On October 4, a California federal jury awarded $137 million to a former contract employee who worked for Tesla. At trial, the plaintiff testified that he was repeatedly called the N-word while at work, regularly heard racial slurs throughout his employment, and was subject to swastikas and other hate symbols graffitied on the walls in the workplace. Though some employees denied making any racial slurs, one employee admitted to drawing a depiction of the Warner Bros. cartoon character Inki (which is based on an African stereotype) on a piece of cardboard in 2016.

Tesla typically handles its workplace disputes through mandatory arbitration. But the plaintiff was able to litigate the matter because he was employed by Tesla through a third-party staffing company, and was therefore never required to agree to the mandatory arbitration provision for Tesla direct hires.

One of the major weaknesses of Tesla’s case was the fact that it had no written policy or procedure for facilitating investigations into racial harassment involving contractors. The plaintiff made numerous written complaints about the harassment, offensive language, and racist graffiti, and Tesla responded that it thought these complaints had been resolved to his satisfaction. Tesla also did not provide standardized training to supervisors on how to conduct investigations into racial harassment.

While the size of this verdict will likely be reduced by the presiding judge or through subsequent appeal, this case illustrates the need to train supervisors and update policies to cover investigations into employees, contractors, and potentially even guests or visitors on company premises. Failure to do so risks litigation and potential jury verdicts.