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Elon Musk's SpaceX shortchanged its workers and now it must pay

SpaceX CEO Elon Musk at the unveiling event of the Dragon V2 in Hawthorne, California, May 29, 2014
Mario Anzuoni | Reuters
SpaceX CEO Elon Musk at the unveiling event of the Dragon V2 in Hawthorne, California, May 29, 2014

Silicon Valley workers are famously well-compensated: At Amazon, Apple, Facebook, Google and numerous other tech companies, even interns earn more per month than the average American. But two of America's hottest companies are conspicuously absent from the list of the country's most generous employers: Tesla, in Palo Alto, Calif., and SpaceX, in Hawthorne, Calif., both run by billionaire Elon Musk.

In 2014, a handful of former employees claiming unfair compensation brought suits against SpaceX that California courts joined into one class action lawsuit. The company agreed to settle in August 2016 and finalized a settlement for about $4 million in May, according to Inverse. Although one of the litigants sought to block the settlement, he lost.

According to a SpaceX company spokesman, "We deny the claims made by these employees, but rather than incur the expense, burden and uncertainty of continuing litigation, we elected to settle this matter so that we can continue to focus on our business."

A SpaceX rocket sits on launch pad 39A as it is prepared for the NROL-76 launch on April 29, 2017 in Cape Canaveral, Florida.
Getty Images
A SpaceX rocket sits on launch pad 39A as it is prepared for the NROL-76 launch on April 29, 2017 in Cape Canaveral, Florida.

Roughly 4,000 current and former employees had the option of participating, and each one who did will get about $500 or as much as $2,000. Their lawyers, meanwhile, will walk away with $1.3 million.

Inverse explains:

California law requires rest periods for employees every four hours, along with breaks for meals. SpaceX's shifts were designed such that workers couldn't take these breaks, but were also not paid more for working these hours instead of resting.

Legal blog Law360 goes into more detail about the original complaints:

In April 2015, named plaintiff Sebring Whitaker filed his own suit, also alleging that SpaceX didn't adequately pay him and similar nonexempt employees for normal and overtime work and didn't adequately provide required meal and rest breaks.

And in October, named plaintiff Stan Saporito filed his own suit alleging the company doesn't provide enough labor hours to its workers for everything that needs to get done, then requires them to work off the clock to finish tasks.

It's doubtful that a $4 million payout will compel Musk to change much about how he runs his businesses. But at some point the market might do that for him. If he continues to pay his SpaceX interns only half of what Facebook does — about $4,000 a month as compared to the $8,000 a month Zuckerberg's most junior employees make, according to the anonymous employer ranking site Glassdoor — he could lose talented prospects to companies in Silicon Valley.

Indeed, a full-time SpaceX employee, who enthuses about the "dynamic work," "great people" and benefits on Glassdoor, mentions "base salary" as a drawback, saying it "could be more competitive."

But the allure of working for one of the boldest and most cutting-edge employers in the world remains. The company made Glassdoor's 2017 list of the Best Places to Work. SpaceX has a positive 4.4 rating out of 5 on the site, and its CEO has an approval rating of 98 percent. As one SpaceX intern writes, "Everyone is a fanboy and Musk's word is law."

Editor's Note: On May 19, this article was updated with corrections and a statement from a SpaceX company spokesman.

See also: What it's like being an intern at Elon Musk's SpaceX and Tesla