Last week, Tesla terminated hundreds of employees for performance. The actual number has not been released, but estimates range from 400 to 1,200 people. Regardless of the actual number, that's a lot.
Usually, when companies terminate large numbers of people, they do so as part of a reduction in force or a layoff. Tesla is quite emphatic, according to the Mercury News, that this is not a layoff. In fact, a Tesla spokesperson said that they had not reported the terminations to California's Employment Development Department, which the law requires in cases of layoffs of more than 50 employees.
Laid off or fired? What's the difference?
Typically, when someone is laid off, it's a recognition of either a business failure or a business reorganization. We say it's not the person who is being terminated, it's the position that is being eliminated, and the person is simply the unlucky one who happened to be sitting in that spot. Now, of course, if you have to terminate someone in relation to a position elimination, you pick the lowest performer, but there are certainly situations where a top performer can be the victim of a layoff. Once the person is terminated, the position remains unfilled. (This, of course, is a bit simplified, as there can be bumping rights, and reorganizations, and the like.)
In a firing, the person is terminated because of performance. Generally, the position is filled. And these people have to answer yes to that horrible question of whether they've ever been "fired" or not. There are many different reasons for firing someone. Tesla says these are performance related, not layoffs.
What about severance?
U.S. law doesn't require severance payments when people are terminated unless they have a specific contract. However, under the Worker Adjustment and Retraining Notification (WARN) Act, when companies terminate a large number of employees at once, they either have to give notice or pay out a 60-day-notice period.
While WARN typically applies to layoffs and not firings, I confirmed with employment attorney Daniel Schwartz that WARN applies for any termination other than for "cause, quits, or retirements." Cause is not poor performance--it's generally things like stealing, watching pornography at work, or fighting. It's not that you just aren't the best at your job.
WARN kicks in when you terminate more than 500 people or over 50 but at least 33 percent of a particular worksite. Because Tesla has been unclear about the exact numbers terminated, it is unclear as to whether or not the federal law applies here.
California has its own law that requires notification at 50 employees, regardless of the percentage. Tesla believes they are not subject to this.
Was it really a performance issue?
While it's strange to terminate so many people at once for performance issues, it's not unheard of. Other companies eliminate the bottom performers regularly. This means that you can be good at your job, but if everyone else is better than you are, you can find yourself terminated.
A Tesla spokesperson said
Like all companies, Tesla conducts an annual performance review during which a manager and employee discuss the results that were achieved, as well as how those results were achieved, during the performance period. This includes both constructive feedback and recognition of top performers with additional compensation and equity awards, as well as promotions in many cases. As with any company, especially one of over 33,000 employees, performance reviews also occasionally result in employee departures. Tesla is continuing to grow and hire new employees around the world.
Some employees, according to the LA Times, are claiming this was retaliation for union activities and reporting safety violations.These are very serious allegations.
What if this happens to you?
First of all, you should never assume that your job is safe.You should always keep your resume up to date and keep a copy of your latest performance review at home. Many employees in this situation are saying that they received good reviews and had no reason to suspect their jobs were in jeopardy. This may be true, but it's hard for you to prove to a new employer if you don't have an actual copy of your review. State laws vary on what an employer is required to provide you after you've left the company--voluntarily or involuntarily.
When you look for a job, you should emphasize that you were part of a mass termination and not an individual termination. When hundreds are let go at once, it's far more likely that you were a good employee who got caught up in a sweep than a bad employee who had been coached and prodded for months before management gave up and terminated you.
If you believe that you were terminated unfairly or illegally, contact an employment attorney immediately. And, finally, don't sign any documents until you understand and agree with them. Take them to an employment attorney for review.