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Published on July 13th, 2018 | by Steve Hanley
July 13th, 2018 by Steve Hanley
Before you get your knickers all knotted up about how I am a Tesla hater and a Musk misanthrope, please be aware that just yesterday I called for a constitutional amendment to allow Elon Musk to run for president and have on multiple occasions given lavish praise to Tesla for slapping the mainstream automobile manufacturers upside the head with a 2×4 and forcing them to make electric vehicles. Without Musk and Tesla, there would be no EV revolution (yet).
What follows is news from this week that is relevant to Musk and to Tesla. What you do with that news is up to you. Please don’t shoot the messenger if it does not conform to your worldview. Thank you. We now return you to your regular programming, already in progress.
NLRB Unfair Labor Practices Complaint
Section 8(a)(1) of the National Labor Relations Act says, “It shall be an unfair labor practice for an employer to interfere with, restrain, or coerce employees in the exercise of the rights guaranteed” to organize a union. On its website, the NLRB adds some context to that section. “For example, employers may not respond to a union organizing drive by threatening, interrogating, or spying on pro-union employees, or by promising benefits if they forget about the union.” It is an unfair labor practice for an employer to create “the impression that you are spying on employees’ union activities,” promise “employees benefits if they reject” a union, or convey “the message that selecting a union would be futile.”
The United Auto Workers have been trying to organize the workers at Tesla’s Fremont factory for over a year. Elon Musk makes little attempt to hide his disdain for unions in general and the UAW in particular. In May he responded to a question from Twitter user Eric Brown, who asked if he was planning to take away stock options from employees if they vote in favor of a union.
But ya know what, let’s test that theory. Maybe we do want UAW back, even tho UAW betrayed us 8 years ago & left us here to rot. Maybe we want UAW back even tho injury rate today is 1/2 what it was with them & wages were lower. Maybe. Let’s hold a vote & find out.
— Elon Musk (@elonmusk) May 22, 2018
On June 4, the NLRB sought permission to amend its complaint against Tesla, based upon what it claims took place during a meeting between Musk and employees on June 7, 2017. The judge hearing the Unfair Labor Practices case has yet to rule on the board’s request to amend. The amended complaint alleges Musk “impliedly promised to remedy their safety complaints if they refrained from their union organizational activity” and “informed employees it would be futile for them to select a union as their bargaining representative by telling them that employees did not need a union and that [Tesla] would allow them to have a union if [Tesla] failed in its efforts to remedy their safety grievances,” according to a report by Jalopnik.
A Tesla spokesperson took issue with the proposed amended complaint in a statement. “Not only are all these allegations false, the NLRB’s amended complaint was improper for a number of reasons. The judge has not yet decided whether it can proceed.” Neither the NLRB or the UAW responded to Jalopnik’s request for comment on the matter.
What About Worker Safety At The Tesla Factory?
Worker safety at the Fremont factory has gotten the attention of OSHA and the state of California, both of which are conducting independent investigations. Tesla insists its factory is safer than others in the industry, but it appears it has failed to properly record some workplace injuries in its safety logs. Justine White, who was once the head of safety at the factory, once complained to her supervisor that the factory floor lacked yellow safety markings. “Elon does not like the color yellow,” she was told. Numerous other safety concerns were deflected by saying things were the way they were because that’s how Elon wanted them.
There is a report in the Mercury News today that claims a Tesla employee had to have one of his legs amputated in 2016 after he was run over by a fork lift being operated improperly. The injury apparently was not reported as work related as both employees were horsing around outside the factory at the time.
In a recent statement to Bloomberg, Tesla said, “Nothing is more important to us than the safety of our employees. This is not to say that there aren’t real issues that need to be dealt with at Tesla or that we’ve made no mistakes with any of the 40,000 people who work at our company. However, there should be absolutely no question that we care deeply about the well-being of our employees and that we try our absolute hardest to do the right thing and to fail less often. With each passing month, we improve safety further and will keep doing so until we have the safest factory in the world by far.”
That may be true, but there are reports of workers developing what is referred to as a “Tesla stare” — a zombie-like state that manifests itself after many long shifts on the factory floor. The state is especially common after so-called “burst weeks” when the company strives to produce as many cars as possible in the last few weeks of each quarter. Mikey Catura tells Bloomberg that workers often consume large quantities of the energy drink Red Bull to counteract the fatigue that sets in during 12- to 16-hour shifts. “They come in vibrant, energized,” he said. “And then a couple weeks go by, and you’ll see them walking out of the building just staring out into space like zombies.” Semi-vegetative states can’t be good for alertness and keeping best safety practices in mind.
The Whistleblower Suit
Martin Tripp is the controversial former Tesla employee who the company claims stole proprietary information and provided it to outside interests. Tesla is suing Tripp for $1 million in damages in federal court in Nevada. This week, Tripp countered by filing a whistleblower complaint with the Securities and Exchange Commission (commonly referred to simply as the SEC) alleging the company routinely overstates Model 3 weekly production, by as much as 44%. Model 3 production is one of the key metrics Tesla investors use to determine the market value of Tesla stock, so any reporting issues with Model 3 production numbers could well be a violation of federal law and SEC regulations.
Tripp has hired Stuart Meissner, a New York attorney who represented an anonymous whistleblower in a 2016 case against Monsanto. That suit resulted in a $22 million award in favor of the whistleblower — one of the largest payouts since the SEC began offering awards in 2012 to encourage more internal reporting of potential violations, according to the Washington Post.
Meissner says Tesla has sought to ruin Tripp’s reputation in order to protect its image and intimidate other potential whistleblowers from coming forward. “Tesla and Mr. Musk have poured gasoline on the fire of Tesla supporters,” he says. Tripp, “is not a public figure like Elon Musk and yet he’s been just tossed out there into the public realm and trashed.”
Meissner tells CNBC that, “It’s dramatic and serious as far as the materiality of the omissions and misstatements, and how they effect investors, and the general public regarding potential safety hazards of Tesla vehicles. I’ve never seen a company handle an employee who has raised issues internally in such an aggressive manner. To me, this indicates that they are trying to send a message not just to Martin Tripp, but to all employees that they should not speak up if they see something wrong.” In emails to Tripp, Elon Musk has called him ‘a horrible human being’ who should be ‘ashamed’ of himself.
It is too early to tell what the results of the suit against Tripp and the SEC complaint will be. Tripp says he cannot afford to hire an attorney to defend himself in the Nevada legal action. No doubt, Stuart Meisnner is handling the SEC matter on a contingency basis, which does not require the aggrieved party to pay a fee up front.
What to make of all these claims and counterclaims? Various people will have different interpretations. Perhaps a clue can be found in an earlier tweet from Musk: “Managing sucks, btw. Hate doing it so much.” Clearly, Elon would prefer to be left alone to pursue his dream of ridding the world of fossil fuels — no union telling when and for how long his people can work, no yellow safety lines on the factory floor, and no disgruntled employees calling the news media with complaints. Musk has an unshakable conviction that he is right and anyone who doesn’t see things his way needs to yield to his vision.
Writing in Forbes this week, Betsy Atkins has some advice for Musk and Tesla that seems reasonable and rational:
“When looking at this messy melee of cross accusations, there is a clear process Tesla’s board ought to immediately look into. An established best practice for any board in a situation like this is to form a Special Committee of independent directors to look into the allegations of the whistleblower. To form a Special Committee you have to determine the scope of the committee and the charter for the committee. Are they investigatory fact finders only, or do they make recommendations for the whole board to review and make a business judgement on?
“For a Special Committee to be effective, they need to be independent which means they must select and hire their own unaffiliated legal counsel. It is always a good idea to get a written proposal from outside counsel and have this be competitively bid so you are able to set a firm budget or you can get enormous scope creep and have the expenses to the company and shareholders run wild. It’s also important to have a time frame goal to complete and investigation.
“In a situation where there are cost claims; the company in this case, claimed sabotage by the employee, it is important to separate the topics being investigated. In other words you could in fact have a valid whistleblower situation where the company put pressure on the employee and tried to intimidate other employees not to come forward. In parallel there could additionally be findings that the employee did inappropriately access confidential material.”
Musk resists being told what to do by anyone. He is pretty much a my-way-or-the-highway kind of guy. That may be a good thing for someone whose intent is nothing less than saving the world, but that doesn’t mean he is an easy person to work for. He may seem himself as a benevolent overlord. He clearly thrives on 16 hour days and may not fully understand why others do not. If there is one word of advice he might benefit from, it is to avoid hubris. There is a reason why pride is listed as one of the 7 deadly sins.
A prudent business person might conclude that now is a good time to turn the daily operation of Tesla over to professionals and let Elon apply his considerable talents to pursuing more of his radical ideas. It may be more important to the world for him to devote his energy to coming up with creative solutions to pressing global problems than it is for him to be sleeping on the floor under a desk at Tesla’s Fremont factory obsessing about daily and hourly production numbers. In a way, Elon may be his own worst enemy. We might all be better off if Elon could learn to step back and let one or more professional business managers do what they do best. [Editor’s note: I’d argue, however, that this is a move that was made a bit too early. Elon trusted excellent professionals to get the insanely rapid scaling done. They didn’t succeed. He had to come in and fix the process and solve the problems others seemed incapable or unwilling to solve. I’d argue that he is still critical in such roles. Once Tesla is comfortably producing 500K vehicles a year, maybe then would be a good time for others to take over such matters.]
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