A contractor working to expand the Tesla Factory in Fremont, California, is in hot water over a recent report that they've been hiring foreign workers, bringing them to the U.S. under suspect visas, and paying them as little as $5/hour for back-breaking construction work, 10 hours a day, six or seven days a week. Tesla itself did not directly hire, supervise, or pay these workers, but as a Silicon Valley company of note, is coming under fire for what happened under their watch.

Tesla's Fremont Factory

As covered extensively in a damning report by The Mercury News, through a series of contractors and subcontractors, Tesla ended up with around 140 works brought from Croatia and Slovenia working on much-needed construction work to prepare the factory for the expected late-2017 volume production start for the Tesla Model 3.

In particular, the report follows the story of Gregor Lesnik, an electrician hired from Slovenia by a hiring firm contracted by a German construction firm that was contracted by Tesla to manage construction of new facilities within the sprawling Fremont complex. Lesnik's story came to light after he was grievously injured in a fall while building a new paint shop in the factory, breaking both of his legs and several ribs, tearing ligaments, and sustaining a concussion. He filed suit against both the contractor that hired him and Eisenmann, the German construction contractor, as well as Tesla. The allegations:

  • Eisenmann USA wrote letters to the U.S. Embassy on behalf of Lesnik and as many as 200 foreign workers stating they would supervise employees at a U.S. auto plant. Most of the Vuzem workers were nonsupervisory laborers and tradesmen.

  • Tesla issued company security badges to the foreign workers, recorded their time on site and shared responsibility setting safety conditions.

  • Vuzem required foreign employees to regularly work between 60 and 70 hours a week. Vuzem paid Lesnik an average of 800 euros per month, or about $900, for a rate of less than $5 per hour. Lesnik was promised an equal amount when he returned home, but the company never paid the balance.

  • The companies violated wage and employment laws and benefited from the cheap labor of foreign workers. Workers were promised $12.70 an hour based on a standard workweek. The suit estimates they are due $2.6 million in overtime and premium pay.

Tesla and Eisenmann were initially able to get themselves removed from the lawsuit, but after the complaint was amended Lesnik was permitted to go forward with the more expansive lawsuit. Both companies deny any responsibility for Lesnik or his injuries, and the hiring contractor rejects his version of the incident.

Also troubling is the abuse of the B1/B2 visa, a tourist/non-labor-worker visa that Lesnik and many of his colleagues were brought to the U.S. under. This is wholly separate from the H1-B visa program, which is meant to allow American companies to hire skilled foreign workers for which they've been unable to find local hires. The U.S. workers that lost the bid for work at the factory can earn up to ten times the $5/hour wages the imported laborers were paid.

Again, though Lesnik has named Tesla in the lawsuit, the company denies any responsibility for his employment or injuries. We're not lawyers here, but it's well-established practice for lawsuits to go after the biggest and most public target for the best possible judgement, even if the larger named defendants may eventually be removed from the suit in to focus on the actual offending parties.

Tesla issued a statement to Mercury News defending their hiring practices, both of skilled U.S. workers and contractors for specialized jobs:

Tesla proudly employs nearly 6,000 American workers from the Bay Area on the floor of the same factory that had previously been shuttered by NUMMI. These are well-paying jobs, each of which comes with equity in Tesla, and which have helped to transform the automotive industry and revitalize this region's important role in it. Separate from its thousands of employees, Tesla sometimes brings in third party general contractors to do short-term construction projects at the factory where Tesla does not have the expertise or ability to do the project on its own. In these situations, Tesla enters into contractual agreements with its general contractors, which allow them to select the resources they need for the job while also requiring them to hire and pay their workers appropriately.

Tesla CEO Elon Musk chimed in on Twitter, expressing his dismay: