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A group of senators, mostly Democrats, came under pressure Tesla CEO Elon Musk is ending the company’s use of enforceable arbitration clauses in employee and customer contracts, in a letter Monday.
Like most large companies, Tesla requires workers to sign an arbitration agreement when hiring where it is legal to do so. This means speaking freely in court, where their speech will become part of a public record, workers needing to obtain a waiver from the arbitration agreement from a judge first.
Such provisions, the senators wrote, allowed workers’ complaints of racial discrimination and other poor working conditions to remain hidden from the public eye. The group included Senator Richard Blumenthal, D-Conn. Sherrod Brown, D-Ohio, Dick Durbin, D-Illinois, Ed Markey, D-Massachusetts, Jeff Merkley, D-Or, Bernie Sanders, I-Vatu. . and Elizabeth Warren, de Mas.
The letter details several discrimination lawsuits against Tesla, where black workers said they regularly faced racial discrimination at work, and women who worked for Tesla reported blatant objections and harassment by male co-workers, with little support from management. The EEOC, a federal agency responsible for enforcing civil rights laws against discrimination in the workplace, previously issued a dossier Find a reason Against Tesla, the company disclosed in June last year.
The senators wrote that workers at the Tesla factory in Fremont, California, appear to have filed at least five times more discrimination lawsuits in the past year than workers at similar factories operated by other companies.
“Only a handful of these cases succeeded in remaining in court, with most being forced out of court on Tesla’s requests to force arbitration,” the lawmakers wrote. “The details alleged by these cases—some of which we have outlined above—raise significant concerns not only about Tesla management’s complicity and involvement in discriminatory circumstances, but also the myriad of other complaints that remain classified.”
The lawmakers wrote that compulsory arbitration clauses in consumer contracts similarly withheld important details about Tesla’s vehicle safety and labor practices from the public.
“The public deserves the full record of safety complaints related to Tesla vehicles,” they said, adding that while clauses in customer contracts could theoretically allow customers to opt out of forced arbitration, they rarely do, making the difference moot.
Of particular concern to senators were consumer complaints about phantom braking that occurred in Tesla cars.
Beyond flawed design choices, Tesla cars appear to suffer from a myriad of hardware and software issues: The steering wheels of two Tesla cars fell off during operation due to a missing retaining bolt, which NHTSA recently opened an investigation into, while another car appeared to spontaneously combustion,” they wrote. “But because Tesla drivers are, as a practical matter, subject to confidentiality arbitration agreements, we and the public — including potential buyers — don’t have visibility into what complaints may have already been filed and what other potential safety issues with Tesla cars come out.”
Along with requiring Tesla to commit to ending arbitration clauses in employee and consumer contracts and to stop filing motions to force arbitration in court, lawmakers asked Tesla for detailed information on its arbitration practices.
For example, senators asked how many complaints of racial harassment, discrimination and retaliation Tesla has received from workers since 2012 and how many complaints have been settled or gone to arbitration. They asked for the same details about sexual harassment complaints from Tesla workers.
They also asked for more information about when Tesla added the ability for consumers to opt out of forced arbitration, and how many have actually been able to do so historically.
The senators also sought detailed information on the types of vehicle-related complaints they received from customers, what hardware and software were factored into those complaints, how many complaints were settled prior to arbitration, and how many complaints were transferred to consumer arbitration.
Mandatory arbitration is common practice among new and used car dealerships, says Paul Bland, executive director at Public Justice, a consumer advocacy group. However, Tesla makes its cars and sells them directly to consumers, so forced arbitration clauses cover more than usual in terms of car sales.
“It makes sense to me for the senators to focus on this,” Bland said. “Tesla is using arbitration clauses as a tactic to turn people into a very rigged forum for the company.”
The consumer advocate has long viewed arbitration as a secret system that makes it difficult for consumers to find out what happened to people in previous related cases. Bland also said that arbitration makes it difficult for consumers to form class-action lawsuits, or even to make informed choices about where they want their business to take.
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