By on May 17, 2016

Tesla Supercharger With Model S At Tesla Dealership

Tesla Motors responded quickly to a bombshell exposé on the low-paid foreign workers helping to expand the company’s California assembly plant.

The investigation by the Bay Area News Group, published in The Mercury News, detailed the hundreds of Slovenian and Croatian laborers brought into the Freemont plant on business visas last year to build a paint shop. Paid $5 an hour, safety protocol among the group was lax, work hours were long, and a serious injury ended in a workers’ compensation lawsuit.

Tesla was cleared of any wrongdoing by an accident investigator, but now the company says it has a moral responsibility to stop all unsafe and unfair work practices at its facility.

The workers, including injured Gregor Lesnik, were recruited by ISM Vuzem, a Slovenian subcontractor brought in by Eisenmann, the German company tasked with building Tesla’s paint shop.

Lesnik’s lawsuit saw all three companies deny responsibility for the worker, who fell three stories from the roof of the shop.

“When Mr. Lesnik brought a workers compensation case, Tesla was dismissed from the case because the judge concluded that we had no legal responsibility for what occurred,” the company stated in their response to the growing controversy.

“All of that is fine legally, but there is a larger point. Morally, we need to give Mr. Lesnik the benefit of the doubt and we need to take care of him. We will make sure this happens.”

The company said it plans to work with the contractor and subcontractor in investigating the matter, and will correct all cases of unfair treatment. Tesla said it doesn’t agree with workers coming to its factory under the conditions described in the article, calling the practice of paying laborers $5 an hour “totally unacceptable.”

“Creating a new car company is extremely difficult and fraught with risk, but we will never be a company that by our action does, or by our inaction allows, the wrong thing to happen just to save money,” Tesla stated.

The electric automaker is ramping up the production capacity of its Fremont factory to handle a greater volume of existing models, as well as the upcoming Model 3, which has 400,000 reservations. The timeline for the Model 3 is tight, with production expected to start in late 2017.

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48 Comments on “Tesla: $5 an Hour ‘Unacceptable’, Company will ‘Do Right’ by Workers...”


  • avatar

    Really, Tesla using imported slave labor ? I know Tesla is a tech stock darling, not a car company, so I’m not surprised they would use the H1-B model where you import a worker for less money to take a job an American should be doing (I know the history of H1-B, but let us agree that it has been perverted). Better still, since your employer owns the visa too, your employer owns you. I’ve seen first hand how this happens to engineers who dare argue with the boss….

    Any sort of scaffold or height related work requires “positive lock”, in that you need a harness and clip. The insurers of the world regulate this practice. Watching how everyone pointed to the right as to “who is liable” is typical in any construction accident. Tort lawyers refer to this as circular liability.

    Tesla was OK with $5 per hour enforced by employer sponsored visas, till they got caught.

    • 0 avatar
      qfrog

      This sounds a bit like Indentured servitude but rather than just killing the servant they send them back home.

      Also, a “moral responsibility” feels like PR speak for a necessary response to spin this story in a less reprehensible direction.

    • 0 avatar
      psarhjinian

      “Tesla was OK with $5 per hour enforced by employer sponsored visas, till they got caught.”

      Tesla didn’t know. Or rather, Tesla didn’t want to know. That’s why you subcontract not just the jobs, but the ethics: plausible deniability.

      I’m sure no one at Tesla really knew, in the direct sense of the word, but that’s the problem with this kind of set-up: it’s dehumanizing. It is, in fact, designed to be dehumanizing.

      • 0 avatar
        bunkie

        It might be a good idea to completely suspend H1B for a while so as to sort out the *actual* unfulfilled need from the obvious profiteering on the part of the contract employers who use the program to undercut local wages.

        The contractor economy is a disaster for an awful lot of people. I’ve learned to navigate it fairly successfully, but then I have a valuable skill set. Still, it comes with major limitations (for me, constantly changing health plans, no practical opportunity to put money in a 401k, for employers, constant discarding of domain knowledge).

    • 0 avatar
      rocketrodeo

      This was not about an H1-B visa. This and similar cases are abuses of the B1 visa. There is next to no oversight.

    • 0 avatar

      There’s no doubt in my mind that Tesla knew EXACTLY what the workers were being paid and EXACTLY what the working conditions were. They would be negligent to their stockholders if they didn’t know. Any claim that they didn’t know would mean that they’re too irresponsible to handle stockholders money.

      So they knew. Which also makes them irresponsible with stockholder money.

      I am amused about their willingness to work with the contractor to increase the “totally unacceptable” $5/hr wage. I’m sure that, working together, they can get that all the way up to $5.50/hr.

      • 0 avatar
        Scoutdude

        I do not for a second think that Tesla knew, nor should they know what a subcontractor is paying their employees. Tesla put out a construction bid and they choose the one that best fit their needs. How the contractor pays their employees is not a part of the contract and not something that management would concern themselves with.

        The most likely scenario was that they took the lowest bidder who stated they could meet the schedule. The contractor then either; used a subcontractor that payed low wages to boost their profit margin and/or brought in a subcontractor to ensure they met the deadline. Going with the low bidder they probably found someone that used wages below the going rate, overworked/didn’t pay overtime to offer that low of a price at that schedule.

        • 0 avatar

          Maybe in whatever country you live in they work that way but I can assure you it does not happen that way in the United States. Every company I know of doing construction puts one or more representatives (depending on the size and the scope of the construction) on site to assure that the contractor is building exactly what they contracted to build. If the contractor were to make a major mistake you wouldn’t want to wait until the project is complete to find out it’s unsuitable for it’s intended purpose. A lot of those contracts demand a company rep be on site to approve actions on a daily basis or the contractor will not proceed.

          So, yes. Tesla knew the conditions there. Without a doubt.

          • 0 avatar
            tresmonos

            WhiskeyRiver,
            Where are your said practices conducted? Any info on what industry and what job site would be appreciated.

            All manufacturing operations I’ve had the pleasure of employment do not ‘actively’ oversee subcontractors during big capital expenditures until tooling and physical equipment is involved. Manufacturers usually are not making their money in construction business related fields so they leave that to the experts.

            Now… there are buy off periods to ensure timelines are achieved and specifications are met.

            During construction, liability is normally too costly to keep an employee on site. Safety is usually subcontracted out, as well. If I were to guess to the reasons why, I would hazard that it all pertains to insurance and company liability.

            Was this too egotistical for you? Or do I need to tone it down a notch?

            I feel that your comment about Scoutdude’s possible nationality was uncalled for. You need to apologize for being ‘loud and mean.’

            Edit: I’m not being serious, but I am trolling you for your nationalistic BS

          • 0 avatar

            tresmonos:

            I worked for a fortune 1000 company for twenty years during which I was the company rep on site for new construction many times. I know exactly what I’m talking about.

            Why would you assume that a company would spend millions or billions on construction without making sure they’re going to end up with exactly what they’re paying for? Huh?

            It requires daily due diligence by the company to assure they get what they paid for. Paying me to be there is a minuscule expense compared to allowing construction to be completed that will not meet it’s intended purpose. Every day you can’t use your new building is expensive. Exponentially so if it’s going to be used to manufacture something.

          • 0 avatar
            tresmonos

            I understand all the basic concepts of capital and the value of time.

            Now tell me: when the foundation is being poured and the steel girders are being constructed, were you present, holding a level, taking metrology samples of the beams and sweeping a broom to clean the floor? You are so full of sh*t.

            If you had time to go over payroll of subcontractors, I doubt you were paying much attention to the specifications of the construction and “ending up with exactly what they’re paying for.”

            I’ve been on teams that have ensured capital projects get done correctly and on time (for new construction and shut down retrofits). Never once did we waste our time and review the paystubs of the people doing the work. Permits, union agreements, etc. are always done up front, way in advance. I don’t buy what you’re selling.

            If only someone was as critical of you as to publish your mistakes online so the internet (you) can get on their high horse and beat on their chest claiming you know exactly what happened on that job site. Oh wait, that’s what I’m doing to you. You get to do it to Tesla and the B&B and I’m here to keep you in check.

            Troll on, WhiskeyRiver fortune whatever employee.

      • 0 avatar
        lot9

        Tesla Knew all along what the pay was going to be…if you are writing the contracts, you know what is figured into it for wages, etc. And you know what the contractors are paying, or going to pay. I did when I did construction jobs and let contracts.

        Tesla, they could have stipulated that the wages would be at least Calif. min. wage, otherwise. If they were worried about low wages…

        But they sure take the US tax dollars in tax breaks for cars, huh?
        Kill the tax breaks for EV, give me back my $$ for my use.

        Tesla is culpable, regardless what the court says..

        • 0 avatar

          tresmonos:

          Did I say I reviewed all that trivia? No I did not.

          My primary function was to know that the specified materials were being used and that construction was on schedule. But someone who is on site every day knows a lot.

          Have you ever seen the blueprints on a commercial building? Often the architect lists every material. What gauge and grade the steel items are. What grade of lumber, if any. the quality and type of screws and nails. As the project nears completion, even the paint is specified – right down to the brand and skus. And you better believe the company is not going to just write out the checks without making sure it’s been done to contract.

          Now, as for you and your attitude…

          You’re a bully And you’re mean. Often for no reason as evidenced in your remarks following Steph’s article last Wednesday about Dana building axles in Toldedo. I’ll refresh your memory:

          “You’re a f*cking idiot” and “Maybe we do need Bernie so he can send your dumb @ss back to school” along with “Typical horse sh1t excuses from everybody” were just three of your comments. Why you attacked Superdessucke is still a mystery but I understand why you attacked me. You’re a bully.

          It’s apparent to me you’ve never worked for a company where you’ve been anywhere close to upper management in a company when it’s building anything.

          You’re one of those angry bullies that sticks his chest out yells or slaps his victim around until he agrees with you, then turns to the spectators and yells “I’m right! Say it!”

          Why you’re allowed to attack people here is beyond me. I suppose just because nobody wants to emulate Bertel even for a minute.

          I think it’s nice that you “understand the concepts” involved but I see no evidence of actual experience.

          • 0 avatar
            tresmonos

            If you’re not there for 100% of the process, you can’t be certain what the subcontractor is doing on site. Same goes for payroll.

            So your high and mighty chest beating about Tesla is moot.

            I’m only keeping your BS in check. You can make all the assumptions you want, but your overreaction tells me all I need to know about your ‘knowledge.’

            No one can do the right thing 100% of the time. Individuals, OEM’s, contractors, etc.

            I’ll be waiting for the day when you make a comment that bring any value to the discussion. Until then, keep trying.

            As for my unscrupulous comments earlier, I was wrong. I apologized and I have moved on. It would be healthy for you to do the same. I sincerely asked you a legitimate question and you took the sh1tty ‘chest beating bully’ path. FYI I love it when people do that if you cannot tell.

          • 0 avatar

            tresmonos:

            Oh, that’s RICH. My overreaction. There really is something wrong with you. Take your meds.

            I’m going to let this drop now because I made my point a long time ago.

            I’m sure you’re going to consider it a win when you make the last post.

  • avatar
    psarhjinian

    But, but, but, “disruptive!” “new economy!” “innovation!”

    Sarcasm aside, it’s good they remedied this situation. However, the whole “subcontracted economy” (“Gig economy” if you’re being charitable; “UberJob” or “curbside employment” if you’re not) needs to go before it moves further up food chain and causes more damage.

    You end up with workers with little or no protection, and people responsible shielded from liability (or, for that matter, paying of a fair wage) by layers of bureaucracy.

    • 0 avatar
      sco

      psar is exactly right, the so-called “gig economy” does nothing but create a sub-class of workers with ever shrinking rights and compensation. This is not disruptive, its destructive. How about if we ask you to show up for your office job at whatever company needs you that day for less money and no benefits, is that something you’d be interested in?

      • 0 avatar
        DeadWeight

        This is Exhibit A as to why any claim of a robust economic recovery that’s in any way sustainable is bullocks.

        The working class, a huge swath of the class formerly known as middle, and now, even a large swath of upper-middle class has been eviscerated by automation, off-shoring, and now, in-shoring of labor under H1-B and other work permit/visa programs, which have been really utilized by major economic actors/segments (IT, medicine, accounting, etc) in an effort to eliminate full time employees (going independent contractor route) or suppressing wages.

        Exhibit B is the massive uptick in detached or semi-detached workers per the BLS’ underemployed labor chart since the 1990s, let alone the major uptick in the # of those between the ages of 18-54 who’ve completely dropped out of the labor force altogether (it’s at an all-time high).

        Exhibit C would be the now historic high household debt levels (higher than pre-crash years of 2004 to 2007).

        But I’m a pessimist, and the record household debt levels, structural employment rot, falling real wages, falling # of attached full-time workers, record government debt levels, incredible number of jobs that automation is about to eliminate (credible estimates of 16,000,000 to 34,000,000 by 2025), etc., are just speed bumps on the road of real, robust, sustainable economic recovery we now find ourselves.

        • 0 avatar
          tresmonos

          If you think a few eastern europeans sneaking in on a work site that would normally be managed by local unions is bad, you should see what the Chinese are doing in Africa. Large construction firms like Fluor Daniels can’t compete unless they abandon all ethics, grease politicians pockets and literally hire slave political prisoner labor.

          I always find myself saying this: we may be bad, but our country is the lesser of all evils when it comes to living standards IMHO. Yes, today I am happily plugged into the Matrix. Most days I try and resist.

          • 0 avatar
            DeadWeight

            I’m not saying this Tesla issue is a huge ordeal relative to the grand context of where we stand historically, tres.

            To be very honest, Musk most certainly had no clue about what the contractor was doing and is now trying to make things right.

        • 0 avatar
          mtmmo

          But the President just said the economy is doing great! I deal with Executives and a common topic is strategic planning & economic outlook over the next 3, 5, and 10 years. My wife is an Economist. We both see and hear first hand how fragile the economy actually is. Due to our National Debt and the (mostly) wasteful Q/E the next 3 years are going to be anything but enjoyable for majority of Americans regardless of who our next President is.

          • 0 avatar
            VoGo

            Sigh.
            This “fragile economy” is enjoying the longest period of private sector job growth in history. Your wife the economist should know that.

            The national debt as a % of GDP (this is the measure economists use) has been essentially flat since the recession ended.

            Q/E reduced the deficit and prevented deflation.

            Your welcome to your opinions, but let’s at least agree on the facts.

          • 0 avatar
            28-Cars-Later

            You sound like you’re peddling fiction /s.

          • 0 avatar
            VoGo

            That the majority of posters on this blog look at this economy as troubled, fragile and weak does make we wonder.

            I get why Trump makes up these lies – he’s trying to get elected, and his supporters don’t have any interest in the truth. But why so many others swallow them up whole and repeat ad nauseum,… I just don’t get it.

          • 0 avatar
            28-Cars-Later

            “his supporters don’t have any interest in the truth”

            I’ll buy that politicians lie to get what they want, but if you imply “supporters” are also liars then the whole country is one big lie.

          • 0 avatar
            VoGo

            28CL: You’re right. I should have said that Trump’s supporters don’t appear to show interest in holding him to the truth.

          • 0 avatar
            28-Cars-Later

            There is a compiled video of Shillary lying for 13 minutes.

            youtube.com/watch?v=-dY77j6uBHI

            People are really too stupid to continue to exist. I really need to seize power and become your Caesar.

      • 0 avatar
        bunkie

        It’s worse, particularly in IT. The body of knowledge belonging to a skilled worker is divided into two major areas: the general industry knowledge and the knowledge specific to a particular organization. Each time a worker moves from one firm to another, it is that second body of knowledge that is discarded. It include everything from knowing how to connect to a printer to understanding the various systems (acronym alphabet soup, everywhere I’ve worked there is a system named “Oasis” all of which are completely different in purpose). It’s unbelievably inefficient.

    • 0 avatar
      stuki

      As long as for every regular employee you hire, the two of you combined also have to pay for an army of lawyers, apparatchiks, administrators, bureaucrats, union leeches and who knows what, the only way to get anything done on any semblance of budget, is to try to bypass as many of the above parasites as possible.

      “Gig economies” are pretty quickly self correcting. You don’t pay decent and timely, word gets around. You don’t perform as promised, ditto. Movie productions, both union and non union, have worked like that for decades, with very few issues.

      Croatians may have a lower standard for “decent” as far as pay goes. Especially if increased opportunity exists to charm some Cali bimbo into aiding them in obtaining more permanent residency…. But you’re not going to get away with abusing them. Heck, just the thought of some nebbish immigration weasel, trying to abuse a bunch of burly construction workers from the Balkans….

  • avatar
    Cactuar

    I get the safety aspect, that should be resolved, but what’s wrong with 5$ an hour?

  • avatar
    mcs

    It’s not just Tesla that has hired this company. Looking through the Eisenmann press releases, it looks like they’ve done work for Volvo, BMW, Honda, and VW. I haven’t had time to dig through all of the press releases, but I’m sure there are more.

    • 0 avatar
      tresmonos

      Ford has used Durr. So has Hyundai. Read my comment below – skilled trades is one thing that is usually negotiated. Now if this was some subcontractor doing brute force manual labor – it’s hard to control some of that labor. Especially during holidays. Usually they will have some local union under their umbrella, even if it’s ‘off the street no drug test no questions asked’ kind of hiring.

      This is much ado about nothing. Sensationalist crap reporting.

  • avatar
    tresmonos

    So Tesla contracted Durr to make their new paint shop. I’m unsure how their contract negotiations went, but when a OEM I’m familiar with did the same with Durr, we had union and state requirements that were met.

    I can see Tesla just being ‘new’ to something of this magnitude. Facilities engineering is a tough game of deadlines and managing your contractors.

    That being said, it’s insane to see Durr corner the market. GK, Griffin, H.M. White are seemingly either quiet or pulled back from a lot of the newer OEM expansions. Koch is just doing smaller systems. I see their footprint in Europe is drying up and Durr is taking over.

  • avatar
    -Nate

    Although I abhor the low wage , I’m sure the Croatians were shickled titless to be getting a whopping $5 / hour….
    .
    This plain sucks all the way ’round .
    .
    -Nate

  • avatar
    Kenmore

    “Dang, B-Bub, if’n we coulda moved *our* slaves around this quick ‘n’ easy….

    I mean, sh*t-fahr, took me three week to get a coffle down to Nawlins jus’ from Nachez!”

  • avatar
    carguy67

    It’s ‘Fremont.’

  • avatar
    zip89105

    Yeah right, Tesla is sorry it got caught.

  • avatar
    dukeisduke

    In other words, “We’re busted.”

  • avatar
    frozenman

    I fail to see this as Tesla’s problem. Blame is right at the feet of various levels of blind government that allows labor practices like this to go on, they are the ones that need to be punished at the ballot box.

    • 0 avatar
      bikegoesbaa

      So if I hire people to build a deck on my house and then have them working in dangerous conditions for below minimum wage it is the government’s fault for not stopping me?

      Interesting viewpoint.

  • avatar
    FOG

    I have a very hard time believing that management at Tesla is so mathematically challenged that they couldn’t figure out that labor costs didn’t add up. I also have trouble believing that the California government didn’t know about this and looked the other way because manufacturing facilities don’t do well under the watchful eyes of the Nature Nazi’s and crazy people.

    • 0 avatar
      psarhjinian

      “I have a very hard time believing that management at Tesla is so mathematically challenged that they couldn’t figure out that labor costs didn’t add up. ”

      Tesla’s is subcontracting this: they might not, and probably don’t, know the billable hours and rate for every employee on the floor, especially if the contractor in turn subcontracted out portions of the work, which is what happened here.

      “I also have trouble believing that the California government didn’t know about this”

      Again, subcontracting. You can get away with a lot of “I didn’t know” if you bury it in enough subcontracting. You really shouldn’t be able to, and it’s still wrong, but that doesn’t stop people from trying to play fast-and-loose with labour law.

      • 0 avatar
        DenverMike

        Walmart was caught with illegal alien cleaning-crews, from sub-subcontracting services.

        It happens a lot, no doubt. The main contractors do what ever it takes to submit the lowest bid, and start shopping for the cheapest subs. What happens after that, they don’t know, don’t care.

  • avatar
    hreardon

    Anybody who has been involved in a competitive bid situation knows that at the end of the day, the people signing the checks and managing the books will ask this question:

    “Will the guy bidding at $30,000 versus the guy at $50,000 be able to get the job done to code, within spec, and on time?”

    If the answer is yes, they’ll take the $30,000 bid and never ask another question so long as the paperwork is legit and the client has the ability to sue/claw back/extract their pound of flesh if things go wrong.

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