Tesla tells furloughed workers to expect a week or more of unemployment

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KEY POINTS
  • On Friday, Tesla braced its furloughed U.S. employees for at least another week of unemployment, according to an email obtained by CNBC.
  • The memo followed outbursts by CEO Elon Musk this week, including calling the current stay-at-home orders “fascist” and tweeting on Friday that Tesla shares are “too high.”
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Elon Musk, co-founder and chief executive officer of Tesla Motors.
Elon Musk, co-founder and chief executive officer of Tesla Motors.

Tesla braced its furloughed U.S. employees on Friday for at least another week of unemployment, according to a memo obtained by CNBC.

The internal communication, from Tesla’s human resources boss, Valerie Capers Workman, followed an expletive-laced outburst by CEO Elon Musk on a Wednesday earnings call during which he said Covid-19 health orders, effecting his business, were “fascist.”

Bloomberg reported on the HR memo earlier.

California Gov. Gavin Newsom said Friday that the state is “days, not weeks” away from making significant modifications to the orders to start opening the economy. In Alameda County, home to Tesla’s Fremont car plant, Tesla has been forced to keep its facility operating at a “minimum basic” level since March 24, and unable to produce new electric vehicles.

Because of the restrictions, Tesla has recently cut temp assignments, furloughed most employees, and slashed the salaries of those still working from home or deemed essential by 10% to 30%. Workman told furloughed employees in the email not to return “unless you are contacted by your manager.”

“Employees working from home or reporting on site for essential operations should continue to do so for the time being unless told otherwise by your manager,” the email said.

Meanwhile, Musk is poised to reap the first tranche of a historic stock award this month. The award is part of a compensation plan the Tesla board authorized in 2018. At the time it was granted, Tesla’s board valued the pay package at $2.6 billion. But, the 10-year stock options program could be worth over $50 billion.

The company has been sued over the plan, and its board will have to defend it in a Delaware court.

Employees who have received bonus pay in the form of equity or purchased shares of Tesla through its employee stock purchase plan will be able to sell some of their shares on Monday, because a lock-up period is ending, two employees with knowledge of the matter told CNBC. They asked not to be named since they were not authorized to speak with press on company matters.

The lock-up period was related to Tesla’s first-quarter earnings report on Wednesday.

Tesla’s stock has been extremely volatile this year, plunging 10% on Friday, after Musk tweeted, “Tesla stock price is too high imo.” Still, it’s up 69% this year, while the S&P 500 is down 12%.

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