"The Hidden Workforce Expanding Tesla's Factory"

[Vitold]

I didn't say there is direct access to the sub's accounting system. There are contractual requirements that cover the things I mentioned and the company has audit rights. This is all very standard, so if it's the first time you've heard of such an arrangement you must not have much to do with subcontracting.

How do you enforce what's in the contract if you don't have information to verify it's being followed?

 

[Electroman]

Extending this a bit, Tesla buys a lot of components from a variety of suppliers. Is Tesla obligated to verify how much they are paying their employees.

Extending this to 'ludicrous' level, if you buy a Model S, are you obligated to check how much Tesla pays its employees.

 

[Drivin]

First time I hear of such arrangement.

I understand that people may not have heard of how businesses in the real world operate. That is okay. Companies do stuff like have these paper documents called "contracts" that stipulate terms about the business arrangement with things like audit rights to make sure that the vendor is "complying" with the terms. When they have third parties "on site" they are normally concerned with a range of things like criminal record, complying with state and federal EEOC laws, complying with company policies (that may include sexual harassment, alcohol usage, drug tests).

The simple example is that if you hire a company to manage your yard and you see 5 people working every Saturday for 8 hours, and you are paying $20 a week, you can either assume (1) the business has decided to run at a loss because they are run by multi-billionaires who are willing to lose money every week or (2) their employees are not very well paid.

 

[FlatSix911]

This should be required reading ...

Response to Mercury News article, entitled “The Hidden Workforce Expanding Tesla’s Factory”
The Tesla Team May 16, 2016
At Tesla, we aspire to operate on the principles of hard work and exceptional performance, but always tempered by fairness, justice and kindness. There are times when mistakes are made, but those are the standards to which we hold ourselves. With respect to the person at the center of this weekend’s article in the Mercury News, those standards were not met. We are taking action to address this individual's situation and to put in place additional oversight to ensure that our workplace rules are followed even by sub-subcontractors to prevent such a thing from happening again.

Gregor Lesnik was brought to the Tesla factory by a company called ISM Vuzem, a sub-contractor brought in by Eisenmann, the firm that we hired to construct our new, high-volume paint shop. We contracted with Eisenmann for the simple reason that we do not know how to build paint shops and they are regarded as one of the best, if not the best, in the world. In our dealings with them, we have found them to be an excellent company, run by good people.

The article describes how Mr. Lesnik came to this country, the conditions under which Vuzem employed him and others to do their work, and how Mr. Lesnik ended up being injured while on the job. Assuming the article is correct, we need to do right by Mr. Lesnik and his colleagues from Vuzem. This is not a legal issue, it is a moral issue. As far as the law goes, Tesla did everything correctly. We hired a contractor to do a turnkey project at our factory and, as we always do in these situations, contractually obligated our contractor to comply with all laws in bringing in the resources they felt were needed to do the job.

Regarding the accident that resulted in Mr. Lesnik being injured, Cal/OSHA (the government regulator that investigates workplace accidents like these) came to our factory, investigated the incident and found that Tesla was not responsible. When Mr. Lesnik brought a workers compensation case, Tesla was dismissed from the case because the judge concluded that we had no legal responsibility for what occurred.

All of that is fine legally, but there is a larger point. Morally, we need to give Mr. Lesnik the benefit of the doubt and we need to take care of him. We will make sure this happens. We do not condone people coming to work at a Tesla facility, whether they work for us, one of our contractors or even a sub-subcontractor, under the circumstances described in the article. If Mr. Lesnik or his colleagues were really being paid $5 an hour, that is totally unacceptable. Tesla is one of the highest paying hourly employers in the US automotive industry. We do this out of choice, because we think it is right. Nobody is making us do so.

Tesla will be working with Eisenmann and Vuzem to investigate this thoroughly. If the claims are true, Tesla will take action to ensure that the right thing happens and all are treated fairly. Creating a new car company is extremely difficult and fraught with risk, but we will never be a company that by our action does, or by our inaction allows, the wrong thing to happen just to save money.

 

[Drivin]

How do you enforce what's in the contract if you don't have information to verify it's being followed?

Same way that the EEOC verifies that a company is complying with their rules.

Besides, if you write a contract that and don't include the ability to verify reps and warranties that your vendor is signing up for, then you need to fire your lawyer - or if you are approving those contracts against the advice of your lawyer, maybe there is not much harmony between the business and legal sides of the business.

As coincidence would have it, Tesla's deputy GC recently left.

 

[Drivin]

This should be required reading ...

All of that is fine legally, but there is a larger point. Morally, we need to give Mr. Lesnik the benefit of the doubt and we need to take care of him. We will make sure this happens. .

The accident happened about a year ago and the lawsuit shortly after that.

Better late than never, but it is good that it only took a year (or an article in the Mercury News) to get them to decide to be moral.

 

[Electroman]

The simple example is that if you hire a company to manage your yard and you see 5 people working every Saturday for 8 hours, and you are paying $20 a week, you can either assume (1) the business has decided to run at a loss because they are run by multi-billionaires who are willing to lose money every week or (2) their employees are not very well paid.

Now you are really stretching very hard to some how show atleast a very thin connection to Tesla here on the $5/hr scandal.

The example you cited above is a case of disproportionate amount of goods and services received for the payment. Somehow implying that is what happened in this case, and Tesla paid pittance to get the paint shop done.

 

[Electroman]

The accident happened about a year ago and the lawsuit shortly after that.

Better late than never, but it is good that it only took a year (or an article in the Mercury News) to get them to decide to be moral.

You are confusing between two different issues. The accident - Tesla is not owning to it, either one year ago or even now. That was done and dusted and Tesla is in the clear.

The Mercury article is primarily about the low wages Lesnick was paid (or how he was treated by his employer post accident), which Tesla was not aware until now. The moral responsibility that Tesla is referring to is on the issue of low wages that came to light only now.

You have used the phrase (or its equivalent) 'better late than never' somehow cleverly mixing these two completey different issues - the accident and the low wages

 

[Eclectic]

How do you enforce what's in the contract if you don't have information to verify it's being followed?

See the part of my post where I refer to audit rights.

 

[Doug_G]

Moving one post to snippiness

 

[Mike Strauss]

If they want to meet their production goals, as they have to with the number of orders they have for the Model 3, its a good idea to pay your workers EXTRA to meet this demand. if not, as we have seen in the past, the stock will drop. analysts aren't so so sure on this one Tesla Motors (TSLA) Analyst Ratings | TipRanks

 

[Vitold]

Same way that the EEOC verifies that a company is complying with their rules.

.

No government entity have picked up on visa and foreign worker abuses and it took someone's injury (plus lawyer) and zealous union to get to the heart of the matter. That's why this article should be mainly about Esenmann and ISM Vuzem.

 

[TaoJones]

How do you enforce what's in the contract if you don't have information to verify it's being followed?

Typically via contractually stipulated reporting and/or with audits of varying rigor.

I concur that the article smells like a union-driven hit piece. The last time the/a union acted up in-state, Tesla bought their union hall and civil behavior returned for awhile. The gigafactory-related handwringing was separate.

It doesn't take much to point today's media in a given direction. Whether a union owns up to being the catalyst or not, it's a fair point that what matters now is how Tesla follows through. Kudos to whomever's handling their crisis comm as the initial response was great - especially given the givens. Now Tesla has an opportunity to create a win from a potential hit by the manner in which they manage/communicate the follow through.

Thumbs up so far for how they've handled it. I wonder how much notice if any the local newsfolk gave Tesla before the original article went public?

 

[Electroman]

If they want to meet their production goals, as they have to with the number of orders they have for the Model 3, its a good idea to pay your workers EXTRA to meet this demand. if not, as we have seen in the past, the stock will drop. analysts aren't so so sure on this one Tesla Motors (TSLA) Analyst Ratings | TipRanks

Are you suggesting Tesla didn't pay Lesnick well enough ?

 

[Vitold]

Typically via contractually stipulated reporting and/or with audits of varying rigor.

Yeah you could, but seriously, when you hire a temp you don't pry how much their agent is skimming off. Maybe in the contract you stipulate that agency will adhere to standard labor/decent work practices, don't do anything illegal, etc. But that's where it ends.

 

[hockeythug]

As I expected.

Tesla paid $55 per hour to factory builders

 

[Skotty]

$55 per hour? A fine example of Tesla corporate welfare and acting irresponsible with taxpayer subsidies.

Yes, I'm just joking.

 

[Electroman]

Where is Drivin when you want him?

 

[neroden]

It seems apparent that Eisenmann is a fundamentally crooked operation, sending out hundreds or thousands of dishonest letters to get B1/B2 visas pretending that employees would be doing supervisory work, when they wouldn't.

Eisenmann is now trying to cover their ass and blame everything on Vuzem.

Tesla, however, should blacklist Eisenmann and never work with them again.