Tesla CEO Elon Musk has been urged by a group of Democratic Senators to end the company’s use of forced arbitration clauses in employee and customer contracts. The senators, including Richard Blumenthal, Sherrod Brown, Dick Durbin, Ed Markey, Jeff Merkley, Bernie Sanders, and Elizabeth Warren, claim that such clauses have allowed workers’ complaints of racist discrimination and other bad working conditions to remain hidden from public view.

Forced Arbitration Clauses Obscure Important Details

The senators also claim that forced arbitration clauses in customer contracts have similarly obscured important details about Tesla’s vehicle safety and business practices from the public. They suggest that the public deserves the full record of safety complaints about Tesla vehicles, including consumer complaints of phantom braking.

Lawmakers Demand Detailed Information from Tesla

As well as calling on Tesla to end arbitration clauses in employee and consumer contracts and to stop filing motions to compel arbitration in court, lawmakers have demanded detailed information from the company on its arbitration practices. This includes how many racial harassment, discrimination, and retaliation complaints Tesla has received from workers since 2012, how many were settled or went to arbitration, and the same details about sexual harassment complaints from Tesla workers. Additionally, lawmakers have asked for more information on when Tesla added the ability for consumers to opt out of forced arbitration and how many have been able to do so historically.

Consumer advocate Paul Bland, executive director at Public Justice, said that mandatory arbitration is a common practice among new- and used-car dealerships. However, Tesla makes and sells its cars directly to consumers, so its forced arbitration clauses cover more than the norm where auto sales are concerned.

Bland said, “It makes a lot of sense to me that senators would focus on this. Tesla uses arbitration clauses as a tactic to shunt people into a forum that’s pretty rigged for the corporation.” Bland views arbitration as a secretive system that makes it harder for consumers to find out what happened to people in previous related cases. Furthermore, arbitration makes it harder for consumers to form class action lawsuits or even to make informed choices about where they want to take their business.


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