A U.S district court has ordered Tesla, an automotive company, to tell employees about the company’s ongoing lawsuit.
Tesla was taken to court by two of its former employees who filed a lawsuit alleging that the company required them to sign releases in exchange for less severance than federal and California state laws provide.
The company in response to the lawsuit which claims that it violated federal law by laying off hundreds of workers without advance notice, urged the court to dismiss it.
Tesla disclosed that employees who were laid off signed valid agreements to bring employment-related legal disputes in arbitration and to refrain from participating in class-action lawsuits.
Further stating that even if the case remained in court, it should be dismissed because the company was merely “right-sizing” by firing poorly performing workers and not engaging in layoffs that require advance notice.
Now, the District Court has ordered that Tesla must continue to inform its employees about the suit “until the merits of Plaintiffs’ claims are resolved in federal court or arbitration proceedings
More than 500 other employees were let go from Tesla’s Gigafactory 2 in Sparks, Nevada, following CEO Elon Musk’s announcement that a coming economic downturn would force the company to lay off 10% of its salaried workforce.
The lawsuit filed by two employees laid off in June from Tesla’s Gigafactory 2 in Sparks, Nevada, and another from Tesla’s Palo Alto store claims that the company violated Section 1400 of the California Labor Code, as well as the federal Worker Adjustment and Retraining Notification Act by laying off workers without 60 days of advance notice.
“Plaintiffs allege that the separation agreements executed after this lawsuit was filed are coercive, abusive, and misleading because Tesla fails to inform terminated employees/potential class members about ‘the pending litigation and the rights that they are potentially giving up,’” according to the court order.
The Court however denied the plaintiffs’ request for pay and benefits for the 60-day notification period.
