Media Moves

Tesla cuts salaries, furloughs workers

April 8, 2020

Posted by Irina Slav

Tesla has told employees it would cut salaries by 10-30% and furlough workers as Covid-19 cripples demand for cars.

Tina Bellon reported the news for Reuters:

Tesla Inc (TSLA.O) told employees on Tuesday it would furlough all non-essential workers and implement salary cuts during a shut down of its U.S. production facilities because of the coronavirus outbreak.

Tesla said it planned to resume normal operations on May 4, barring any significant changes, according to an email sent to U.S. employees by in-house counsel Valerie Capers Workman, which was viewed by Reuters.

The company, which suspended production at its San Francisco Bay Area vehicle and New York solar roof tile factories on March 24, said in the email the decisions were part of a broader effort to manage costs and achieve long-term plans.

Tesla did not immediately respond to a request for comment.

The coronavirus pandemic has slashed U.S. demand for cars and forced several other automakers to furlough U.S. workers.

Pay for salaried Tesla employees will be reduced beginning on April 13 and cuts will remain in place until the end of the second quarter, the email said.

Kirsten Korosec from TechCrunch wrote:

Pay cuts for salaried employees — which ranges from 30% for vice presidents, 20% for director-level executives and 10% for the remaining workforce — is expected to be in place until the end of the second quarter, according to the email. The salary cuts and furloughs will begin April 13. Employees who cannot work from home and have not been assigned critical onsite positions will be furloughed until May 4, according to the email.

“While we are continuing to keep only minimum critical operations running, we expect to resume normal production at our U.S. facilities on May 4, barring any significant changes,” the email from Tesla’s human resources department head Valerie Workman. “Until that time, it is important we take action to ensure we remain on track to achieve our long-term plans.”

“This is a shared sacrifice across the company that will allow us to progress during these challenging times,” the email read.

Furloughed employees will remain employees of Tesla without pay. They will their healthcare benefit. The email directs furloughed employees to apply for unemployment benefits.

The Verge’s Sean O’Kane reported:

There is no specific mention of CEO Elon Musk in the email. Musk, who underplayed the coronavirus threat in March and tweeted that the “panic” over it was “dumb” is a few years into a $2.6 billion compensation plan at Tesla, though he has not accepted the state-mandated minimum wage salary in the past.

Valerie Capers Workman, the company’s North American HR boss, said in the email that these workers will get a specific notice via email with “additional instructions on how to apply for unemployment benefits through [their] state agency,” and that “[f]or the vast majority of furloughed employees, unemployment benefits will be roughly equivalent to normal take home pay.” They will “remain an employee of Tesla (without pay)” while on furlough, and keep their healthcare benefits.

“On one hand we are devastated by this, we all want to get back to work. On the other hand we all know we are going to get way more money from unemployment since all the extras won’t be taken out,” one hourly employee at Tesla’s Fremont, California factory told The Verge. “[We are] happy we will be able to support our families better than when we were working.”


Subscribe to TBN

Receive updates about new stories in the industry daily or weekly.

Subscribe to TBN

Receive updates about new stories in the industry.