On April 14, CEO Elon Musk of Tesla announced the company would cut its workforce by over 10%, according to an internal memo revealed by Business Insider (BI). In layoff notices sent to impacted employees, Tesla said workers should expect information about severance “within 48 hours.”
Emails sent to the personal accounts of workers informed them that they had been laid off effective immediately. Some former employees said they were also cut off from Tesla’s internal systems at the same time.
The electric automaker is reportedly offering severance packages to laid off workers equivalent to two months of pay — meaning impacted employees will be paid through June 14, five former employees told BI.
The severance packages reportedly do not take into account their length of employment with Tesla, as workers who had been with the company for a few months received the same number of weeks of pay as those who had been there for years.
Under the Worker Adjustment and Retraining Notification (WARN) Act, companies with more than 100 employees must provide 60 days’ notice before carrying out mass layoffs. However, Tesla’s proposed severance could cover potential penalties if the company were found to be in violation of WARN, which states that laid off workers could be entitled to up to 60 days of pay and benefits if they’re not given proper notice.
Tesla is also reportedly offering to cover two months of COBRA health insurance for workers who had health insurance through the company.
To receive the severance, laid-off employees must sign an agreement that, among other things, requires them to not participate in any class action lawsuits or arbitrations against the company, share any of the company’s trade secrets, or publicly disparage Tesla. Such terms are fairly common in severance agreements.
Tesla said the severance agreement must be signed within five business days of receipt, and workers will receive their severance pay 45 days after their employment end date.
While the initial layoff notices went out overnight, some Tesla workers affected by the job cuts told BI that they didn’t receive termination emails until the morning of April 18.
The severance agreement does not include any information about stock awards or unused paid time off (PTO). However, a termination notice email sent to laid-off workers on April 17 said Tesla employees will have “30 days or 3 months (or both)” from their termination date to exercise any vested stock options, and workers will receive a payout for any accrued vacation time before their end date in their final paycheck.
A Tesla spokesperson did not immediately respond to a request for comment.
Source: BI
