Elon Musk, CEO of Tesla, said a 10-per-cent cut in salaried staff at the electric-car maker will happen over three months, as the world’s richest man predicted a U.S. recession was more likely than not.
His remarks were his most detailed explanation of job cut plans and his first in-person appearance since Reuters reported at the start of this month that the company needed to cut staff by about 10 per cent and was pausing hiring worldwide.
Speaking at the Qatar Economic Forum organized by Bloomberg, Musk said the cuts would apply only to salaried workers, meaning a 3.5-per-cent reduction in total headcount, changes he described as “not super material.”
But he expressed concern about the prospect of a U.S. recession. “It’s not a certainty, but it appears more likely than not,” he said. Musk’s outlook echoes comments from executives, including JPMorgan Chase & Co CEO Jamie Dimon and Goldman Sachs President John Waldron. A “hurricane is right out there down the road coming our way,” Dimon said early this month.
In an email on June 2, seen by Reuters, Musk told Tesla executives he had a “super bad feeling” about the economy and that the company needed to cut staff by about 10 per cent and “pause all hiring worldwide.”
He said on June 21 that Tesla expected to increase the number of workers paid by the hour as opposed to on fixed salaries. He also said he was sticking with digital currency and intended to personally support dogecoin.
Coincidentally, former Tesla employees recently filed a lawsuit against the U.S. electric car company, alleging its decision to carry out a “mass layoff” violated federal law, as the company did not provide advance notice of the job cuts.
Laurie Shelby, vice president of environmental, health and safety at Tesla, talks with an employee on March 20, 2018 in Fremont, California. Shelby is responsible to implement the new safety rules required by Alameda County at the auto plant. (Photo by Paul Kuroda/Sipa USA)No Use UK. No Use Germany. Photo by Paul Kuroda /Reuters
The lawsuit was filed late June 19 in Texas by two workers who said they were terminated from Tesla’s gigafactory plant in Sparks, Nevada, in June. According to the suit, more than 500 employees were terminated at the Nevada factory; and more than 20 people identifying themselves as Tesla employees said they were laid off, let go, or had positions terminated this month, according to online postings and interviews with Reuters.
The workers allege the company failed to adhere to federal laws on mass layoffs that require a 60-day notification period under the Worker Adjustment and Retraining Notification Act, according to the lawsuit, and the action, filed by John Lynch and Daxton Hartsfield, who were fired on June 10 and June 15 respectively, seeks pay and benefits for the 60-day notification period.
Tesla, which has not commented on numbers of layoffs, did not immediately respond to requests for comment about the lawsuit, but Musk played down the lawsuit as “trivial.” “Let’s not read too much into a pre-emptive lawsuit that has no standing,” he said at the Qatar Economic Forum organized by Bloomberg.
Keyword: Musk details upcoming Tesla staff cuts, faces lawsuit over past one