Subcontractor Pays Employees $5 an Hour to Build Tesla Paint Shop

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A report shows that Tesla Motors Inc (NASDAQ:TSLA), one of the leading companies in the electric car industry built a California paint shop and paid workers only $5 per hour. The report prompted Tesla CEO Elon Musk to launch an investigation into the matter.

It is alleged the company used Eastern European workers, mainly from Slovenia and Croatia as they built a new paint shop in the northern part of California in Fremont, as they prepare to mass produce the new Model 3 sedan.

Subcontractor Eisenmann, a German based manufacturer is said to be the one who hired the workers and paid them only $5 per hour, which is in stark contrast with the wages of local sheet metal workers who get $52 an hour and $42 in benefits per hour in addition to their pension.

Musk responded to the report via Twitter where he wrote that the report had only gotten to him that day, and he was going to investigate the issue and try and fix the problem. He also acknowledged that there was an error on many levels if the report was true.

The news comes just after Tesla launched it’s new affordable Model 3 where they took close to $10 billion in orders. The company has marketed the Model 3 as its first affordable electric car and is scheduled to ship out from next year.

The report gave an example of a Slovenian electrician named Gregor Lesnik, who suffered an injury on the job. He fell three stories down, and bounced on a scaffold and landed on the factory floor. He suffered a concussion, broke his legs and ribs and also tore his ligaments. His visa noted that he was employed as a supervisor at the factory, but did not give mention of the hands-on work he did.

Lesnik filed a lawsuit against a Slovenian firm called ISM Vuzem, that had hired him which he has filed allegations against. The documents are filed in the Alameda county superior court. The lawsuit claims that the workers at the factory worked 10-hour shifts for most of the time, seven days a week. The company, however, shortchanged the workers and only gave them wages for 40 hours a week without any of the overtime payments. Lesnik also alleges in the suit that Vuzem withheld some promised payments after completion of the job.

Lesnik filed the suit for himself and his fellow employees and claims that the contractor tried to get him out of the US quickly straight after his injury because they didn’t want to deal with all the visa problems that might come his way if he went to the hospital. Lesnik alleges that a week after his fall, the employers lied to doctors saying that he(Lesnik) desired to travel back to Slovenia. They said he had shown a desire to receive medical care exclusively in Slovenia. At the time, Lesnik could not leave the hospital because he needed constant medical attention and could not safely fly home.

The suit also says that one time a supervisor came to harass him in the hospital and told him that they could not pay for his rehabilitation fees, and no lawyer would want to represent him in any case. Lesnik, however, managed to get lawyers, and they claim that the workers at the factory are owed $2.6 million in wages.

Tesla and the German manufacturing company are fighting to be removed from Lesnik’s suit and won an initial fight. Tesla responded lengthily to Lesnik’s suit saying that they were looking at ways to take action against the problem and would implement future measures that would ensure that even the subcontractors would stick to rules and regulations.

Tesla also stated that the issue was not a legal issue but rather a moral one, and the contractor was obligated to work according to the laws. Tesla repeatedly asserts that they are not at fault.