Tesla Settles Some Worker Racism Claims as Bigger Trial Looms

Tesla Inc. reached an agreement to settle several workers’ claims alleging pervasive anti-Black racism at one of its California plants, while the company still faces a jury trial in a broader case brought by the state’s civil rights enforcement agency.

The electric-vehicle maker’s accord with three workers was disclosed Wednesday in a court filing, averting a series of trials that were set to start earlier this week in state court in Oakland. Terms and conditions in the settlement remain confidential and the filing said claims by two other workers are still pending.

For almost a decade, the company headed by Elon Musk has been trying to fend off allegations that the assembly line in Tesla’s Fremont plant was a hostile work environment filled with racist slurs, graffiti and drawings of nooses and swastikas.

Related: Tesla’s Musk Expects Widespread US Use of Cars Without Human Monitors This Year

Tesla has lost arbitration proceedings in some cases and privately settled others while publicly denying wrongdoing. The company has previously said it does not tolerate harassment and has removed employees found responsible for misconduct.

Five years ago, a similar case generated one of the largest-ever verdicts in a discrimination case involving a single worker—$137 million—but Tesla got the award reduced 98% before reaching a confidential settlement.

The allegations grabbed a bigger spotlight when civil rights regulators at the state and federal level sued Tesla in separate cases in 2022 and 2023. California’s case, alleging systemic discrimination, pay inequities and a hostile work environment, is scheduled for a July 20 trial, also in Alameda County Superior Court in Oakland.

The U.S. Equal Employment Opportunity Commission accused the company of tolerating racial harassment and retaliating against workers who spoke out against the abuse. The Trump administration and Tesla entered into settlement negotiations earlier this year.

The case that was set for trial this week was filed in 2017 by Marcus Vaughn, who alleged that he had heard the “N-word” used at least 100 times by co-workers. He presented evidence that Black and White employees alike referred to the factory as “the plantation” or “slaveship.”

After he complained repeatedly to management, one of the offensive co-workers was fired, but the racist slurs continued, according to Vaughn’s complaint.

When Vaughn’s six-month contract was up for renewal, a supervisor recommended against it, saying Vaughn “does not have a positive attitude at work and for the company” and he was let go, according to the complaint.

Vaughn’s complaint was at one point certified as a class action on behalf of some 6,000 Black workers at the Fremont plant. But the judge overseeing the case later voided the class status because attorneys for the plaintiffs were unable to secure commitments that at least 200 former employees or contractors were willing to testify.

In its defense of Vaughn’s case, Tesla argued that with more than 10,000 workers at the factory, it wasn’t possible to stop all bad conduct. The company also denied that termination of Vaughn’s work as a contractor was retaliation for his complaints.

Top photo: A Tesla Model Y electric vehicle during a launch event at the Andino Shopping Mall in Bogota, Colombia, on Thursday, Nov. 20, 2025. Photographer: Jair F. Coll/Bloomberg.