Elon Musk clarifies Tesla layoffs after ex-employees sue firm

Elon Musk has sought to make clear what number of Tesla employees will lose their jobs, following the launch of a lawsuit by former workers who declare the automaker breached US labor legal guidelines.

Talking at an occasion hosted by Bloomberg on Tuesday, Musk mentioned Tesla would scale back its salaried workforce by 10% within the subsequent three months, whereas on the similar time rising the variety of hourly workers.

A report earlier this month from Reuters mentioned Musk needed to chop 10% of jobs, citing an inside e-mail penned by the Tesla CEO. Within the memo, Musk reportedly mentioned he has a “tremendous dangerous feeling” in regards to the economic system.

However in a follow-up e-mail to Tesla workers obtained by CNBC, Musk clarified the corporate can be lowering its salaried head rely by 10% and rising its hourly staffing.

Musk mentioned Tuesday that this meant Tesla’s layoff announcement would have an effect on round 3.5% of its general workforce, including the precise quantity was “not tremendous materials.” Salaried employees account for about two-thirds of Tesla workers, he added.

“A 12 months from now, I feel our head rely can be greater in each salaried and clearly in hourly,” Musk mentioned.

On Sunday, two former Tesla workers filed a lawsuit towards the corporate alleging it violated US federal legal guidelines relating to “mass layoffs.”

Underneath the Employee Adjustment and Retraining Notification Act, employers are required to offer 60 days advance discover of a mass layoff or plant closure.

Musk, the world’s richest particular person, dismissed the significance of the go well with Tuesday, saying it has “no standing.”

“That could be a small lawsuit of minor consequence,” he mentioned. “Something that pertains to Tesla will get massive headlines, whether or not it’s a bicycle accident or one thing rather more critical.”

Musk’s therapy of employees has been below scrutiny these days. He just lately informed Tesla workers that they need to come into the workplace no less than 40 hours per week or go away the corporate.

Whereas different tech bosses — together with Parag Agrawal, CEO of Twitter, which Musk is making an attempt to purchase — have embraced the post-Covid drive into distant working, Musk isnt on board. He has mentioned individuals desirous to work remotely “ought to faux to work someplace else.”

The corporate has additionally confronted racism towards Black employees. In February, the California Division of Honest Employment and Housing sued Tesla over complaints about racial discrimination and harassment.

Requested in regards to the prospect of the economic system tipping right into a recession, Musk mentioned it’s “inevitable sooner or later” however questioned when such an occasion could occur.

A recession within the close to time period is “extra probably than not,” he mentioned. Though, he added, “It isn’t a certainty.”

With inflation at historic highs, economists are apprehensive in regards to the prospect of “stagflation,” the place costs go up however financial development deteriorates.

Final week, the Federal Reserve made its largest enhance to rates of interest since 1994 in an effort to tame excessive inflation.