Report: Tesla Used Illegal Foreign Labor to Expand CA Plant

Elon Musx in Tesla X (Justin Sullivan / Getty)
Elon Musx in Tesla X (Justin Sullivan / Getty)

First Digital’s Bay Area News Group investigative reporters have accused Tesla Motors of employing foreign contract laborers at $5-per-hour, 10 hours a day, six days a week to expand its government-subsidized California auto plant.

In 2009, the U.S. Department of Energy in loaned Tesla Motors $465 million to open a plant for its all-electric Model S vehicle. Despite the $1 billion traditional automakers were paying to build and equip new auto plants, Tesla acquired the bankrupt General Motors “New United Motor Manufacturing Inc.” plant in Fremont California for $42 million.

In 2010, the company received another $20 million worth of saleable California corporate income tax credits to acquire the plant’s factory presses and other machinery for $17 million, and buy other equipment at a “fraction” of the original cost.

Although Tesla Motors has been unprofitable since opening the Fremont plant, it has collected $517 million selling government-mandated environmental credits to competing automakers and others. The cash has been used to fund operating losses, build out sales distribution, and add to the manufacturing facility.

Many Californians are shocked to learn that Tesla has been able to accomplish all of this this without being forced to sign contracts with the United Auto Workers’ Union.

But a lawsuit from an injured construction worker on the Fremont plant has exposed Tesla as hiring a foreign contractor in 2015 to ship 140 workers from impoverished Croatia and Slovenia to build a new paint shop at Tesla’s Fremont plant.

The Bay Area News Group, after dozens of employee interviews and extensive review of the contractor’s payroll, visa and court documents, concluded that the Eastern European contract employees “work long hours for low wages, in apparent violation of immigration and labor laws.”

The contractor for Gregor Lesnik of Slovenia allegedly claimed on his application for a United States B1/B2 for “Nonimmigrant Visas for Tourism and Business” that he would be a management supervisor for a South Carolina auto manufacturing plant.

Although the federal law governing B1/B2 Visas specifically states, “These provisions do not apply to an alien seeking to perform building or construction work, whether on-site or in-plant,” Lesnik was shipped directly to Fremont, California where he allegedly joined 140 Eastern Europeans being paid about $5-per-hour, in 10-hour days, six and sometimes seven days a week as laborers to build Tesla’s paint shop.

The only reason the details of the outsourced labor contract have come to light is that Lesnik, after three months on the job, allegedly climbed to the top of the paint shop roof on May 16, 2015, stepped onto an unsecured tile, and fell three stories to the cement factory floor.

Lesnik survived that catastrophic plunge, but allegedly broke both of his legs, cracked a few ribs, tore up his knee and sustained a concussion. But after Tesla and the two contractors involved in the paint shop work allegedly refused to accept any legal responsibility for the hiring practices, long hours and low pay, Lesnik filed a whistleblower lawsuit.

Rob Stoker, President of the Building and Construction Trades Council of Alameda County Local 104, told the Bay Area New Group argues that the potentially illegal hiring practice cost local sheet metal workers tens of thousands of work hours and millions of dollars in wages.

Breitbart News construction industry sources tend to agree, and warn that California is known for onerous labor laws. Experienced workers performing similar tasks are generally paid about $48 an hour in wages and benefits. Any work over eight hours a day is also subject to time-and-a-half; any work over 60 hours a week is subject to double time.

Tesla could be required to “make whole” its workers for all illegal under-payments, plus pay federal fines of $5,000 per worker, $15,000 for each and every violation of the California Labor Code, and be banned from the B1/B2 and HB-1 Visa programs for life.

Tesla is already involved in a nasty labor dispute at the construction site of its Reno Gigafactory. About 350 construction workers walked off the job on March 1, complaining about low wages of $12-to-$14-per-hour and trying to draw attention to the outsourcing of work to non-union labor.

Besides the cost of fines and terrible publicity, the real risk for Tesla is that the union-friendly regulators in the Obama administration and the State of California under Governor Jerry Brown could use the egregious labor violations to force Tesla to sign its first union employee contact.

In its official response to the investigation, Tesla admitted that it had made mistakes, but limited them to Lesnik: “As far as the law goes, Tesla did everything correctly.”

Bay Area News Group columnist Michelle Quinn urged Tesla to “do the right thing”:

Going forward, Tesla should publish standards for foreign and domestic workers along its entire supply chain and conduct regular audits to make sure sub-subcontractors are meeting those requirements. It should publish those audits and call out bad actors. …

Tesla doesn’t want its fans, its employees or the community wondering if its amazing engineering feats and its factory ingenuity rely, in any way, on cheap foreign labor.


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