Tesla Inc has agreed to enter mediation that could resolve a lawsuit brought by the U.S. Equal Employment Opportunity Commission, which accuses the electric car maker of allowing widespread racial harassment at its Fremont, California factory.
The EEOC said on Tuesday it is working with Tesla Inc to select a mediator, with talks expected to begin in March or April. Both sides must also submit a proposal by June 17 outlining next steps if mediation fails.
A U.S. judge has already paused some evidence deadlines to allow talks to take priority.
Tesla and Federal Employment Law
The lawsuit, filed in September 2023, alleges Tesla violated federal employment law by tolerating a hostile work environment for Black employees at its Fremont assembly plant.
According to the EEOC, workers were subjected to racial slurs and racist graffiti, including swastikas and nooses. The agency said some graffiti appeared on vehicles as they moved down the production line.
Tesla, based in Austin, Texas, has denied the claims. The company said it did not knowingly ignore harassment and accused the EEOC of pursuing the case for publicity.
Neither Tesla nor the EEOC responded to requests for comment outside business hours.
Judge Halts Deadlines to Prioritise Talks
U.S. District Judge Jacqueline Scott Corley approved the pause in evidence gathering late Tuesday in San Francisco, allowing mediation to move forward without the pressure of active litigation deadlines.
The EEOC said mediation could offer a faster path to resolution. However, the agency is also preparing for the case to continue if talks fail.
Class Action Blocked for Thousands of Workers
Tesla scored a legal victory in November when a California state judge ruled that more than 6,000 Black workers could not sue the company together in a class action lawsuit.
The judge said many of the workers selected to testify were unwilling to do so, making a group case unworkable under state rules.
That ruling narrowed the legal risk for Tesla but did not end scrutiny of its workplace practices. The company has faced several lawsuits tied to alleged mistreatment at the Fremont plant.
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