- Tesla will cut all salaried employees' pay and will furlough hourly workers after health orders to curb COVID-19 have forced it to suspend new vehicle production.
- According to an e-mail sent to all employees, the company expects to resume production at its Fremont, California car plant on May 4.
- The pay reductions are expected to be in place until the end of the second quarter.
[Editor's note: This article was originally published on April 7, but a technical issue pushed it to our app users on April 30.]
Tesla will cut pay for all of its salaried employees and will furlough hourly workers until May 4, when it intends to resume production of electric cars, according to an internal e-mail that multiple employees shared with CNBC. The pay reductions are expected to be in place until the end of the second quarter.
Health orders, implemented to curb the spread of COVID-19, forced Elon Musk's electric car company to wind down production at its main vehicle assembly plant in Fremont, California.
The new pay cuts follow Tesla's first-quarter vehicle production and deliveries report, which pleased investors — the company said it delivered approximately 88,400 vehicles and produced 103,000 in Q1. Tesla has yet to withdraw guidance it gave investors for 2020, saying it should "comfortably exceed" 500,000 vehicle deliveries for the year.
Last week, Tesla informed staffing agencies that it would be ceasing all contract work until further notice. Hundreds of temps were dismissed from their Tesla gigs as a result.
Here is the full email sent by the company's head of North American HR, Valerie Workman, on Tuesday evening:
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+
Registered In-House Counsel
[contact information redacted]