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Tesla Suit Exposes Labor Issues

Wednesday, May 25, 2016

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A new paint shop for a Tesla Motors factory expansion is at the center of a controversy over whether the contractors responsible for its construction were grossly underpaid.

A worker brought in from overseas to help construct a high-volume paint shop for Tesla Motors in Fremont, CA, reports he was paid as little as $5 per hour without overtime.

The alleged pay rate was $50 shy from an hourly labor rate agreed upon in contracts, according to the U.S. electric automobile maker.

Controversial Report

The pay controversy came to light after The Mercury News published a watchdog report May 15 profiling Gregor Lesnik, an electrician from Slovenia, who was seriously injured in the factory in May 2015.  

Tesla Motors Fremont CA
By Maurizio Pesce / CC BY 2.0 via Wikimedia Commons

Tesla had hired Eisenmann to build the paint shop expansion in March 2015. The firm said it would investigate the allegations.

Lesnik has reportedly sued the subcontractor he worked for, ISM Vuzem, of Slovenia, along with the Germany-based engineering contractor Eisenmann and shop owner Tesla, claiming that he and many other Eastern European laborers were brought into the country under “questionable visas” and were not compensated fairly.

The visas were said to be B1/B2 visas, which include an outright ban on hands-on construction work, the newspaper investigation found.

Tesla had hired Eisenmann to build the paint shop expansion in March 2015 and Eisenmann then subcontracted Vuzem to build a ventilation system for the facility.

Tesla’s CEO Elon Musk responded to the profile report on Twitter, saying “Tesla actually paid $55/hr.”

He also tweeted: “we need to make sure the injured person is taken care of,” while questioning the truth of the report.

Documents Reveal Pay

However, as a part of Lesnik’s case, Vuzem provided his contract, pay schedule and time sheets, The Mercury News related in a follow-up report.

Those documents reportedly show Lesnik earned 800 euros a month, or about $900 based on a 40-hour week, translating to an hourly rate of $5.60. He regularly worked 60 to 70 hours a week, the report said.

Lesnik said he had been promised $12.70 per hour, according to the suit.

Investigation Continues

Eisenmann responded with a statement saying it would be investigating all of its contracts with suppliers.

"Any violation against the rules and regulations will lead to an immediate end of the business relationship," the statement read.

In a blog post, Tesla said that it had acted legally, but holds itself to a “higher moral standard.”

“If Mr. Lesnik or his colleagues were really being paid $5 an hour, that is totally unacceptable,” the post said.

“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.”

Injury and Suit

The suit claims Lesnik was injured on May 16, 2015, when he plunged nearly three stories from the roof of the paint shop to the factory floor. He broke both legs and ribs, tore ligaments in his knee and suffered a concussion in the fall, according to The Mercury News.

His suit against the contractors and automobile maker seeks unspecified damages and penalties, according to the reports.

The foreign workers estimate they are owed $2.6 million in overtime and premium pay.


Tagged categories: Asia Pacific; Automotive coatings; Construction; EMEA (Europe, Middle East and Africa); Engineers; Latin America; Lawsuits; North America; Program/Project Management; Renovation; Shop-applied coatings; Workers

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