Tesla is under pressure from the Democratic Party’s leadership who claim the automaker is hiding complaints from workers and customers.
The issue stems from the inclusion of “arbitration clauses” inside Tesla’s contracts with workers and customers.
An arbitration clause consists of any form of agreement between parties that indicate certain disputes will be resolved by an arbitrator instead of through a civil court.
There are several reasons why someone would prefer arbitration since the proceedings are often faster, less costly, and more private than those in a court. Tesla uses arbitration clauses in employee and customer contracts. Over the last year, these clauses have been raised as an issue.
Last summer, we reported on a former Tesla employee who the automaker accused of stealing information about its Dojo supercomputer. Tesla aggressively sued the worker in court, making some serious public accusations against him, which he denied, and then moved to settle the dispute in arbitration – effectively preventing the worker from defending himself against the claims.
Now seven senators, including well-known Democratic leaders like Elizabeth Warren, Bernie Sanders, Richard Blumenthal, and Edward J. Markey, have sent a letter to Elon Musk to pressure Tesla to stop including arbitration clauses.
They wrote in the letter:
We are incredibly troubled by Tesla’s reported use of forced arbitration clauses in consumer and employee contracts. Such provisions deny consumers their right to bring cases in court and shield Tesla from public scrutiny and accountability. Several recent reports and lawsuits have described a culture of “severe and pervasive harassment” faced by workers at Tesla, and on February 15, the National Highway Traffic Safety Administration (NHTSA) found Tesla’s Full Self-Driving Beta software could “infringe upon local traffics laws or customs” and increase the vehicle’s crash risk. 1 We are deeply concerned that the arbitration agreements you impose on your workers and consumers have kept these reportedly deplorable and discriminatory conditions and potential safety flaws from the public eye and limited regulatory authorities’ ability to protect Tesla customers and employees and hold Tesla publicly accountable.
They believe Tesla is using the tactic to hide complaints from employees and customers. These senators are asking Tesla to release the number of complaints it received from both and to commit to stop using arbitration clauses in its contracts.
Here’s the letter in full:
Normally, this is where we would add a response from Tesla about these claims, but Tesla doesn’t have a PR department to ask for a response.