Former Tesla Employee Victimized by N-Word Wins Big Arbitration Award

Author: David B. Weisenfeld, XpertHR Legal Editor

August 10, 2021

Tesla must pay $1 million to a former employee who claimed two supervisors called him the N-word and that his complaints about the conduct were ignored, an arbitrator has ruled. The award included $100,000 in emotional distress damages.

Large discrimination awards are unusual in arbitration, making this case particularly notable. Plaintiffs' attorneys have fought vigorously to oppose the use of mandatory arbitration clauses as a condition of employment for precisely that reason.

But arbitrator Elaine Rushing found "widespread use of the N-word" at Tesla's Northern California factory. She noted that Melvin Berry had received positive job performance reviews but that he was written up after confronting one supervisor about his use of the N-word. Rushing described the conduct as "sufficiently severe or pervasive to alter the terms of [Berry's] employment" and said it created a racially hostile work environment.

Case law is clear that one instance of a supervisor directing the N-word at a subordinate is enough to constitute severe harassment, the arbitrator added. "No other word in the English language so powerfully or instantly calls to mind our country's long and brutal struggle to overcome racism and discrimination against African Americans," she explained in finding the electric carmaker strictly liable for the supervisors' conduct.

The arbitrator also ruled in the employee's favor on his constructive discharge claim, holding there was ample evidence that a reasonable person in Berry's position had no choice but to resign. She found that each of his complaints were ignored and that, in one instance, he was forced to work longer hours and to push a heavier cart around. Berry left his job after 17 months.

Tesla denied the claims and said there was no evidence that Berry had complained to HR. The company currently is facing three lawsuits, including a class action, involving the alleged use of the N-word and other racially tinged incidents.

The arbitrator reached her decision in May, but the ruling was confidential and did not come to light until a court filing last week to enforce the arbitrator's order, first reported by Bloomberg.