Tesla Accused of Exploiting Cheap Labor to Make Its Factories A contractor allegedly took advantage of foreign workers to build Tesla's U.S. facilities.

By Jon Fingas

This story originally appeared on Engadget

Jonathan Weiss | Shutterstock.com

Tesla may pride itself on making the world a better place through eco-friendly electric cars, but it's not immune to ethical concerns. Mercury News has discovered that at least one of Tesla's contractors has been using sub-contracted, low-paid labor (as little as $5 per hour) from eastern Europe to work on the automaker's facilities.

The partner companies have avoided offering overtime pay and even compensation for injuries -- one man is suing his employers after he fell three stories while working on a Tesla paint plant in Fremont. The practices let those contractors finish crucial factory work at a fraction of the cost of using American labor, which could cost as much as $52 per hour for similar tasks.

Tesla initially downplayed the findings. In a statement, it maintained that its work agreements require contractors to "hire and pay their workers appropriately" while saying little about its own responsibility. However, CEO Elon Musk is very much the hands-on sort. He tells his Twitter followers that he only just learned about this exploitation, and that he plans to "investigate and make it right." Don't be surprised if Tesla has better oversight of its contractors going forward.

To some extent, the problem rests in the U.S. visa system. While it's easy for officials to verify that temporary workers are going home at the end of their stints, it's difficult to make sure that workers are doing what their visa says they're doing -- let alone that they're being paid well. Tesla isn't alone among tech companies facing labor issues, and it certainly bears some responsibility in caring for its contracted workers, but it may need help from the government to minimize labor abuses.

Update: Tesla has written a blog post explaining its views. It stresses that government regulators cleared it of wrongdoing, but it also vows to "take care" of underpaid and injured workers. The company doesn't want the "wrong thing to happen" just to save a few bucks, it says.

Jon Fingas is an associate editor at Engadget.

Want to be an Entrepreneur Leadership Network contributor? Apply now to join.

Fundraising

22 Cap Table Red Flags That Can Derail Your Fundraising (and How to Fix Them)

A poorly structured cap table is a silent killer of fundraising efforts. Here are some common red flags that can cost you valuable investments.

Business Ideas

70 Small Business Ideas to Start in 2025

We put together a list of the best, most profitable small business ideas for entrepreneurs to pursue in 2025.

Leadership

How to Set Goals That Stick — A Manager's Guide to Building Accountability

Effectively setting goals isn't as simple as writing down a target and praying you and your team hit it. It requires accountability, clarity and collaboration.

Growing a Business

What Small Businesses Can Learn from Yelp's Trend Tracker

How Yelp's trend expert helps small businesses thrive by leveraging Yelp Trend Tracker insights, fostering community-focused engagement and embracing data-driven strategies to stay ahead of evolving consumer preferences.

Business News

'I Can't Get Everyone to Move Here': Why Airbnb's CEO Is Sticking With a Once-a-Month Hybrid Schedule

Airbnb gives all its employees the freedom to work from home or the office, but there's a catch.