Former SpaceX Employees Sue

[deruch]

I seem to remember vague reports/rumors at the time that the firings/layoffs were spread out over many different divisions/locations.  Depending on how the people that lost their jobs were spread out between CA, TX, FL, etc. then even the 200-400 jobs number may not be relevant.  i.e. there may not have been 50 CA jobs lost, in which case whether they were layoffs or not could be moot in this case (though it might affect WARN violations in other states). 

[Lar]

This thread has a lot of wander potential. Please keep that in mind. We are not a labor relations site. Not sure we should be reposting comments from other sources on this topic... whether positive or negative...

... and I just removed a post as well as a reply critiquing the post. Brickbats to my PM inbox.

[Space Ghost 1962]

Perhaps this might help.

Perspective of Musk is as making quick decisions and deals with the consequences after the fact.

Perhaps he looked at reviews and said something like "I want these gone by end of day/week, get it done".

Perhaps it couldn't be done in a day/week. How do you push back on that?

Oops.

[Nomadd]

Working in a large corporation, RIF's happen.  It is common place.  It is never pleasant.  It is never easy.  Some will take the job loss and do nothing.  Some will feel they were wrongfully let go and seek out council. 

It's not a RIF when you hire more people than you let go.

[guckyfan]

Perhaps this might help.

Perspective of Musk is as making quick decisions and deals with the consequences after the fact.

Perhaps he looked at reviews and said something like "I want these gone by end of day/week, get it done".

Perhaps it couldn't be done in a day/week. How do you push back on that?

Oops.

Elon clearly listens to his employees. He does not make decisions like that and sticks to them if given a reason they are wrong.

[Prober]

Working in a large corporation, RIF's happen.  It is common place.  It is never pleasant.  It is never easy.  Some will take the job loss and do nothing.  Some will feel they were wrongfully let go and seek out council. 

It's not a RIF when you hire more people than you let go.

that kind of spin is up to a US court now to trash around

[newpylong]

http://www.dailybreeze.com/social-affairs/20140807/spacex-sued-for-laying-off-hundreds-of-workers-without-proper-notice

SpaceX is going to have a hard time winning this one. They will need evidence that the terminated employees were previously made aware of sub par performance.

Performance reviews take care of the documentation part, and from what I can tell the fired employee has to make the case that they were not fired.

Firm wide restructuring or losing the least performing 5% out of the blue is layoffs, any way you want to spin it.

SpaceX stated publicly it was less than 5%, and the article in question states "200 to 400 factory workers" which works out to about 1% of their 3,000 employees.  That is hardly a "massive" number if it was a layoff, and that appears to be wording that the Cal WARN Act uses to trigger it's requirements.

They are a young company growing rapidly. Hopefully they take steps to prevent this from happening again.

You are assuming what they did was wrong as opposed to a statistical "bump" in the number of people coming up for internal review that were on shaky review ground.  My guess is that if we knew when the people affected were hired we would see that they came mainly from the same era of hiring, and that it reflects the challenges SpaceX had at the time filling certain positions.

Granted my views are colored by having spent most of my career in management having to deal with performance reviews, but two employees out of "200 to 400 factory workers" doesn't seem like it's a massive problem for SpaceX - more of a law firm taking a chance to see if they can get something out of SpaceX regardless of the merits of the situation.

I think you need to review your math.

I would hate to work for the company you were at. I have never waited until a performance review to fire someone. Performance reviews are to review the last year and set goals for the next year.

Whether they were terminations or layoffs is for the court to decide but its obvious they have some problems if this many were cut at once. If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck.

[ArbitraryConstant]

Elon should just pack up and move SpaceX to Texas where employees know they have to perform or get sacked.

Plenty of California companies take that philosophy too, AFAICT they just give pay in lieu of notice and show you the door.

[clongton]

Employment loss means: (1) Your employment was terminated, but it doesn't include if you're fired "for cause, "like for disciplinary reasons, ...
Mass layoff: This is a reduction in force (RIF) that causes an employment loss at a single site during any 30-day period of at least: (1) 500 employees, or; (2) 50 to 499 workers if they make up at least 33% of the employer's workforce

http://labor-employment-law.lawyers.com/warn-act-may-help-if-youre-losing-your-job.html

WARN does not cover employees that are "fired" v.s. "laid off".  It also does not cover contract personnel (job shoppers). Does anyone know if these persons were fired or were job shoppers?

Also 400 employees does not rise to the 500 employee level to trigger a WARN. Because it is below the trigger number it does not constitute a "Mass Layoff" and therefore does not trigger the WARN requirements of 60 day notices.

ISTM that SpaceX threaded the needle on this one.

[butters]

The software industry is associated with a fair number of radical management theories, and while it's refreshing to see Elon Musk apply some of them to the manufacturing sector, I was hoping that he would leave the vitality curve (aka "rank-and-yank") behind. This was a strategy pioneered by Jack Welch at GE to be applied only to management. It's also commonly applied in the financial industry and in sales. But the software industry is famous for applying the vitality curve to engineers, usually with mixed results.

It appears to work best when the company is healthy and growing and has an abundance of job applicants. So if any company is in a position to test the vitality curve hypothesis on a technical workforce, SpaceX could possibly make it work at this stage in their corporate development. Most companies don't try it until they are past their prime and struggling to reinvent themselves.

[Coastal Ron]

I think you need to review your math.

Yes, as another pointed out it was worng ().  However SpaceX has stated that the number of people involved was less than 5%, so if their employee total is 3,000 then it would be less than 150 people at question here, not the 200-400 stated in the lawsuit (implying an employee total between 4,000-8,000 if 5%).  I adjusted the loose nut on my calculator so the math should be right this time...

I would hate to work for the company you were at. I have never waited until a performance review to fire someone. Performance reviews are to review the last year and set goals for the next year.

The most recent companies I am using for reference are well known technology/manufacturing companies that were in high demand to work for.  Not sure what type of companies you work for, but we typically had two review periods per year and managers were busy taking care of non-employee management issues in between the review periods.  Now sure there would be some employees that merited immediate attention (such as when I fired my first employee for lying about an accident), but the normal process would be that expectations would be set during performance reviews and then followed up at the next one unless otherwise agreed upon.

Whether they were terminations or layoffs is for the court to decide but its obvious they have some problems if this many were cut at once. If it looks like a duck, swims like a duck, and quacks like a duck, then it probably is a duck.

In fast growing technology companies sometimes you hire someone that is just not the right fit, so from what I can tell SpaceX management is being very good at making sure that they don't keep people around that aren't the right fit.  Is that wrong?  I hope you aren't advocating that once people are hired they are guaranteed lifetime employment regardless whether they are the right person for the job.

So the key thing to note here is that what SpaceX has said they have done is not unusual.  Maybe not the most common route, but certainly not unusual in company practice.  Which is why the supposed "duck" in this case looks like these were performance related actions, not a layoff.

[deltaV]

Employment loss means: (1) Your employment was terminated, but it doesn't include if you're fired "for cause, "like for disciplinary reasons, ...
Mass layoff: This is a reduction in force (RIF) that causes an employment loss at a single site during any 30-day period of at least: (1) 500 employees, or; (2) 50 to 499 workers if they make up at least 33% of the employer's workforce

http://labor-employment-law.lawyers.com/warn-act-may-help-if-youre-losing-your-job.html

WARN does not cover employees that are "fired" v.s. "laid off".  It also does not cover contract personnel (job shoppers). Does anyone know if these persons were fired or were job shoppers?

Also 400 employees does not rise to the 500 employee level to trigger a WARN. Because it is below the trigger number it does not constitute a "Mass Layoff" and therefore does not trigger the WARN requirements of 60 day notices.

ISTM that SpaceX threaded the needle on this one.

The California WARN act covers layoffs of 50 or more people regardless of percentage of workforce: http://www.edd.ca.gov/jobs_and_training/Layoff_Services_WARN.htm#GeneralProvisionsoftheFederalandCaliforniaWARNLaws .

[dragon44]

The software industry is associated with a fair number of radical management theories, and while it's refreshing to see Elon Musk apply some of them to the manufacturing sector, I was hoping that he would leave the vitality curve (aka "rank-and-yank") behind.

I think it's important to note that SpaceX has never said anything about a vitality curve. I think people jumped to that assumption when they saw "low performers" and a % attached to the firings. Rank-and-yank implies something like 1) Rank all employees from top to bottom 2) Fire the bottom 10%.

There is nothing to suggest the lowest n% had to be fired. It sounds more like annual reviews are complete, we have people that still aren't measuring up, let's fire them and hire replacements.

[GORDAP]

The California WARN act covers layoffs of 50 or more people regardless of percentage of workforce: http://www.edd.ca.gov/jobs_and_training/Layoff_Services_WARN.htm#GeneralProvisionsoftheFederalandCaliforniaWARNLaws .

DeltaV, it looks like you're misreading the law.  According to the link you provided, the '50 or more people regardless of percentage' provision only comes into effect if it is associated with a plant closing.  From the link:

"Plant closing. This is when an "employment site," or part of a site, is shut down and causes an "employment loss" for 50 or more employees during any 30-day period"

As far as we know, there was no plant closing associated with this event - that would have been much bigger news.

[deruch]

The California WARN act covers layoffs of 50 or more people regardless of percentage of workforce: http://www.edd.ca.gov/jobs_and_training/Layoff_Services_WARN.htm#GeneralProvisionsoftheFederalandCaliforniaWARNLaws .

DeltaV, it looks like you're misreading the law.  According to the link you provided, the '50 or more people regardless of percentage' provision only comes into effect if it is associated with a plant closing.  From the link:

"Plant closing. This is when an "employment site," or part of a site, is shut down and causes an "employment loss" for 50 or more employees during any 30-day period"

As far as we know, there was no plant closing associated with this event - that would have been much bigger news.

No.  The "50 employees" number isn't limited to only plant closings.  The sections that are relevant are CA Labor Code Section 1400 and 1401 (1402-1408 are about liability and associated issues), especially 1400.d & .f: 

CA Labor Code:
1400.  The definitions set forth in this section shall govern the construction and meaning of the terms used in this chapter: 
     (a) "Covered establishment" means any industrial or commercial facility or part thereof that employs, or has employed within the preceding 12 months, 75 or more persons.
     <snip>
     (c) "Layoff" means a separation from a position for lack of funds or lack of work.
     (d) "Mass layoff" means a layoff during any 30-day period of 50 or more employees at a covered establishment.
     (e) "Relocation" means the removal of all or substantially all of the industrial or commercial operations in a covered establishment to a different location 100 miles or more away.
     (f) "Termination" means the cessation or substantial cessation of industrial or commercial operations in a covered establishment. {NB: this is talking about "plant" operations termination not specific job employment's termination}
<snip>

1401.   (a) An employer may not order a mass layoff, relocation, or termination at a covered establishment unless, 60 days before the order takes effect,...
<snip>
(all emphasis added)

The 50 people is related to the "mass layoff" term.  The code requires the prior notice for both "mass layoffs" and "termination", which is what the code calls plant closings (per 1401.f).  Mainly, this case will be all about whether the job losses were actually layoffs or indeed firings.  At least, assuming that at least 50 of the people that lost their jobs were employed at one CA covered establishment or that they met the equivalent Federal statute, the focus will be on that.  There may also be some wrangling about whether enough of the jobs were at any one site to meet the reporting requirements.     

[CuddlyRocket]

^ Is SpaceX suffering from a lack of funds or lack of work? The fact that their overall numbers are going up would tend to suggest not. I suppose a part of SpaceX might suffer from lack of work if they over-produce because demand is a lot less than anticipated, but I haven't seen enough to judge whether that is the case.

[deruch]

^ Is SpaceX suffering from a lack of funds or lack of work? The fact that their overall numbers are going up would tend to suggest not. I suppose a part of SpaceX might suffer from lack of work if they over-produce because demand is a lot less than anticipated, but I haven't seen enough to judge whether that is the case.

While I don't have any personal knowledge of the state of SpaceX's financial health, "lack of funds" in this context means like soon unable to meet payroll (though, in certain circumstances, there are exemptions from WARN for companies that are in the process of searching for or securing financing).  I don't at all believe that is the case here and any further speculation on it requires theories that come very close to tinfoil hat brigade stuff.  "Lack of work" is about shortfalls in orders leading to being overstaffed, capturing large gains in productivity without corresponding gains in production levels that makes employees redundant, or lowering production, and hence payroll, as a cost cutting measure.  Without knowing what their jobs were, what numbers in various divisions, etc., any discussion is total hypothetical twaddle.  All we really know is that SpaceX has said that they weren't layoffs.  The plaintiffs in the case will have to prove otherwise.  It wouldn't be the first time that a company has done so.     

[Ludus]

I'd think SpaceX would find it hard to argue that terminating 50+ employees on a single date was not a layoff under the law. The claim that it was based on performance reviews in that context seems to be simply a selection criterion like seniority for a blanket decision to reduce the workforce (layoff everybody with a score below X on their performance review). As long as it's not lay off everybody over 40 or layoff everybody who's Muslim or some other prohibited category that's OK...but it doesn't let them off notification and severance requirements.

The principle here is that termination for cause means the employee actively violated a rule or did something clearly blameworthy, not that they simply didn't work up to expectations. The later is entirely arbitrary and accepting it would mean any employer could neatly sidestep all regulation of layoffs.

They might find it cheaper and easier to settle for paying the 60 days back wages and benefits.

This seems like a pretty technical HR/Labor law compliance issue rather than an indication there's any hidden problem at SpaceX.

[butters]

My limited understanding of labor laws is that it is tricky to legally fire employees for not being good enough at their jobs, so companies devise official policies and procedures for measuring performance and responding accordingly. They can't just be on the general lookout for under-performing employees to cull whenever it makes sense. It has to be a sort of game with rules that everybody signs acknowledging that they understand how to play. Otherwise it's not fair.

Many companies have these kinds of policies in place, and there's absolutely a way to implement this legally. The question is whether SpaceX documented their policy appropriately and jumped through all the other requisite hoops to fulfill their responsibilities under the law. The law cares primarily about the process. The outcome is secondary.

[wolfpack]

I think some of you are confusing layoffs and terminations. A layoff is WITHOUT CAUSE (business dried up, company decided to exit a market, etc). A termination is WITH CAUSE (low performance review, employee violated a workplace rule, etc). Terminations are always tougher because the company is making a definitive statement about an individual and it has to be true or else it's actionable. Thus you need documentation and lots of it.

So you don't layoff low performers. You fire them and cross your fingers that they don't sue. Which in this case they did. Beyond that, it's really an internal SpaceX issue and not any of our business.