Tesla Inc. (NASDAQ:TSLA) is facing a proposed class action in federal court accusing the electric vehicle maker of favoring foreign visa holders over U.S. citizens in hiring and firing decisions, a practice plaintiffs allege allows the company to pay lower wages.
Tesla shares were up 7.36% during Friday's regular session and down 0.0.99%, according to Benzinga Pro.
Lawsuit Filed In San Francisco
The lawsuit, filed Friday in San Francisco federal court, claims Tesla systematically discriminates against American workers in violation of civil rights law, reported Reuters.
According to the complaint, Tesla hired an estimated 1,355 H-1B visa holders in 2024 while laying off more than 6,000 domestic employees, "the vast majority" believed to be U.S. citizens.
Plaintiffs Scott Taub, a software engineer and Sofia Brander, a human resources specialist, say they were denied interviews at Tesla after disclosing they did not require sponsorship.
Taub said he was told one position was "H1B only," while Brander alleged she was passed over despite previously working for Tesla as a contractor.
The complaint argues that Tesla prefers H-1B visa workers because they can be paid less than U.S. employees for equivalent work -- a practice the plaintiffs call "wage theft."
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Elon Musk Defends Visa Program
The lawsuit points to a December 2024 post on X, formerly Twitter, by Tesla CEO Elon Musk, a naturalized U.S. citizen who once held an H-1B visa.
At the time, Musk posted, "The reason I’m in America, along with so many critical people who built SpaceX, Tesla and hundreds of other companies that made America strong, is because of H1B."
Lawyers for the plaintiffs said the case could affect thousands of U.S. workers who either applied for Tesla jobs and were not hired or were laid off while visa holders remained.
Corporate Context And Political Climate
The lawsuit comes as corporate hiring practices face heightened political and legal scrutiny.
President Donald Trump has barred diversity, equity and inclusion programs for federal contractors, prompting major corporations, including Coca-Cola (NYSE:KO), PepsiCo (NASDAQ:PEP), Meta Platforms, Inc. (NASDAQ:META) and Amazon.com, Inc. (NASDAQ:AMZN) to scale back initiatives.
Meanwhile, Costco reaffirmed its DEI policies after unanimous shareholder support.
Tesla's Financial Headwinds
The lawsuit also lands during a period of financial pressure for Tesla.
The company reported second-quarter 2025 revenue of $22.5 billion, down 12% year-over-year and short of analyst expectations.
Tesla said it began early production of a more affordable model in June, with volume output planned for later this year. It is also advancing the development of the Tesla Semi and Cybercab, slated for mass production in 2026.
Benzinga’s Edge Stock Rankings show that TSLA continues to trend positively over the short, medium and long term, with more detailed performance insights available here.
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Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.
