Tesla Overtime Lawsuit Reaches $1M Settlement

A settlement has been reached in a Tesla overtime lawsuit filed by car sales advisers, alleging that the company failed to provide breaks and pay overtime.

Tesla and a group of car sales advisers reached this $1 million settlement deal in a Tesla overtime lawsuit which alleges that the automotive company failed to provide rest and meal breaks and failed to pay overtime.

The proposed settlement would pay $550,000 of the settlement fund to Class Members. Named plaintiffs would be awarded $30,000 in incentive awards under the proposed settlement. The proposed settlement fund would also cover a $37,500 payment under California’s Private Attorney General Act.

Legal counsel for the plaintiffs would be allowed to apply for up to 33 percent in attorneys’ fees plus $20,000 in court costs. Any funds left over after initial payments would be distributed to Class Members based on weeks worked during the class period. No amount of the settlement fund would revert to Telsa.

The settlement was reached amid uncertainty over a U.S. Supreme Court decision which may jeopardize the proposed Class’ standing. A pending lawsuit, Epic Systems Corp. v. Lewis, will determine whether employees are bound by class action waivers signed in their employee agreements. Tesla has previously argued that the owner and sales advisers are bound by class action waiver they signed at the beginning of their employment with the company.

“Should the United States Supreme Court uphold class action waivers contained in arbitration agreements, each individual Tesla class member would have to initiate his or her own arbitration to seek recovery for the claims brought in this complaint,” the settlement motion states. “The uncertainty of the outcome of the case was a prominent factor in reaching the settlement.”

The Supreme Court issued its decision in Epic Systems on May 21, upholding class action waivers in employment agreements.

To avoid the risk of each Class Member having to file their own Tesla overtime lawsuit, the group of owner and sales advisers agreed to a settlement less than a year after they filed their original complaint.

The class action Tesla overtime lawsuit claimed that the car manufacturer violated California law by classifying their owner and sales advisers as exempt from overtime. In California, commission-based salespeople are exempt from overtime only if they make 1.5 times the minimum wage and earn more than half of their compensation from commissions.

The Tesla employees in the class action Tesla overtime lawsuit claim that, because Tesla pays commissions at a set dollar amount, they cannot be classified as exempt commission based employees.

The plaintiffs originally sought to represent a Class of owner and sales advisers who worked for California Tesla dealerships from June 2013 to the present. The class action Tesla overtime lawsuit seeks compensatory damages, statutory and civil penalties, restitution, court costs, and attorneys’ fees.

The Class Action Tesla Overtime Lawsuit is Case No. 3:17-cv-03763 in the United States District Court for the Northern District of California.

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