Labor Takes Aim at Tesla in Private Letter to CA Dems

UAW pushes lawmakers to curb green car rebates for companies that don’t 'respect workers' rights' amid face-off with Elon Musk

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September 14, 2017

Labor unions are pressuring California lawmakers to curb tax breaks on electric vehicles in an effort to punish Tesla Motors for resisting a unionization campaign.

The California Labor Federation, an AFL-CIO affiliate and one of the state's most influential labor organizations, asked top Democrats to include budgetary language that would restrict tax breaks based on a company's labor practices in a letter obtained exclusively by the Washington Free Beacon. The September 12 letter, addressed to the chairs of the Senate and Assembly budget committees, urges lawmakers to approve AB 134 and SB 119, which would require "clean vehicle manufacturers to be certified as fair and responsible employers in order to be eligible for consumer rebates."

"Public investments should reflect our values—companies who benefit from public dollars should follow the law and respect workers' rights," the letter says. "The State of California has invested hundreds of millions of dollars in rebates … we must consider whether public resources should support companies where workers face economic insecurity and threats to their rights."

The letter comes as United Auto Workers (UAW) attempts to unionize Tesla's Fremont factory, which employees more than 10,000 workers, according to a company spokesman. The campaign has been bitterly contested, according to workers at the factory. Jose Moran, a UAW supporter and line worker at the company for more than four years, said the workplace is rife with "preventable injuries," "mandatory overtime," and confidentiality agreements "that threatens consequences if we exercise our right to speak out" in a February post on Medium.

"Injuries, poor morale, unfair promotions, high turnover, and other issues aren't just bad for workers — they also impact the quality and speed of production. They can't be resolved without workers having a voice and being included in the process," he wrote.

Neither the UAW nor the California Labor Federation returned request for comment.

Workers and the UAW have filed 11 unfair labor practice complaints against the company since 2011. Six of those charges have been withdrawn or dismissed. In August, the National Labor Relations Board (NLRB), which oversees labor disputes and union elections, opened an investigation into the company over five charges filed in 2017. Those complaints allege the company has threatened employees over supporting the union and failed to address worker concerns over worker safety.

"[Tesla] violated the [National Labor Relations Act] by intimidating, creating the appearance of surveillance, and conducting surveillance on [redacted] and others for their union activities," a charge filed by an employee in April says. "[Tesla] through its agency violated the Act by instructing employees that they were not allowed to pass out any literature unless it was pre-approved by the employer."

Tesla has denied the allegations as "baseless" and "entirely without merit." An attorney representing the company declined to comment, while a Tesla spokesman said the company is sticking by a statement issued after news of the NLRB investigation broke. The spokesman declined to comment on the union-backed legislation.

"Faced with declining membership, an overwhelming loss at a Nissan plant earlier this month, corruption charges that were recently leveled against union leaders who misused UAW funds, and failure to gain traction with our employees, it's no surprise the union is feeling pressured to continue its publicity campaign against Tesla," the statement said.

Demand for Tesla's luxury electric vehicles, which cost between $50,000 and $140,000, peaked in 2016 when the company sold 47,185 cars in the United States, according to estimates from Sales, however, have slowed with the company selling an estimated 16,000 vehicles in the first five months of 2017. Green energy tax breaks play a large role in driving sales, but the company will soon lose out on that benefit after reaching the 200,000-vehicle limit. The $7,500 federal tax break is expected to fall to $3,750 in April 2018 before being phased out entirely in April 2019, according to SeekingAlpha.

California has one of the most generous state rebates for electric vehicles, offering a $2,500 tax break for buyers, the third highest rebate in the nation, though the program is capped at individuals who earn $150,000 and families with $300,000 income. Tesla failed to convince lawmakers to pass a $3 billion rebate program for electric vehicles that would have boosted rebates for more expensive cars. The union campaign would further hurt the company and put workers at risk of seeing their jobs cut, according to auto-industry consultant Edward Niedermeyer.

"Demand for Models S & X have been slowing," he said. "Tesla has had to offer pretty significant discounts on its cars to keep its sales volume up, which suggests that any reduction in credits will affect demand."

He considers the Tesla factory more vulnerable to a UAW campaign, despite the union's recent high-profile losses in right to work states, such as Tennessee and Mississippi. Organized labor's large footprint in the state could help boost its reputation among the workforce. The location of the factory, as well as its past union affiliation could also tilt the scales in the UAW's favor.

"Tesla's Fremont plant used to be a UAW shop, so there are former UAW members around who can form the kernel of an organizing drive," he said. "California's more liberal population gives the UAW a base of support that it didn't have in the South."

California's labor organizations intend to maintain the pressure on the automaker as California concludes its budget debate, calling the rebate reforms "an opportunity we must not miss."

"We should not allow once middle class automotive jobs to be replaced by jobs that are temporary or dangerous," the letter says. "The proposed budget bill language is an opportunity we must not miss to protect workers and incentivize good labor practices in an emerging economy that is critical to the future of our state and our planet."

Lawmakers have until Friday to pass the legislation before the legislature adjourns for recess.