Tesla cuts wages, puts workers on leave to “manage costs” during pandemic


Starting April 13, Tesla cuts the wages of all employees in the United States and places hourly workers who cannot work at home during the coronavirus pandemic on unpaid leave, according to an internal email read by The edge.

Salaried employees at the vice president level and beyond will see their wages reduced by 30%, according to the email, which was first reported by Electrek. Directors and above will have their salaries reduced by 20%. Everyone will receive a 10% reduction, and Tesla has said workers outside the United States will see “comparable reductions.” Wage cuts will last throughout the second fiscal quarter, which ends in June.

It is not known how many hourly workers will be put on leave without pay. But this is likely to be a significant number, as Tesla said that anyone who cannot work from home and who has not received “critical work” to be performed at one of the company’s facilities will be affected by the leave. Tesla employs approximately 50,000 people worldwide.

There is no specific mention of CEO Elon Musk in the email. Musk, who downplayed the coronavirus threat in March and tweeted that “panic” was “stupid” after a few years in a $ 2.6 billion compensation plan at Tesla, although he didn’t accept the minimum wage imposed by the state in the past.

Valerie Capers Workman, the company’s North American human resources manager, said in the email that these workers will receive a specific notice by email with “additional instructions on how to apply for unemployment benefits via [their] the state agency “and that”[f]or the vast majority of employees on leave, unemployment benefits will be roughly equivalent to normal net wages. They “will remain a Tesla employee (without pay)” while on leave and will maintain their health care benefits.

“On the one hand, we are devastated by this, we all want to go back to work. On the other hand, we all know that we are going to get a lot more out of unemployment because all the extras will not be cut, “said an hourly worker at Tesla’s Fremont, California plant. The edge. ” [We are] happy to be able to support our families better than when we were working. “

The employee, who was granted anonymity to speak freely about the situation, said his team was also happy not to endanger the health of colleagues during the pandemic.

Tesla temporarily closed its electric car plant in California on March 23, as well as its solar panel plant in New York. The company has also already reduced its workforce in Nevada Gigafactory, where it manufactures batteries and some parts for the Model 3, by “more than 75%”.

Many of these workers were on paid leave, at least until further wage cuts and holidays were announced on Tuesday. And Workman said in Tuesday’s email that the company will not resume production at its US facilities until at least May 4, which is the earliest workers on leave will be recalled. (The California Home Stay order currently ends on May 3, but may be extended.)

“We know the uncertainty has not been easy, and we are doing everything we can to keep you safe and informed while navigating changes around the world,” Workman wrote in the email. Wage cuts and leave are part of a “larger cost management effort,” she said. “This is a shared sacrifice within the company that will allow us to progress in these difficult times.”

The cuts come just days after Tesla announced better-than-expected sales figures for the first quarter of 2020, thanks in part to the company’s new Gigafactory in China, which was also shut down briefly in February. When Tesla announced the suspension of operations at the factories in California and New York last month, the company cited its stock of $ 6.3 billion and a recent increase of $ 2.3 billion to reassure shareholders.

“We believe that this level of liquidity is sufficient to successfully weather a long period of uncertainty,” the company wrote at the time.

Still, even former automakers are taking similar steps as they head into what should be a much worse second-quarter for new vehicle sales. Just hours before the release of Workman’s email, Nissan and Honda announced that tens of thousands of hourly workers were on leave, adding to a growing list of people who need unemployment benefits. already have 10 million names thanks to the pandemic.

Hi all,

Thank you for your continued commitment to Tesla and our mission during this unprecedented period. We know the uncertainty has not been easy and we are doing everything we can to keep you safe and informed while navigating changes around the world.

Although we continue to maintain only minimal critical operations, we expect to resume normal production at our US facilities on May 4, unless there are significant changes. Until then, it is important that we take steps to ensure that we stay on track to achieve our long-term plans.

Starting Monday, April 13, we are implementing the actions below as part of a larger cost management effort. It is a shared sacrifice within the company that will allow us to progress in these difficult times.

Remuneration will be temporarily reduced for employees.

For American employees, these reductions are 30% for vice-presidents and more, 20% for directors and more and 10% for everyone.

For non-US employees, there will also be comparable discounts, details of which will be communicated by the local management team in accordance with local laws and works councils.

These reductions are expected to be in effect until the end of the second quarter.

Employees who cannot work from home and who have not been assigned to critical on-site work will be placed on leave.

On leave, you remain a Tesla employee (without pay) and keep your health care benefits. You will not report to work until the end of the leave, and you will be asked to return by management, which is expected to be on May 4.

A notice of discharge will be sent to you within the next few days with further instructions on how to apply for unemployment benefits through your state agency.

For the vast majority of employees on leave, unemployment benefits will be roughly equivalent to normal net wages.

Some employees will be assigned to critical functions and will continue to report on site. These employees will be communicated directly by their manager or HR partner.

For the merit exam cycle:

Salary and hourly rate adjustments will be suspended.

Stock grants will also be suspended.

If you would like to take voluntary leave, as some have requested, please discuss this with your manager and your HR partner.

We continue to monitor the situation closely and our top priority is to ensure the safety of our employees. As usual, for those on site, if you are sick or uncomfortable coming to work, please contact your manager and stay at home.

We respect your decision and you will not be penalized. For HR related questions, contact your HR partner or send an e-mail [email address removed]

Thank you all for everything you do to ensure the success of our business.


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