Tesla settles claim after layoffs spark legal battle: 'Resolving all matters in dispute'

A lawsuit filed by former Tesla employees over the EV manufacturer's handling of mass layoffs in 2024 was dismissed by a judge in late April, after the two sides reached a settlement.

What's happening?

According to Bloomberg Law, Judge Araceli Martinez-Olguin of the U.S. District Court in Northern California dismissed a suit filed by former Tesla employees against the EV juggernaut after the sides agreed to a settlement.

Judge Martinez-Olguin dismissed the suit with prejudice, with the agreement "resolving all matters in dispute." The suit had been filed as a class-action suit alleging that Tesla had failed to supply 14,000 employees with sufficient advance notice of a mass layoff in 2024.

Tesla is required under California law to provide 60 days' advance written notice of any layoffs, and the suit alleged the automaker failed to do that.

Terms of the settlement were not disclosed, and Judge Martinez-Olgun noted that the dismissal would not preclude other suits from being filed "in relation to the same facts."

Why is Tesla's lawsuit important?

Tesla has gotten itself into hot water in recent years over some of its labor practices. In 2023, the company was sued over allegations of racist treatment of Black employees in its Fremont, California, plant.

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It was hit with another lawsuit in 2023 over its safety score metric, alleging that the company's safe driving features unfairly inflated drivers' insurance premiums.

And, most recently, the company was sued over claims that it was manipulating odometer numbers to bypass warranty claims on its cars.

What's being done about Tesla's lawsuits?

In this case, the company was quick to settle the suit outside of court to avoid a prolonged trial, but the other suits are pending trial.

In an effort to avoid running afoul of the law again, Tesla has shifted much of its operations to Texas, where labor laws are much more favorable to corporations. However, the company remains under scrutiny for some of its practices.