Tesla has agreed to enter mediation in a federal racial discrimination lawsuit, a move that could advance the case toward resolution. The U.S. Equal Employment Opportunity Commission filed the suit two years ago, alleging the company tolerated severe harassment of Black employees at its flagship factory in Fremont.
The EEOC claims Tesla permitted a pattern of discrimination that included racist slurs, swastikas, and nooses. It also alleges the company fired or retaliated against workers who reported harassment.
This week, Tesla agreed to mediation in the EEOC case. The agency stated it is working with Tesla to select a mediator, with negotiations potentially starting in March or April. Both sides plan to submit a proposal to the presiding judge by June 17 outlining steps if mediation fails.
Moving the case to federal mediation grants it confidentiality under the Administrative Dispute Resolution Act. Notes from the sessions will be destroyed, and the meetings will not be recorded. Participants must sign confidentiality agreements.
In response to earlier allegations, Tesla has denied all accusations of racism. The company referenced its diversity, equity, and inclusion program in a statement, saying it has disciplined and terminated employees who use racial slurs or harass others. It also noted that the California Department of Fair Employment and Housing had investigated past complaints and found no wrongdoing.
However, the California Civil Rights Department took legal action against Tesla in 2023 for failing to comply with an investigative subpoena related to a confidential investigation into harassment and discrimination at the Fremont plant.
This is not the first racial discrimination case involving Tesla. In 2022, the DFEH filed a civil action alleging the company segregated Black employees to the lowest workforce levels across the state. The agency said it received hundreds of complaints over three years before filing, claiming Tesla "turned a blind eye to years of complaints from Black workers protesting the near-constant use of racial slurs in the workplace."
That civil action led to several individual lawsuits. In one case, Tesla was initially ordered to pay former contract worker Owen Diaz $137 million, but the amount was reduced to $15 million on appeal. After a retrial, the payout was cut to $3 million.
Lawsuits at the Fremont plant have not been confined to racial discrimination. In 2021, six women filed separate complaints alleging "nightmarish conditions of rampant sexual harassment," according to a Law360 article. This occurred one month after a California woman filed a similar lawsuit.
Other recent lawsuits against Tesla include a case alleging a design flaw in Cybertruck door handles trapped occupants during a fatal 2024 crash in Piedmont, California. Another lawsuit claims Tesla misled customers about its Full Self-Driving feature. A Florida jury also awarded a family $243 million in damages over a 2019 crash involving Tesla Autopilot, though Tesla is appealing.