US judge gives former Tesla worker two weeks to accept $15 million racism payment

Tesla's Fremont factory in California
The jury awarded Owen Diaz US$139.9m but the judge slashed the amount. Photo credit: Getty Images

A US federal judge has given a Black former elevator operator at Tesla two weeks to decide whether to accept US$15 million (NZ$23 million) in damages over racial abuse at the electric car company, far below the US$137 million (NZ$211 million) a jury had awarded.

US District Judge William Orrick in San Francisco said Owen Diaz identified no controlling question of law to justify an immediate appeal of the reduced award, which includes US$1.5 million of compensatory damages and US$13.5 million of punitive damages.

Diaz alleged that his colleagues and a supervisor subjected him to a hostile work environment that included slurs, caricatures and swastikas in his nine months working at Tesla's factory in Fremont, California in 2015 and 2016.

A jury had awarded Diaz US$6.9 million of compensatory damages and US$130 million of punitive damages last October.

Orrick reduced both on April 13, while rejecting Tesla's bid for a new trial.

In the order, Orrick said he was "firmly convinced" that the jury award was excessive, and that allowing a quick appeal "would further delay resolution of a case that is already five years old".

Lawyers for Diaz did not immediately respond to requests for comment. They had said a question of law concerning damages for emotional distress justified an immediate appeal.

In an interview at the time the initial announcement was made, Bernard Alexander, a lawyer for Diaz, said his client planned to appeal.

"We're pleased that the court upheld the jury's finding that Tesla's conduct was absolutely reprehensible," Alexander said.

"The award of US$15 million is substantial but does not come close to reflecting the harm caused to Mr Diaz, or the reprehensibility of Tesla's conduct."

Tesla had sought to limit compensatory and punitive damages to $300,000 each.

Under US Supreme Court precedent, punitive damages typically should be less than 10 times compensatory damages.

Tesla is also being sued by California's civil rights agency, the Department of Fair Employment and Housing (DFEH), over racial discrimation at the Fremont factory.

The lawsuit, filed in February,  said the facility was "racially segregated" with some Black workers saying they were subjected to racist slurs and drawings and assigned the most physically demanding jobs.

At the time, the DFEH said working conditions were so intolerable to some Black employees that they'd actually been forced to quit.

"Workers referred to the Tesla factory as the 'slaveship' or 'the plantation', where defendants' production leads 'crack[ed] the whip,'" according to one excerpt from the lawsuit.

Tesla hit back at the DFEH's lawsuit, saying it does not tolerate harassment and had disciplined and fired workers for engaging in misconduct.

"A narrative spun by the DFEH and a handful of plaintiff firms to generate publicity is not factual proof," the company said in a blog post.

The company has also faced allegations of sexual harrasment at the California factory.

Reuters / Newshub