Tesla is furloughing thousands of its employees and mandating pay cuts for most other employees.
The electric car manufacturer announced the cutbacks on Tuesday. The car company is furloughing all hourly employees who cannot work from home and cutting the pay of salaried employees. All salaried employees will receive at least a 10% cut, directors and above a 20% cut, and vice presidents and other executives a 30% cut, according to The Verge.
Tesla HR official Valerie Workman, who wrote the email, said the furloughs would remain in place until factories in California are allowed to open back up on May 4. Gov. Gavin Newsom has issued a stay-at-home order across the state until at least May 3, and may extend it beyond. Cuts to pay will remain in place through the second quarter.
It is unclear how many employees will be affected. Tesla employs about 50,000 people globally. Furloughed employees will keep their healthcare benefits through the company.
Tesla has already suspended a large portion of its manufacturing capacity in factories in California, Nevada, and New York. Until the Tuesday email, the company had been paying hourly workers, though most had been sent home because of the coronavirus. The plants have kept on skeleton crews to perform essential tasks and maintain security.
Workman said that furloughed employees would receive instructions on how to apply to receive unemployment benefits until factories are opened back up.
Below is the full text of the email sent to Tesla employees, via CNBC:
Hi Everyone,
Thank you for your continued commitment to Tesla and our mission during this unprecedented time. We know that the uncertainty has not been easy, and we are doing everything we can to keep you safe and informed while also navigating the changes around the world.
While we are continuing to keep only minimum critical operations running, we expect to resume normal production at our U.S. facilities on May 4, barring any significant changes. Until that time, it is important we take action to ensure we remain on track to achieve our long-term plans.
Starting Monday, April 13, we are implementing the below actions as part of a broader effort to manage costs. This is a shared sacrifice across the company that will allow us to progress during these challenging times.
Pay will be temporarily reduced for salaried employees.
- For U.S. employees, these reductions are 30% for Vice Presidents and above, 20% for Directors and above, and 10% for everyone else.
- For non-U.S. employees, there will also be comparable reductions, of which the specifics will be communicated by the local leadership team in accordance with local laws and works-councils.
- These reductions are expected to be in place until the end of Q2
Employees who cannot work at home and have not been assigned to critical work onsite will be furloughed.
- Under furlough, you remain an employee of Tesla (without pay) and retain your healthcare benefits. You will not report to work until the furlough ends and you are directed to return by management, which we expect to be May 4.
- A furlough notice will be emailed to you in the coming days with additional instructions on how to apply for unemployment benefits through your state agency.
- For the vast majority of furloughed employees, unemployment benefits will be roughly equivalent to normal take home pay.
- Certain employees will be assigned to critical functions and they will continue to report onsite. Those employees will be communicated to directly by their manager or HR partner.
For the merit review cycle:
- Salary and hourly rate adjustments will be put on hold.
- Equity grants will be on hold as well.
If you would like to take a voluntary leave of absence, as some have reached out to request, please discuss with your manager and HR partner.
We continue to monitor the situation closely, and our top priority is to ensure the safety of our employees. As usual, for those who are onsite, if you are sick or are uncomfortable coming to work, please contact your manager and stay at home.
We respect your decision and you will not be penalized. For HR-related questions, contact your HR partner or email [address redacted]
Thank you all so very much for everything you do to ensure the success of our company.
Valerie Capers Workman | North America HR+
AU/NZ/JP/KR
Registered In-House Counsel
[contact information redacted]