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SpaceX Slapped With Wage Class Action Over Mass Layoff

43 points by ericras 12y ago

TrainedMonkey 12y ago
Here is link that goes through Google and bypasses paywall: http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CB8QFjAA&url=http%3A%2F%2Fwww.law360.com%2Farticles%2F564591%2Fspacex-slapped-with-wage-class-action-over-mass-layoff http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd...
- deleted 12y ago
  [deleted]
bnejad 12y ago
Seems like a clear wrong doing on SpaceX's side... Weird SpaceX would lay people off when by all accounts their business is doing fairly well?
- toomuchtodo 12y ago
  Elon is probably cautious about cash flow after the Tesla Motors incident: http://www.mercurynews.com/giants/ci_10727401 http://www.mercurynews.com/giants/ci_10727401
- TheHypnotist 12y ago
  According to this article ( http://www.spacenews.com/article/launch-report/41428spacex-says-%E2%80%9Cheadcount-reduction%E2%80%9D-due-to-annual-reviews-not-layoffs http://www.spacenews.com/article/launch-report/41428spacex-s... ) they were firings, not layoffs. Which may throw a wrench in their lawsuit.
  - goodJobWalrus 12y ago
    but how do you justify not paying the wages earned?
    - bnejad 12y ago
      Yeah this is really the worst part even they were actually firings.
  - georgemcbay 12y ago
    IANAL, but I don't think this is going to fly in court given that (4 times) more than 50 people were let go at once. If it looks like a layoff and quacks like a layoff, I don't think the judge or a jury is going to care what SpaceX calls it. Kind of surprised a company that is so on the ball technically would fuck something like this up; it is definitely going to end up costing them way more than 2 months severance to everyone (plus whatever they were owed -- some people claim they didn't even get that) would have.
    - gpm 12y ago
      In this case I think it might, I'm not a lawyer, but the relevant law seems to be this one (http://www.leginfo.ca.gov/cgi-bin/displaycode?section=lab&group=01001-02000&file=1400-1408 http://www.leginfo.ca.gov/cgi-bin/displaycode?section=lab&gr...), which defines layoff as > "Layoff" means a separation from a position for lack of funds or lack of work.
      - sokoloff 12y ago
        US Dept of Labor and the Federal WARN Act have specific requirements for employers over 100 employees where 50 or more are let go from a single location in a 30-day period: http://www.dol.gov/compliance/guide/layoffs.htm http://www.dol.gov/compliance/guide/layoffs.htm Doesn't matter if they're layoffs for lack of work or performance-based firings: you still have to comply with the provisions of that law. (I have no knowledge whether SpaceX did or did not comply, of course.)
        gpm 12y ago
        The article says that the suit is about a alleged "violation of California's Worker Adjustment and Retraining Notification Act.", and "The Cal WARN Act", not the Federal WARN Act. I have no knowledge of this lawsuit other then this article though.
        hga 12y ago
        The "not paying them wages earned before termination" would be a matter of state law, and with California having its own WARN Act, I presume the lawyers think it's best to sue in state court.
  - krschultz 12y ago
    Well, the company always wants to say it is a performance based firing, that reduces the company unemployment insurance liability. However, the companies don't get the final say in the matter.
    - seanflyon 12y ago
      I think fired employees are eligible for unemployment, so I wouldn't think it would effect unemployment insurance liability. As far as I am aware, you are eligible for unemployment so long as you did not chose to leave.
      - jsight 12y ago
        Fired employees are not always eligible for unemployment: http://www.nolo.com/legal-encyclopedia/unemployment-benefits-contesting-employees-claim-30348.html http://www.nolo.com/legal-encyclopedia/unemployment-benefits...
- sliverstorm 12y ago
  There's a host of possible reasons. They could have discovered they hired too many people, for example.
  - FireBeyond 12y ago
    "Oops, our bad. We're going to let you go, because we hired too many people for the amount of work we had, and on that note, since we didn't really have any work for you the last few weeks you were here, well, we're not going to pay you for that. And we're going to tell anyone, including press releases, that you were 'fired'."
- ctdonath 12y ago
  NASA is/was noted for releasing a large number of people after successful missions. Everything is going well overall, they just didn't need everyone around during long idle periods. Might presume SpaceX is doing the same: what do you do with >200 idle personnel? pay them to do nothing, or release them and hire as needed when the time comes again?
  - AYBABTME 12y ago
    R&D? Ping pong?
  - jscott0918 12y ago
    I don't think the problem is with laying off unnecessary staff. I think this is a notification and backwage issue. If someone works for you for two weeks, then gets fired, you can't just not pay them for the time worked. Also, in most states, you cannot lay off employees without cause (meaning without a specific issue with a single employees behavior or performance) without sufficient notice.
    - justin66 12y ago
      That's pretty much completely wrong, for better or worse. It's called at will employment. Edit: I wonder if the downvoters who have not bothered to comment realize that every state in the US except Montana has some form of at will employment. The person I was replying to couldn't be more wrong. (The very obvious claim about not being able to fail to pay people is of course true)
      - deleted 12y ago
        [deleted]
      - rgbrenner 12y ago
        Edit: I wonder if the downvoters who have not bothered to comment realize that every state in the US except Montana has some form of at will employment. The person I was replying to couldn't be more wrong. You're being downvoted because you're wrong. At-will employment doesn't mean you can stiff your employees on backwages. It also doesn't mean you don't need to comply with Worker Adjustment and Retraining Notification (WARN) laws, which exist in many (most?) states. At-will employment doesn't mean the employer gets to do whatever they please.
- GFK_of_xmaspast 12y ago
  Mass firings under any and all conditions is how capital works these days.
FD3SA 12y ago
Does anyone know why this layoff occurred? Was it a case of their designs maturing, and thus SpaceX no longer needing the large R&D staff they previously did? Quite curious, as they seem to be doing very well. Musk has capitalized on the Ukraine/Russian ordeal quite well, and is positioned to become a dominant force in the US Aerospace industry. Wouldn't have thought he'd be the type to let go of productive employees on a whim. He understands better than most that talent is the only resource companies have in the long run.
- krastanov 12y ago
  It happened a week after their annual review cycle. Their version is that it was just removing underperforming staff. They also claim that they plan to grow their workforce by 20% this year (the layoffs was 5% of the workforce). EDIT: Also, their RnD program is still going strong, especially so with the new engines and the plan for their 10m diameter rocket.
  - indlebe 12y ago
    >Their version is that it was just removing under performing staff. It's too bad we won't know if there was a formal employee review process in place and if these employees were aware that they were "underperforming".
- krschultz 12y ago
  The loss of up to 200 jobs at Space Exploration Technologies Corp. is due to firing of “low performer” employees as part of its annual review process, and not layoffs, the company’s president said July 26. [1] That sounds like trying to dodge officially having a layoff, or pretty shitty company culture. I wonder what other SpaceX employees think of the matter. I didn't see much news about it. [1] http://www.spacenews.com/article/launch-report/41428spacex-says-%E2%80%9Cheadcount-reduction%E2%80%9D-due-to-annual-reviews-not-layoffs http://www.spacenews.com/article/launch-report/41428spacex-s...
  - bostonvaulter2 12y ago
    Is there something inherently wrong with firing "low performers" rather than laying them off?
snitko 12y ago
SpaceX doesn't owe anything to you unless it signed a contract that says it has to employ you for this amount of time. I don't understand neither laws, nor the people who would foster such lawsuits. That's using government to steal someone else's money because you feel it's unfair that they laid you off.
- dragonwriter 12y ago
  > SpaceX doesn't owe anything to you unless it signed a contract that says it has to employ you for this amount of time. I don't understand neither laws, nor the people who would foster such lawsuits. If they agreed to employ you in a state, they agreed to do so under the laws of the state. Even if you don't understand the laws, you should be able to understand that the existence of laws providing various protections is part of the context in which people agree to accept employment from a particular employer, in a particular place, and under particular payment terms. Employers certainly consider the legal environment when they choose to employ people in a particular location, and when they decide on the terms of employment.
  - snitko 12y ago
    I was trying to argue from a moral point of view. The existence of state, which itself is an immoral institution, doesn't justify the absurdity of the idea to demand being employed.
    - genwin 12y ago
      But no one in the article demanded to be employed.
      - snitko 12y ago
        As far as I understand, people demand money for being laid off. It's essentially the same.
    - cma 12y ago
      If you made your contract with that law as the understanding, you might have demanded more if the protection wasn't there.
bellerocky 12y ago
Do the affected employees know they're in a bad state? Would be courtesy to let them in on their low performance so that they can make a job change before they are "terminated with cause" as that never looks good for future employment. Are they put on a performance improvement plan? It sounds pretty fucked up.
avz 12y ago
(Only tangentially related) If you're a space exploration nerd working in the space industry you'll realize one day that your salary and benefits are space exploration costs. This produces the following dilemma: Accept a small pay and benefits. Space exploration costs go down. More space exploration is done per dollar. Demand a good salary and benefits. Space exploration costs go up. Less space exploration gets done per dollar. Damn it.
- AndrewKemendo 12y ago
  The ROI on space exploration (currently) is terrible and the only tangible near term solution to that dilemma is asteroid harvesting. That is why SpaceX is predominantly about getting government contracts - outside of satellites (GEO and down) there isn't much economic incentive for humanity. Look, manned spaceflight is cool and there are some really bad ass ideas about space exploration, but the reality is that there really isn't that much in it for us. Our bodies are fundamentally not suited for space travel - so much so that the bulk of on-board systems are life support, making anything else a small portion. What are the goals anyway? I have heard many things like: having a second habitable home for humanity in case (X) happens, or exploration for its own sake. None of these are particularly compelling given the economics behind them. I certainly wouldn't pass up the chance to go to space, but I think it is not where humanity should be putting its energy.
  - hga 12y ago
    "SpaceX is predominantly about getting government contracts" Doesn't sound like they're very successful, then, per Wikipedia, "As of December 2013, SpaceX has a total of 50 future launches under contract, two-thirds of them are for commercial customers." Now, the article goes on to talk about their efforts to get validated for military launches, and in the relevant article (https://en.wikipedia.org/wiki/Evolved_Expendable_Launch_Vehicle https://en.wikipedia.org/wiki/Evolved_Expendable_Launch_Vehi...) it says "On July 11, 2014, the DoD certified the Falcon 9 rocket as an EELV launch vehicle.", so we can expect as of late 2016 for them to have more government launches. While NASA et. al. get most of the publicity, the numbers show a significant market for commercial launches. Especially, I would imagine, if SpaceX ends up being both cheaper and more reliable, as they have promise to be.
ChuckMcM 12y ago
Two comments: First when any 'vulnerable' company does anything at all out of the ordinary you can see this. SpaceX is vulnerable because they trade on their reputation. Legal extortion is not all that uncommon so it is not necessarily true that the lawyers think they can win, but they may feel they can get a settlement of some sort. Perhaps one of the lawyers in the gallery will chime in. Second, the laws apply differently in different states. California is an 'at will' state which means you really can be tossed for any non-protected reason at any time (not true if you have a labor contract). But SpaceX employs people in Texas and Florida as well.

43 points by ericras 12y ago

Here is link that goes through Google and bypasses paywall: http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&ved=0CB8QFjAA&url=http%3A%2F%2Fwww.law360.com%2Farticles%2F564591%2Fspacex-slapped-with-wage-class-action-over-mass-layoff http://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd...

deleted 12y ago
[deleted]

bnejad 12y ago

Seems like a clear wrong doing on SpaceX's side... Weird SpaceX would lay people off when by all accounts their business is doing fairly well?

toomuchtodo 12y ago
Elon is probably cautious about cash flow after the Tesla Motors incident: http://www.mercurynews.com/giants/ci_10727401 http://www.mercurynews.com/giants/ci_10727401
TheHypnotist 12y ago
According to this article ( http://www.spacenews.com/article/launch-report/41428spacex-says-%E2%80%9Cheadcount-reduction%E2%80%9D-due-to-annual-reviews-not-layoffs http://www.spacenews.com/article/launch-report/41428spacex-s... ) they were firings, not layoffs. Which may throw a wrench in their lawsuit.
- goodJobWalrus 12y ago
  but how do you justify not paying the wages earned?
  - bnejad 12y ago
    Yeah this is really the worst part even they were actually firings.
- georgemcbay 12y ago
  IANAL, but I don't think this is going to fly in court given that (4 times) more than 50 people were let go at once. If it looks like a layoff and quacks like a layoff, I don't think the judge or a jury is going to care what SpaceX calls it. Kind of surprised a company that is so on the ball technically would fuck something like this up; it is definitely going to end up costing them way more than 2 months severance to everyone (plus whatever they were owed -- some people claim they didn't even get that) would have.
  - gpm 12y ago
    In this case I think it might, I'm not a lawyer, but the relevant law seems to be this one (http://www.leginfo.ca.gov/cgi-bin/displaycode?section=lab&group=01001-02000&file=1400-1408 http://www.leginfo.ca.gov/cgi-bin/displaycode?section=lab&gr...), which defines layoff as > "Layoff" means a separation from a position for lack of funds or lack of work.
    - sokoloff 12y ago
      US Dept of Labor and the Federal WARN Act have specific requirements for employers over 100 employees where 50 or more are let go from a single location in a 30-day period: http://www.dol.gov/compliance/guide/layoffs.htm http://www.dol.gov/compliance/guide/layoffs.htm Doesn't matter if they're layoffs for lack of work or performance-based firings: you still have to comply with the provisions of that law. (I have no knowledge whether SpaceX did or did not comply, of course.)
      - gpm 12y ago
        The article says that the suit is about a alleged "violation of California's Worker Adjustment and Retraining Notification Act.", and "The Cal WARN Act", not the Federal WARN Act. I have no knowledge of this lawsuit other then this article though.
        hga 12y ago
        The "not paying them wages earned before termination" would be a matter of state law, and with California having its own WARN Act, I presume the lawyers think it's best to sue in state court.
- krschultz 12y ago
  Well, the company always wants to say it is a performance based firing, that reduces the company unemployment insurance liability. However, the companies don't get the final say in the matter.
  - seanflyon 12y ago
    I think fired employees are eligible for unemployment, so I wouldn't think it would effect unemployment insurance liability. As far as I am aware, you are eligible for unemployment so long as you did not chose to leave.
    - jsight 12y ago
      Fired employees are not always eligible for unemployment: http://www.nolo.com/legal-encyclopedia/unemployment-benefits-contesting-employees-claim-30348.html http://www.nolo.com/legal-encyclopedia/unemployment-benefits...
sliverstorm 12y ago
There's a host of possible reasons. They could have discovered they hired too many people, for example.
- FireBeyond 12y ago
  "Oops, our bad. We're going to let you go, because we hired too many people for the amount of work we had, and on that note, since we didn't really have any work for you the last few weeks you were here, well, we're not going to pay you for that. And we're going to tell anyone, including press releases, that you were 'fired'."
ctdonath 12y ago
NASA is/was noted for releasing a large number of people after successful missions. Everything is going well overall, they just didn't need everyone around during long idle periods. Might presume SpaceX is doing the same: what do you do with >200 idle personnel? pay them to do nothing, or release them and hire as needed when the time comes again?
- AYBABTME 12y ago
  R&D? Ping pong?
- jscott0918 12y ago
  I don't think the problem is with laying off unnecessary staff. I think this is a notification and backwage issue. If someone works for you for two weeks, then gets fired, you can't just not pay them for the time worked. Also, in most states, you cannot lay off employees without cause (meaning without a specific issue with a single employees behavior or performance) without sufficient notice.
  - justin66 12y ago
    That's pretty much completely wrong, for better or worse. It's called at will employment. Edit: I wonder if the downvoters who have not bothered to comment realize that every state in the US except Montana has some form of at will employment. The person I was replying to couldn't be more wrong. (The very obvious claim about not being able to fail to pay people is of course true)
    - deleted 12y ago
      [deleted]
    - rgbrenner 12y ago
      Edit: I wonder if the downvoters who have not bothered to comment realize that every state in the US except Montana has some form of at will employment. The person I was replying to couldn't be more wrong. You're being downvoted because you're wrong. At-will employment doesn't mean you can stiff your employees on backwages. It also doesn't mean you don't need to comply with Worker Adjustment and Retraining Notification (WARN) laws, which exist in many (most?) states. At-will employment doesn't mean the employer gets to do whatever they please.
GFK_of_xmaspast 12y ago
Mass firings under any and all conditions is how capital works these days.

FD3SA 12y ago

Does anyone know why this layoff occurred? Was it a case of their designs maturing, and thus SpaceX no longer needing the large R&D staff they previously did? Quite curious, as they seem to be doing very well. Musk has capitalized on the Ukraine/Russian ordeal quite well, and is positioned to become a dominant force in the US Aerospace industry. Wouldn't have thought he'd be the type to let go of productive employees on a whim. He understands better than most that talent is the only resource companies have in the long run.

krastanov 12y ago
It happened a week after their annual review cycle. Their version is that it was just removing underperforming staff. They also claim that they plan to grow their workforce by 20% this year (the layoffs was 5% of the workforce). EDIT: Also, their RnD program is still going strong, especially so with the new engines and the plan for their 10m diameter rocket.
- indlebe 12y ago
  >Their version is that it was just removing under performing staff. It's too bad we won't know if there was a formal employee review process in place and if these employees were aware that they were "underperforming".
krschultz 12y ago
The loss of up to 200 jobs at Space Exploration Technologies Corp. is due to firing of “low performer” employees as part of its annual review process, and not layoffs, the company’s president said July 26. [1] That sounds like trying to dodge officially having a layoff, or pretty shitty company culture. I wonder what other SpaceX employees think of the matter. I didn't see much news about it. [1] http://www.spacenews.com/article/launch-report/41428spacex-says-%E2%80%9Cheadcount-reduction%E2%80%9D-due-to-annual-reviews-not-layoffs http://www.spacenews.com/article/launch-report/41428spacex-s...
- bostonvaulter2 12y ago
  Is there something inherently wrong with firing "low performers" rather than laying them off?

snitko 12y ago

SpaceX doesn't owe anything to you unless it signed a contract that says it has to employ you for this amount of time. I don't understand neither laws, nor the people who would foster such lawsuits. That's using government to steal someone else's money because you feel it's unfair that they laid you off.

dragonwriter 12y ago
> SpaceX doesn't owe anything to you unless it signed a contract that says it has to employ you for this amount of time. I don't understand neither laws, nor the people who would foster such lawsuits. If they agreed to employ you in a state, they agreed to do so under the laws of the state. Even if you don't understand the laws, you should be able to understand that the existence of laws providing various protections is part of the context in which people agree to accept employment from a particular employer, in a particular place, and under particular payment terms. Employers certainly consider the legal environment when they choose to employ people in a particular location, and when they decide on the terms of employment.
- snitko 12y ago
  I was trying to argue from a moral point of view. The existence of state, which itself is an immoral institution, doesn't justify the absurdity of the idea to demand being employed.
  - genwin 12y ago
    But no one in the article demanded to be employed.
    - snitko 12y ago
      As far as I understand, people demand money for being laid off. It's essentially the same.
  - cma 12y ago
    If you made your contract with that law as the understanding, you might have demanded more if the protection wasn't there.

bellerocky 12y ago

Do the affected employees know they're in a bad state? Would be courtesy to let them in on their low performance so that they can make a job change before they are "terminated with cause" as that never looks good for future employment. Are they put on a performance improvement plan? It sounds pretty fucked up.

avz 12y ago

(Only tangentially related) If you're a space exploration nerd working in the space industry you'll realize one day that your salary and benefits are space exploration costs. This produces the following dilemma: Accept a small pay and benefits. Space exploration costs go down. More space exploration is done per dollar. Demand a good salary and benefits. Space exploration costs go up. Less space exploration gets done per dollar. Damn it.

AndrewKemendo 12y ago
The ROI on space exploration (currently) is terrible and the only tangible near term solution to that dilemma is asteroid harvesting. That is why SpaceX is predominantly about getting government contracts - outside of satellites (GEO and down) there isn't much economic incentive for humanity. Look, manned spaceflight is cool and there are some really bad ass ideas about space exploration, but the reality is that there really isn't that much in it for us. Our bodies are fundamentally not suited for space travel - so much so that the bulk of on-board systems are life support, making anything else a small portion. What are the goals anyway? I have heard many things like: having a second habitable home for humanity in case (X) happens, or exploration for its own sake. None of these are particularly compelling given the economics behind them. I certainly wouldn't pass up the chance to go to space, but I think it is not where humanity should be putting its energy.
- hga 12y ago
  "SpaceX is predominantly about getting government contracts" Doesn't sound like they're very successful, then, per Wikipedia, "As of December 2013, SpaceX has a total of 50 future launches under contract, two-thirds of them are for commercial customers." Now, the article goes on to talk about their efforts to get validated for military launches, and in the relevant article (https://en.wikipedia.org/wiki/Evolved_Expendable_Launch_Vehicle https://en.wikipedia.org/wiki/Evolved_Expendable_Launch_Vehi...) it says "On July 11, 2014, the DoD certified the Falcon 9 rocket as an EELV launch vehicle.", so we can expect as of late 2016 for them to have more government launches. While NASA et. al. get most of the publicity, the numbers show a significant market for commercial launches. Especially, I would imagine, if SpaceX ends up being both cheaper and more reliable, as they have promise to be.

ChuckMcM 12y ago

Two comments: First when any 'vulnerable' company does anything at all out of the ordinary you can see this. SpaceX is vulnerable because they trade on their reputation. Legal extortion is not all that uncommon so it is not necessarily true that the lawyers think they can win, but they may feel they can get a settlement of some sort. Perhaps one of the lawyers in the gallery will chime in. Second, the laws apply differently in different states. California is an 'at will' state which means you really can be tossed for any non-protected reason at any time (not true if you have a labor contract). But SpaceX employs people in Texas and Florida as well.