Tesla Sued By Former Workers Over Mass Layoffs: What You Need To Know

Two former Tesla Inc TSLA employees have sued the electric vehicle company over not providing the required advance notice to lay off about 10% of its workforce, Bloomberg News reported on Monday, citing a lawsuit.

What Happened: The employees who were fired this month from Tesla’s battery factory near Reno, Nevada, allege Tesla did not comply with the 60-day notification requirement under the Worker Adjustment and Retraining Notification (WARN) Act.

John Lynch and Daxton Hartsfield are among the 500 employees at the facility that were let go, as per the lawsuit filed late Sunday in Austin, Texas. 

Lynch and Hartsfield said there were not given any advance notice of the termination and are seeking class-action status for their lawsuit on behalf of others who were part of mass layoffs in May and June. 

The WARN Act makes it mandatory for companies to provide a 60-day notice before any mass layoff affecting 50 or more employees at a single site. 

See Also: Tesla Calls Off Online Hiring Drives In China After Elon Musk's Job Warning

Why It Matters: Earlier this month, Musk warned of 10% job cuts at Tesla in a company email and said he believed the U.S. is already under recession. 

Musk last week clarified that Tesla was not freezing hiring and that its “hourly headcount will increase” over the next year.

Price Action: Tesla closed 1.7% higher at $650.3 on Friday, according to data from Benzinga Pro.