When Karl H. was hired as an internal investigator at Tesla’s Gigafactory in Nevada, he expected to have to deliver some bad news. He didn’t expect to get fired for doing his job.
Unfortunately, as we’ve discussed before on this blog, retaliation against employees is apparently widespread in the high-tech industry. But, in many circumstances, such retaliation is illegal.
That’s the case with many types of whistleblowing, including reporting unlawful securities-related behavior to the Securities and Exchange Commission under the Sarbanes-Oxley Act, or SOX. The SOX specifically lays out a broad array of retaliatory actions that are prohibited and, certainly, firing a good-faith whistleblower is a violation of the SOX.
Karl was hired as an investigator first by Tesla and then, when he was allegedly retaliatorily terminated from that position, he was hired again by a third-party Tesla contractor named USSA. In both positions, he was assigned to investigate allegations of illegal activity at the Gigafactory, such as:
- That personnel, or someone posing as personnel, had stolen at least $37 million from Tesla
- That members of a drug cartel were operating a trafficking business out of the factory and may have had ties to Tesla managers, along with a DEA warning about the alleged drug activity
- That contracts were improperly awarded, including one where Tesla paid $900,000 for something that would ordinarily cost $65,000 to $75,000
- That a high-level group at Tesla was using technology to spy on workers’ emails, texts and cellphones in possible violation of federal wiretapping laws
Karl was fired by Tesla after reporting these allegations to management. He was then hired by USSA in a similar position but, after reporting additional findings to Tesla management, he was told his job was being eliminated as part of a restructuring effort. However, his position was then filled by another person.
Moreover, the lawsuit claims that Tesla CEO Elon Musk personally ordered USSA to fire Karl. Musk allegedly saw Karl working after his Tesla firing and became infuriated, demanding they take action immediately.
Karl is suing for whistleblower retaliation in violation of the SOX, breach of employment contract, and intentional interference with contractual relations. He is seeking back pay with interest, compensation for his lost wages, attorney fees and court costs, and punitive damages meant to punish the defendants for wrongdoing.
If you are considering blowing the whistle on illegal activity you’ve seen at work, it’s important to talk to an employment law attorney before you take any action. An attorney can help ensure your whistleblower complaint is filed correctly and on time to ensure you have legal protection from retaliation by your employer.