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Former Tesla Worker’s Payout Slashed From $15M to $3.2M in Racial Bias Case

Krishi Chowdhary Journalist Author expertise
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Former Tesla Worker’s Payout Cut to $3.2M in Racial Bias Case

Black former Tesla worker Owen Diaz, who sued the carmaker in 2017 over racial bias, saw his payout slashed to $3.2 million from $15 million by a federal jury on Monday. The jury ordered Tesla to pay Diaz $175,000 for emotional distress and another $3 million in punitive damages. The latter is intended to punish unlawful conduct and deter such cases in the future.

He claimed that despite his repeated complaints about racial harassment at his workplace, Tesla had failed to act.

Diaz worked at Tesla’s Fremont Factory as an elevator operator. This isn’t the first time the EV carmaker failed to address racial harassment at its flagship assembly plant.

The former elevator operator at Tesla first filed a lawsuit against the company. Employees frequently called him racial slurs and scrawled swastikas and racist caricatures on the walls and other work areas, he said.

After complaining several times to his managers didn’t have any effect, Diaz sued the company for not upholding its responsibility to prevent workplace racial harassment.

A 98% reduction from the original payout

While the week-long trial that ended on Monday resulted in Diaz’s payout getting reduced by almost 80% from the previous $15 million, his original payout was manifold higher. Back in 2021, a different jury had awarded him $137 million. The carmaker challenged the verdict, which resulted in yet another trial.

In 2022, US District Judge William Orrick ruled that the amount was excessive and slashed the payout to $15 million.

It included $1.5 million in compensatory damages and $13.5 million in punitive charges. However, the payout was rejected by Diaz and his lawyers, who claimed that the reduction was unjust and the lowered punitive charges would fail to deter future misconduct from Tesla.

Diaz took his chance by going for another trial – the one that ended on Monday and saw his payout get slashed even more. Down to $3.2 million, it’s now only about 2% of the $137 million that Tesla was originally ordered to pay him in the 2021 trial.

A blow to civil rights activists

Monday’s verdict also comes as a blow to civil rights activists that want to deter companies from tolerating workplace discrimination by implementing hefty fines. On Friday, Bernard Alexander, one of Diaz’s lawyers, urged jurors to award Diaz a payout of almost $160 million in damages. It would send a message to Tesla and other large companies that they can no longer get away with a slap on the wrist for failing to address discrimination, he said.

They’re just throwing numbers up on the screen like this is some kind of game show.Alex Spiro, Tesla’s lawyer

He also claimed that Diaz’s lawyers had failed to produce any evidence that the former Tesla employee suffered any serious, long-lasting damage due to the company’s inaction.

During the 2022 trial, Orrick banned either party from producing any more evidence on the case.

Tesla CEO Elon Musk took to Twitter to say that he respects the jury’s decision but added that the payout would have been canceled altogether if Tesla was allowed to produce new evidence.

Diaz and his lawyers are likely to file a post-trial motion and ask for a new trial. Tesla, too, might do the same, claiming that the $3 million it has been ordered to pay as punitive charges is an excessive amount.

Punitive charges are usually only four times the amount awarded for emotional damages. Either way, this case isn’t over yet.

Krishi Chowdhary Journalist

Krishi Chowdhary Journalist

Krishi is an eager Tech Journalist and content writer for both B2B and B2C, with a focus on making the process of purchasing software easier for businesses and enhancing their online presence and SEO. Krishi has a special skill set in writing about technology news, creating educational content on customer relationship management (CRM) software, and recommending project management tools that can help small businesses increase their revenue. Alongside his writing and blogging work, Krishi's other hobbies include studying the financial markets and cricket.