Billionaire Elon Musk, CEO of electric car maker Tesla, confirmed that the 10% cut in the manufacturer’s salaried staff will take place in three months due to the high probability of recession in the United States.
The confirmation was made during the Qatar Economic Forum, organized by Bloomberg, this Tuesday (21). It was the first time Musk had spoken on the subject since an email from him asking to pause hiring at factories around the world was reported by Reuters.
Also according to Musk, the cuts will only apply to salaried workers, which would mean a 3.5% reduction in the total number of employees. He also stressed that he hopes to increase the number of workers paid by the hour instead of fixed wages.
Former Tesla employees have already filed a lawsuit against the company alleging that the decision to carry out a “mass layoff” violated federal law as there was no advance notice of the cuts.
The lawsuit was filed late Sunday (19) in Texas, United States, by two workers who said they were fired from the factory in Sparks, Nevada, in June of this year. According to the process, more than 500 employees were laid off.
“Tesla simply notified employees that their terminations would take effect immediately,” the complaint reads.
Model 3 vehicles made by Tesla — Photo: Reuters
The lawsuit filed by John Lynch and Daxton Hartsfield, who were fired on June 10 and 15, respectively, seeks compensation and benefits for the 60-day notice period.
“It is very shocking that Tesla has blatantly violated federal labor law by laying off so many workers without providing the necessary notice,” Shannon Liss-Riordan, a lawyer representing the workers, told Reuters.
Still according to Shannon, Tesla is offering some employees just one week of severance pay, adding that it is preparing an emergency motion with a court to try to stop the company from trying to obtain employee releases in exchange for just one week of severance pay.
Musk played down the process as “trivial”. “We’re not going to read too much into a preemptive process that has no foundation,” he told the Qatar Economic Forum.
“It seems like anything Tesla-related gets a lot of clicks, whether trivial or significant. I would put this process you refer to in the trivial category.”
The suit was filed in US District Court, Western District of Texas.
Wall Street — Photo: Lucas Jackson/Reuters
The potential recession in the United States has been a growing concern for top executives, the Federal Reserve and the Biden administration.
U.S. President Joe Biden reiterated on Monday that he felt a U.S. recession was not inevitable, even as the world’s largest economy struggled to cope with rising gas prices and inflation, which is on the rise. its highest level in 40 years.
Former US Treasury Secretary Lawrence Summers told NBC News on Sunday that he expected a recession.