Tesla Launches Investigation Into Allegations Eastern Europeans Were Given Visas, Paid $5/Hr To Expand Fremont Factory

Last year, California automaker Tesla Motors carried out an expensive retrofit of its Fremont production facility where its Tesla Model S electric car was made, primarily as part of its plans to ready the facility for the start of Tesla Model X production late last summer. In addition to installing new production lines designed to increase vehicle production capabilities and improve production line efficiency, Tesla installed two new paint shops which it said were more environmentally friendly than their predecessors. One for cars and one for parts like bumpers and trim panels, the two paint shops were said to dramatically reduce the number of chemicals used during the painting process, while also saving and recycling an incredible amount of water in the process.

The new paint shops are state of the art

The new paint shops are state of the art

At the time, Tesla CEO Elon Musk said that those paint shop upgrades gave the Fremont facility the most sophisticated, autonomous automotive paint shop in the world. Designed and installed by German plant specialists Eisenmann, the deal to manufacture, install and test the paint shops were said to be “running to nine figures,” in a March 2015 press release from Eisenmann that was “the most valuable in Eisenmann’s history.”

Since the plants were installed and put into operation, helping Tesla continue to raise its total vehicle output month by month, we’ve heard little of the high-tech paint booth or the Fremont facility. But now Tesla is facing allegations that it used cheap foreign labor, rather than local skilled staff, to construct the paint shops ahead of their commissioning last summer. At their most severe, these allegations imply that Tesla — or rather its contractor — broke U.S. employment law in the process.

The paint shops were finished before Model X entered production.

The paint shops were finished before Model X entered production.

The allegations come from local newspaper The Mercury News, which claims that as many as 140 Eastern Europeans — mostly from Croatia and Slovenia– were hired to install Tesla’s new paint shops at the equivalent price of just $5 per hour. Moreover, it alleges, these workers arrived in the U.S. from Europe using B1/B2 Visas: a visa class that allows holders to enter the U.S. for pleasure or pre-existing business purposes (such as attending a conference, a one-off meeting, or a carrying out a temporary supervisory role based on specialist experience) but specifically prohibits holders from seeking regular full-time employment during their stay.

The company arranging the visas? ISM Vuzem, a Slovenian company subcontracted by Eisenmann to find the workers needed to install its multi-million dollar plant equipment in the Fremont facility.

The allegations came to light after a Slovenian worker by the name of Gregor Lesnik fell nearly three stories from the top of a paint shop roof onto the factory floor, sustaining multiple fractures to his ribs, torn ligaments in his knee, broke both his legs and sustained concussion. Now returned to his home country of Slovenia, Lesnik has now filed a workers’ compensation case against concerned parties, saying that he and other workers like him were paid around €800 ($900) per month for their work. Work that included long, workdays in excess of ten hours, often with only one, or even no days off per week. With no overtime paid, Lesnik says that works out to less than $5 per hour, well below minimum wage. He and the other workers taking joint legal action, say their lawyer, are entitled to more than $2.6 million in unpaid salaries since they were paid far less than they were promised by ISM Vuzem.

Tesla prides itself on treating its staff well.

Tesla prides itself on treating its staff well.

Part of Lesnik’s complaint centers around how quickly ISM Vuzem tried to remove him from the U.S. after his accident, trying to encourage him to leave the country and return home before he was considered well enough to travel. But the core of the case focuses on the work conditions and pay.

Originally, Lesnik’s court papers listed Tesla Motors, Eisenmann and ISM Vuzem as being defendants in the case, but after preliminary court proceedings in the Alameda County Court, Tesla and Eisenmann have had their company names removed from the case, since ultimate responsibility lies with ISM Vuzem, not Tesla or Eisenmann. Additionally, a formal investigation from Cal/OSHA — a government regulator tasked with investigating industrial workplace accidents — has cleared Tesla of all blame.

Yet while Tesla is now legally off the hook, it has vowed to launch a full and thorough investigation into the matter, stating it has already launched an investigation into what happened and will ensure that it will “do right” by Lesnik and his fellow Eastern European workers.

“When Mr. Lesnik brought a workers compensation case, Tesla was dismissed from the case because the judge concluded that we had no responsibility for what occurred,” Tesla stated in an official blog post on its site yesterday. “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,” it continues. “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.”

In addition, it says it is working with both Eisenmann and ISM Vuzem to ensure something like this never happens again.

As The Mercury News reports, Lesnik’s story begins in late 2014 when he was an unemployed electrician living with his mother in Slovenia. His girlfriend was expecting their first child and he needed a job. A nearby company called ISM Vuzem was looking for workers, so he applied.

Tesla says it will do everything it cat to ensure those affected are treated right

Tesla says it will do everything it can to ensure those affected are treated right

Vuzem, a company which has made a name for itself by sourcing and supplying workforces to install plant machinery in automotive production facilities across Europe and the U.S., is no stranger to the visa process. But rather than play by the rules, it appears Vuzem could be trying to bend the rules to its advantage.

You see, while obtaining a visa for the U.S. is reasonably difficult — at least if you’re looking for a semi-permanent visa for extended work or emigration purposes work in specific industries or are just looking for regular work — B1 and B2 visas, designed primarily to allow temporary visitation to the U.S. for leisure purposes or to work in certain roles (such as supervising installation of specialist equipment) are much easier to obtain. But despite being easier to obtain, B1/B2 Visa holders are prohibited from engaging in exactly the kind of work that Lesnik and his colleagues were being paid to undertake.

Further expansion will be needed for Model 3 production.

Further expansion will be needed for Model 3 production.

In other words, Vuzem appears to have used an incorrect Visa classification to get its workers to the U.S. What’s more, it’s something that The Mercury News says it has been caught doing before on similar construction projects at other automotive plants across the U.S. in recent years, pointing to a major problem with the B1/B2 Visa system.

But for its connection to the debacle, Tesla says it will do everything it can to ensure that something like this does not happen again. Although legally in the clear — since it was a subcontractor to a contracted third-party firm which made the apparently illegal hires — Tesla says it is already undertaking a thorough investigation to see just how Lesnik and his colleagues were given such low salaries and such tough working conditions.

“If the claims are true, Tesla will take action to ensure that the right things happen and all are treated fairly,” it concludes. “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. ”

We’ll be paying close attention to the outcome of that investigation, so you can be sure we’ll share any additional news with you as we have it.


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