Tesla settles racial discrimination lawsuit

Electric vehicle maker Tesla It settled a racial discrimination lawsuit in which a federal jury previously awarded $3.2 million in damages to Owen Diaz, a Black man who worked as an elevator operator at its factory in Fremont, California, in 2015.

“The parties have reached an amicable resolution of their disputes,” attorney Lawrence Organ of the California Civil Rights Law Group, who represented Diaz, told CNBC via email. “The terms of the settlement are confidential and we will have no further comment.”

The same company is representing current and former Tesla employees in a proposed class action lawsuit, titled Marcus Vaughn v. Tesla Inc., claiming that racial discrimination and harassment against black workers continues at the automaker. Diaz is not part of that lawsuit.

“It took tremendous courage for Owen Diaz to stand up to a company the size of Tesla,” Organ told CNBC by phone on Friday. “Civil rights laws only work if people are willing to take that kind of risk.” Although the litigation chapter in his book “Life is over, there is still a lot of work to be done for Tesla.”

“When I started this case, I suggested that this behavior would stop if Elon Musk made a statement and a commitment to his employees that this was unacceptable,” he said. “And we haven’t heard that after seven years of litigation, a nine-figure ruling and then a seven-figure ruling. Why doesn’t he stop this behavior?” “This is what makes no sense to me. Tesla is supposed to be the factory of the future. But this behavior is from Jim Crow's past.”

The US Equal Employment Opportunity Commission also filed a lawsuit against Tesla, accusing the automaker of violating “federal law by tolerating widespread and persistent racial harassment of its black employees, and by subjecting some of these workers to retaliation for opposing the harassment.”

Tesla has called EECO's allegations a “false narrative that ignores Tesla's record on equal employment opportunity.”

In 2023, as CNBC previously reported, Diaz testified in federal court in San Francisco that his Tesla colleagues regularly used racial epithets to discredit him and other black workers, made him feel physically unsafe at the factory, and told him to “go back to Africa.” “He left racist graffiti in the bathrooms.

Diaz's colleagues at Tesla also left a racist graffiti at his workplace, he said. The drawing was a crude reference to Enki the Caveman, a 1950s-era cartoon whose main character is a black boy depicted with large lips, wearing a loincloth, earrings, and a bone through his hair.

During his trials, Diaz recounted that he encouraged his son to work at Tesla, but later regretted the referral because his son was also exposed to a racially hostile workplace.

In his first trial, the jury awarded Diaz a much larger verdict, including punitive damages, of $137 million after he and his lawyers convinced the jury that he had been subjected to serious racial discrimination and that the company had failed to take all reasonable steps to end and prevent it. And more civil rights violations.

Diaz and Tesla sought a retrial to determine damages after Judge William H. Orrick reduced the amount awarded by the jury to $15 million. Diaz was victorious again and received a $3.2 million verdict.

The settlement with Diaz comes as Tesla CEO Elon Musk faces widespread criticism over his handling of hate speech on X, formerly Twitter, which he owns and runs as CTO.

As NBC News recently reported, Musk shared unverified claims of cannibalism in Haiti this month on X, sharing posts discrediting Haitian immigrants as likely cannibals.

Progressive news organization MotherJones also reported that “the tech billionaire retweeted followers of prominent race scientists on his platform,” and “spread misinformation about racial minorities’ intelligence and physiology.”

Tesla, which lacks a traditional public relations office in North America, did not respond to a request for comment.