In a complaint, an investor accused Tesla Inc’s executives and directors of enabling a “toxic working culture” to develop in the business. The company was previously been accused of racial discrimination and sexual harassment at its facilities.
According to a complaint filed on Thursday in federal court in Austin, Texas, by stockholder Solomon Chau, Elon Musk, CEO, and others who run the world’s largest electric-vehicle maker breached their fiduciary duty by fostering an environment of discrimination and harassment, potentially exposing Tesla to millions of dollars in liability.
“Tesla has created a toxic workplace culture grounded in racist and sexist abuse and discrimination against its own employees,” Chau said. “This toxic work environment has gestated internally for years, and only recently has the truth about Tesla’s culture emerged,” he added in the complaint. “Tesla’s toxic workplace culture has caused financial harm and irreparable damage to the company’s reputation.”
Chau claimed in his complaint that Musk “either knew, was reckless, or was grossly negligent in disregarding the illegal activity of such substantial magnitude and duration.”
The complaint accuses the defendants – Musk, 11 Tesla board members, and the corporation – of neglecting to confront and rectify red flags about internal accusations of discrimination and harassment. According to the complaint, this prompted Tesla to lose high-quality personnel and spend fees for defending charges and settling penalties for infractions.
Tesla is also currently defending a racial discrimination and harassment lawsuit filed by California’s Department of Fair Employment and Housing after the agency discovered a systemic pattern of maltreatment of Black workers at the facility outside San Francisco. Several female employees have also complained that sexual harassment is prevalent in the Fremont workplace.
The case number is 1:22-cv-00592, US District Court, Western District of Texas (Austin). Chau chastised Tesla’s board for rejecting shareholder recommendations intended at improving the company’s employment difficulties. So far, shareholder activists have been unsuccessful in convincing Tesla’s board to increase openness regarding its use of arbitration to address sexual harassment and racial discrimination accusations.
