racist forums, movements and memes on the Reddit and 4chan message boards.”
In addition, the investors point out that Tesla’s head of diversity left the company in June 2019 after less than two years on the job and the company has not filled the position.
Tesla’s Board of Directors has already recommended investors vote against the resolution at its annual meeting on Sept. 22.
The Board’s opposing statement says the resolution would not serve the best interests of Tesla or its investors, “as its inaccurate and unsupported assertions regarding arbitration and its impact on workplace conditions at Tesla fail to justify the reporting it requests.”
Tesla countered that its arbitration process entitles employees to all remedies available to them in the courts. The company also contested that it requires confidentiality agreements for arbitrations.
“An employee is free to publicize the results of an arbitration, other than any trade secrets or propriety business information,” the Board wrote.
In addition, the Board said that arbitration does not impede any employees’ rights to file a lawsuit.
“Therefore, the proponent does not state convincing support for a correlation between arbitration and harassment, discrimination, or limits on employee grievances generally,” the Board said.
“In addition, while the proposal makes generalized references to allegations against Tesla, it does not present any specific evidence that harassment, lack of diversity, or non-transparent working conditions are areas of concern at Tesla.”
Linnea Brett, an organizer with the Clean Air Coalition of WNY, a nonprofit environmental organization that has been helping Tesla workers in Buffalo with a union campaign, said the investors’ proposal is the result of “widespread concern about mistreatment of Tesla workers.”
“Our organization has been working directly with these workers and learning firsthand about their experiences of racism and discrimination at Gigafactory 2 since 2018,” Brett said.
“We also know, from several years worth of reporting and lawsuits against the company, that the racism, sexual harassment, and other forms of discrimination and abuse are not limited to Tesla employees in Buffalo, but that Tesla is causing harm to workers at all of their facilities.”
“Ending mandatory arbitration would be a positive step: mandatory arbitration is an unfair obstacle, designed to prevent workers from getting actual justice when they’ve been harmed, and sheltering abusive employers from consequences.”