Tesla has agreed to enter settlement negotiations with a federal agency that sued the electric car maker over allegations of racial harassment at its California factory.
Court documents filed Tuesday show Tesla will participate in private mediation with the US Equal Employment Opportunity Commission. The two parties expect to choose a mediator soon, with talks scheduled for March or April.
Should mediation fail to produce an agreement, lawyers said they’ll submit a proposal to the court by June 17, 2026, outlining how to proceed with the lawsuit.
The federal agency filed suit against Tesla in 2023, claiming Black workers at the Fremont factory experienced ongoing racial harassment. The complaint also alleges company leaders retaliated against employees who raised concerns about the treatment.
This isn’t the first attempt at resolution
Tesla and the commission already went through mandatory mediation back in June 2023, but those talks didn’t work out. Neither Tesla nor the employment commission provided comment when contacted.
The case number is US Equal Employment Opportunity Commission v. Tesla, 3:23-cv-04984, filed in federal court in Northern California.
When the commission first brought the lawsuit, it accused the Austin-based automaker of creating a hostile environment for racial minorities at the California plant. Black workers faced severe and persistent racial harassment, according to the complaint. Company officials then punished workers who complained about what was happening.
Tesla disclosed it was under federal investigation in an April 2022 filing with regulators. That probe came before California’s civil rights agency filed its own separate lawsuit accusing Tesla of turning a blind eye to rampant racism against Black workers at Fremont and other facilities statewide.
Allegations Going Back to 2015
According to the federal suit, problems at the Fremont plant go back to at least 2015. Non-Black workers regularly used racial slurs and made monkey noises, the commission claimed. Managers sometimes addressed Black employees—both individually and as a group—using the N-word. Workers encountered racist graffiti around the workplace, including nooses and swastikas drawn on desks, in elevators, and even on vehicles moving down the production line.
The commission wants the court to prohibit Tesla from subjecting Black workers to racism and retaliation or maintaining a hostile workplace. It’s seeking financial compensation for workers’ emotional distress and lost wages, either through back pay or reinstatement.
The federal case was filed in Oakland, California.
California’s civil rights agency has made similar claims, saying Tesla ignored years of employee complaints about racial slurs at the plant where the company builds its Model S, X, 3, and Y cars. Tesla’s defense in court argues the state overstepped its authority and “uses litigation as a bullying tactic and to advance its turf war” with the federal commission. That state case, filed last year, remains pending.
