Tesla urged by senators to end arbitration for employees and consumers

A group of predominantly Democratic senators is pushing You’re here CEO Elon Musk will end the company’s use of forced arbitration clauses in employee and customer contracts, in a letter Monday.

Similar to most large companies, Tesla requires workers to sign an arbitration agreement upon employment wherever it is legal to do so. This means that to speak freely in court, where their speech will become part of a public record, workers must first obtain an exemption from the arbitration agreement from a judge.

The senators wrote that such clauses allowed workers’ complaints of racial discrimination and other poor working conditions to remain hidden from public view. The group included Sens. Richard Blumenthal, D-Conn.; Sherrod Brown, D-Ohio; Dick Durbin, D-Ill.; Ed Markey, D-Mass.; Jeff Merkley, D-Ore.; Bernie Sanders, I-Vt. ; and Elizabeth Warren, D-Mass.

The letter references details of the discrimination lawsuits against Tesla, in which black workers said they routinely faced racist discrimination at work, and women who worked at Tesla reported blatant objectification and harassment by male colleagues, with little or no management support. The EEOC, a federal agency responsible for enforcing civil rights laws against workplace discrimination, has previously released a find the reason against Tesla, the company disclosed in June last year.

The senators wrote that workers at the Tesla factory in Fremont, Calif., appear to have filed at least five times more discrimination lawsuits last year than workers at comparable factories run by other companies.

“However, only a few of these cases have managed to survive in court, with most being forced out of court following Tesla’s motions to compel arbitration,” the lawmakers wrote. “The details alleged by these cases – some of which we have noted above – raise significant concerns not only about the complicity and participation of Tesla management in the discriminatory terms, but also about the countless other complaints that remain confidential.”

Forced arbitration clauses in consumer contracts also obscured important details about Tesla’s vehicle safety and business practices from the public, lawmakers wrote.

“The public deserves the full record of safety complaints about Tesla vehicles,” they said, adding that while clauses in customer contracts can theoretically allow customers to opt out of forced arbitration, they rarely do. which makes difference basically moot.

The senators were particularly concerned about consumer complaints about phantom braking that has occurred in Tesla vehicles.

“Beyond faulty design choices, Tesla’s vehicles appear to be plagued by a myriad of hardware and software issues: the steering wheels of two Tesla vehicles fell off during operation due to a missing retaining bolt, on which NHTSA recently opened an investigation, while another vehicle appeared to spontaneously burn,” they wrote. “But because Tesla drivers, in practice, are subject to confidential arbitration agreements, we and the public – including potential buyers – have no visibility into complaints that have already been filed and other potential safety issues with Tesla vehicles. exist.”

In addition to asking Tesla to commit to ending arbitration clauses in employee and consumer contracts and to stop filing motions to compel arbitration in court, lawmakers have asked Tesla for information details on its arbitration practices.

For example, the senators asked how many complaints of racial harassment, discrimination and retaliation Tesla had received from workers since 2012 and how many had been settled or had gone to arbitration. They asked for the same details about sexual harassment complaints from Tesla workers.

The senators 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 asked for detailed information on the types of vehicle-related complaints they have received from customers, the hardware and software involved in those complaints, how many were settled before arbitration and how many were found in favor. of the consumer.

Mandatory arbitration is standard practice among new and used car dealerships, says Paul Bland, executive director of Public Justice, the consumer advocacy group. However, Tesla manufactures and sells its cars directly to consumers, so its forced arbitration clauses cover more than the norm when it comes to auto sales.

Bland said, “It makes a lot of sense to me that senators are focusing on this. Tesla is using arbitration clauses as a tactic to direct people to a forum that’s pretty rigged for the company.”

The longtime consumer advocate sees arbitration as a secret system that makes it harder for consumers to find out what happened to people in related prior cases. Bland also said arbitration makes it harder for consumers to file class actions or even make informed choices about where they want to conduct their business.

Read the full letter here.

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