Elon Musk clarifies Tesla layoffs after ex-employees sue firm

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

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

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

However in a follow-up e mail to Tesla employees obtained by CNBC, Musk clarified the corporate might be lowering its salaried head depend 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 total workforce, including the precise quantity was “not tremendous materials.” Salaried staff account for about two-thirds of Tesla staff, he added.

“A 12 months from now, I believe our head depend might be larger in each salaried and clearly in hourly,” Musk mentioned.

On Sunday, two former Tesla staff filed a lawsuit in opposition to the corporate alleging it violated U.S. federal legal guidelines relating to “mass layoffs.”

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

Musk, the world’s richest individual, dismissed the significance of the swimsuit Tuesday, saying it has “no standing.”

“That may 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 staff has been below scrutiny currently. He not too long ago informed Tesla staff that they need to come into the workplace not less than 40 hours every week or depart the corporate.

Whereas different tech bosses — together with Parag Agrawal, CEO of Twitter, which Musk is attempting to purchase — have embraced the post-Covid drive into distant working, Musk is not on board. He has mentioned folks eager to work remotely “ought to fake to work some place else.”

The corporate has additionally confronted allegations of racism in opposition to Black staff. In February, the California Division of Truthful Employment and Housing sued Tesla over complaints about racial discrimination and harassment.

Requested concerning 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 seemingly than not,” he mentioned. Though, he added, “It isn’t a certainty.”

With inflation at historic highs, economists are frightened concerning the prospect of “stagflation,” the place costs go up however financial progress deteriorates.

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