Former SpaceX employees sue over alleged labor law violations

Gwynne Shotwell, president and CEO of SpaceX, said the terminated employees were "low performers," according to trade publication Space News.
Gwynne Shotwell, president and CEO of SpaceX, said the terminated employees were “low performers,” according to trade publication Space News.
(Gary Friedman / Los Angeles Times)

Two former SpaceX employees are suing the Hawthorne company, alleging it violated California labor law in terminating them and others in what they called “mass layoffs.”

The lawsuit by former structural technicians at the rocket-maker accused Space Exploration Technologies Corp. of firing 200 to 400 employees in California in late July without providing the 60-day notice state labor law requires.

The suit, which seeks back-pay plus interest, also seeks class-action status to include others laid off. The complaint was filed Thursday in Los Angeles County Superior Court.


California’s Worker Adjustment and Retraining Notification Act requires companies with 75 employees or more to provide 60 days’ notice when laying off 50 or more workers. Companies that fail to provide the notice are required to pay up to 60 days’ compensation and benefits, and they could owe civil penalties of as much as $500 a day should they fail to notify government labor officials of the cuts.

A key issue on the lawsuit is whether the July terminations meet the criteria of a layoff, which California labor law defines as “a separation from a position for lack of funds or lack of work.”

Last week, SpaceX President Gwynne Shotwell said the terminated employees were “low performers,” according to trade publication Space News. She said she did not know how many employees had been fired, but that in past review cycles the number was about 3% of the company’s work force.

A plaintiffs’ lawyer, however, alleged that the company was disguising a mass layoff to avoid paying 60 days’ worth of pay and benefits to dismissed workers. The dismissals leave a “black mark” on employees’ records, which may prevent them from finding work in the future, said the lawyer, Lee Feldman.

“It’s particularly troublesome, because in order to save a few bucks, they told employees they were firing them for cause,” Feldman said.

SpaceX spokesman John Taylor said July 25 that the company conducted a “headcount reduction” of less than 5% of its work force after an annual review cycle and “some rebalancing of resources.”

Even so, he said SpaceX expects to hire more employees than it fires and to end up with 20% more workers this year. The company already is advertising nearly 400 job openings on its website.

The company did not break down the terminations by number, location or position. It said it had more than 3,000 employees at the time, which could put the number of terminated workers at about 150.

Feldman said his clients, Bobby R. Lee and Ron Gatling, were never counseled about their performance or given any warnings before their July 21 dismissal. He said companies in financial straits often use performance as a criteria for determining whom to lay off, “but that’s still a layoff.”

The suit also alleges that the company’s failure to give proper notice and pay 60 days’ compensation constitutes unfair competition.

SpaceX has not formally responded to the lawsuit and Taylor declined Monday to comment on the matter.

Twitter: @chadgarland