[US] Salaries Cut And Workers Furloughed As Tesla Manage Pandemic Costs


 
15 APR 2020

On April 13, Tesla will cut the wages for all salaried employees in the US and place hourly workers on unpaid leave if they cannot work at home during the coronavirus pandemic, The Verge reports. This according to an internal email the publication had access to.

Salaried employees at or above the vice-president level will have their pay cut by 30 per cent, according to the email (a fact first reported by Electrek). Directors and above will have their pay cut by 20 per cent. All other employees will be hit by a 10 per cent pay cut, and Tesla says workers outside the US will see “comparable reductions.” The pay cuts will last through the second financial quarter, which ends in June. (Link via original reporting)

At present, it is reportedly unclear how many hourly workers will be placed on unpaid leave. But it is likely a significant number, as Tesla said that anyone who cannot work from home and has not been given “critical work” to do at one of the company’s facilities will be affected by the furlough. Tesla employs around 50,000 people worldwide. There is no specific mention of CEO Elon Musk in the email. 

Valerie Capers Workman - Tesla’s North American HR boss - said in the email that these workers will get a specific notice via email with “additional instructions on how to apply for unemployment benefits through [their] state agency,” and that “[f]or the vast majority of furloughed employees, unemployment benefits will be roughly equivalent to normal take-home pay.” They will “remain an employee of Tesla (without pay)” while on furlough, and keep their healthcare benefits. (Quotes via original reporting)

Tesla temporarily shut down its electric car factory in California on March 23, along with its solar panel factory in New York. Additionally. the company has already made a “more than 75 per cent” reduction in its workforce at the Nevada Gigafactory, where it makes batteries and some parts for the Model 3. (Links via original reporting)

But many of those workers were on paid leave, at least until the new pay cuts and furloughs were announced on Tuesday. And Ms Workman said in her Tuesday email that the company won’t resume production at its US facilities until at least May 4, which is the earliest the furloughed workers will be called back. California’s stay-at-home order is currently in place until May 3, but can be extended.

“We know that the uncertainty has not been easy, and we are doing everything we can to keep you safe and informed while also navigating the changes around the world,” Workman wrote in the email. The pay cuts and furloughs are part of a “broader effort to manage costs,” she said. “This is a shared sacrifice across the company that will allow us to progress during these challenging times.”

Legacy automakers are reportedly taking similar actions as they head into what is expected to be a far worse second quarter for new vehicle sales. Nissan and Honda announced tens of thousands of hourly factory workers were being put on furlough, hours before Ms Workman’s email. 

Hi Everyone,

Thank you for your continued commitment to Tesla and our mission during this unprecedented time. We know that the uncertainty has not been easy, and we are doing everything we can to keep you safe and informed while also navigating the changes around the world.

While we are continuing to keep only minimum critical operations running, we expect to resume normal production at our U.S. facilities on May 4, barring any significant changes. Until that time, it is important we take action to ensure we remain on track to achieve our long-term plans.

Starting Monday, April 13, we are implementing the below actions as part of a broader effort to manage costs. This is a shared sacrifice across the company that will allow us to progress during these challenging times.

Pay will be temporarily reduced for salaried employees.

For U.S. employees, these reductions are 30% for Vice Presidents and above, 20% for Directors and above, and 10% for everyone else.

For non-U.S. employees, there will also be comparable reductions, of which the specifics will be communicated by the local leadership team in accordance with local laws and works-councils.

These reductions are expected to be in place until the end of Q2

Employees who cannot work at home and have not been assigned to critical work onsite will be furloughed.

Under furlough, you remain an employee of Tesla (without pay) and retain your healthcare benefits. You will not report to work until the furlough ends and you are directed to return by management, which we expect to be May 4.

A furlough notice will be emailed to you in the coming days with additional instructions on how to apply for unemployment benefits through your state agency.

For the vast majority of furloughed employees, unemployment benefits will be roughly equivalent to normal take home pay.

Certain employees will be assigned to critical functions and they will continue to report onsite. Those employees will be communicated to directly by their manager or HR partner.

For the merit review cycle:

Salary and hourly rate adjustments will be put on hold.

Equity grants will be on hold as well.

If you would like to take a voluntary leave of absence, as some have reached out to request, please discuss with your manager and HR partner.

We continue to monitor the situation closely, and our top priority is to ensure the safety of our employees. As usual, for those who are onsite, if you are sick or are uncomfortable coming to work, please contact your manager and stay at home.

We respect your decision and you will not be penalized. For HR-related questions, contact your HR partner or email [email address removed]

Thank you all so very much for everything you do to ensure the success of our company.