Tesla's Fremont Factory
It was reported that a pending Tesla lawsuit filed by foreign worker, Gregor Lesnik, injured while working at Tesla's Fremont factory in May was settled thereafter for $550,000. The painter fell three stories, breaking his legs, ribs, and suffering a concussion.
Tesla Assembly Line In Painting Process
As part of the incident, Tesla and its subcontractors have been under scrutiny and investigation by media because foreign workers have reported unfair labor practices.
The group of workers, including Lesnik, are managed by a Slovenian company known as ISM Vuzem, that transports the foreign employees to the factory to work long hours at low wages.
It was alleged that the managing company mandated sixty to seventy hour work weeks at less than $5 an hour. (It claimed that Vuzem paid Lesnik ~800 euros per month ($878 USD),or about $4/hour). The employees were told that they would also receive a stipend equal to money earned, once they returned back home, but the promises were never realized.
Although Tesla has released statements assuring that it has not violated any laws, reports show that the workers were actually contracted at $12.70 per hour. Reportedly, $2.6 million in estimated overtime and salary has gone unpaid according to the language of the lawsuit.
Tesla made it known that OSHA, government regulator of accidents in the workplace, investigated and found Tesla to not be at fault for the incident involving Lesnik. A statement from Tesla reads:
“When Mr. Lesnik brought a workers compensation case, Tesla was dismissed from the case because the judge concluded that we had no legal responsibility for what occurred.”
Lesnik came to the Tesla paint shop in March of 2015, part of a project led by systems manufacturer Eisenmann, who then used its own subcontractor - ISM Vuzem (out of Slovenia).
Over the course of the investigation, Tesla CEO Musk confirmed that his company paid Eisenmann $55 an hour for the work being done, and in turn Eisenmann paid Vuzem an "hourly rate" to actually do the work (amount unknown). From there Vuzem promised wages of $12.70/hour to workers, which was claimed to actually be less than $5 in reality. So, it appears as though more than a little was 'taken off the top' before wages hit the bottom rung of the ladder.
Elon Musk immediately tweeted on the matter when it first came to light in May: "Sounds like the wrong thing happened on many levels. Will investigate and make it right."
@margotroosevelt Only heard about this today. Sounds like the wrong thing happened on many levels. Will investigate and make it right.
— Elon Musk (@elonmusk) May 16, 2016
As a result of the injuries (and probably the bad press as well), Mercury news reports the case was quickly settled out of court. $400,000 of the money was to agree to bring an end to the pending civil suit. The final $150,000 covered Lesnek's workers' compensation claim.
There was no breakdown of how much of that amount was covered by Tesla, and how much by the sub-contractor...but given Tesla's statement on matter when it was discovered by the company, it appears Tesla footed much of the bill.
At Tesla, we aspire to operate on the principles of hard work and exceptional performance, but always tempered by fairness, justice and kindness. There are times when mistakes are made, but those are the standards to which we hold ourselves. With respect to the person at the center of this weekend’s article in the Mercury News, those standards were not met. We are taking action to address this individual's situation and to put in place additional oversight to ensure that our workplace rules are followed even by sub-subcontractors to prevent such a thing from happening again.
Gregor Lesnik was brought to the Tesla factory by a company called ISM Vuzem, a sub-contractor brought in by Eisenmann, the firm that we hired to construct our new, high-volume paint shop. We contracted with Eisenmann for the simple reason that we do not know how to build paint shops and they are regarded as one of the best, if not the best, in the world. In our dealings with them, we have found them to be an excellent company, run by good people.
The article describes how Mr. Lesnik came to this country, the conditions under which Vuzem employed him and others to do their work, and how Mr. Lesnik ended up being injured while on the job. Assuming the article is correct, we need to do right by Mr. Lesnik and his colleagues from Vuzem. This is not a legal issue, it is a moral issue. As far as the law goes, Tesla did everything correctly. We hired a contractor to do a turnkey project at our factory and, as we always do in these situations, contractually obligated our contractor to comply with all laws in bringing in the resources they felt were needed to do the job.
Regarding the accident that resulted in Mr. Lesnik being injured, Cal/OSHA (the government regulator that investigates workplace accidents like these) came to our factory, investigated the incident and found that Tesla was not responsible. When Mr. Lesnik brought a workers compensation case, Tesla was dismissed from the case because the judge concluded that we had no legal responsibility for what occurred.
All of that is fine legally, but there is a larger point. Morally, we need to give Mr. Lesnik the benefit of the doubt and we need to take care of him. We will make sure this happens. We do not condone people coming to work at a Tesla facility, whether they work for us, one of our contractors or even a sub-subcontractor, under the circumstances described in the article. If Mr. Lesnik or his colleagues were really being paid $5 an hour, that is totally unacceptable. Tesla is one of the highest paying hourly employers in the US automotive industry. We do this out of choice, because we think it is right. Nobody is making us do so.
Tesla will be working with Eisenmann and Vuzem to investigate this thoroughly. If the claims are true, Tesla will take action to ensure that the right thing happens and all are treated fairly.
Creating a new car company is extremely difficult and fraught with risk, but we will never be a company that by our action does, or by our inaction allows, the wrong thing to happen just to save money.
There have been no other official details of the settlement nor any news about whether or not Vuzem will face any legal issues based on the investigations.