Tesla hit with class action over hiring foreign workers over Americans

Tesla is facing a proposed class-action lawsuit in California accusing the electric carmaker of favouring foreign workers on H-1B visas over U.S. citizens in hiring and layoffs, a practice the plaintiffs say breaches federal civil rights law.

The complaint, filed on Friday in San Francisco federal court, alleges a “systematic preference” by Tesla for visa holders, enabling the company to suppress wages while cutting U.S. workers at higher rates. The lawsuit was reported by Reuters.

Hiring data questioned

The case points to 2024 as evidence of a pattern. Tesla is alleged to have hired about 1,355 H-1B workers that year while laying off more than 6,000 employees domestically, “the vast majority” believed to be U.S. citizens.

The lawsuit was brought by software engineer Scott Taub and human resources specialist Sofia Brander. Both claim they were denied interviews after Tesla determined they did not require visa sponsorship. Taub said he was told one role was “H-1B only,” while Brander, a two-time contractor at Tesla, said she was rejected for interviews despite relevant experience.

Allegations of wage suppression

“While visa workers make up just a fraction of the United States labour market, Tesla prefers to hire these candidates over U.S. citizens, as it can pay visa-dependent employees less than American employees performing the same work,” the complaint stated. The filing described the practice as “wage theft.”

Tesla, headquartered in Austin, Texas, did not respond to media requests for comment on the allegations.

Musk’s own history with visas

Elon Musk, Tesla’s chief executive, has previously defended the H-1B programme, citing his own history as a visa holder. In December 2024 he wrote on X that “so many critical people who built SpaceX, Tesla and hundreds of other companies that made America strong” had arrived in the country on H-1B visas.

Plaintiffs argue Tesla has taken that reliance too far, effectively disadvantaging U.S. citizens by using the programme as a cost-saving tool.

Legal and political implications

The case, Taub et al v Tesla Inc (No. 25-07785), has been filed in the U.S. District Court for the Northern District of California. It seeks damages for all U.S. citizens who applied for Tesla roles but were not hired, or who were dismissed while visa workers were retained.

Employment lawyers say the plaintiffs will face challenges proving systemic discrimination, but the claims could expose Tesla to both financial liability and political scrutiny. U.S. visa policy and domestic hiring practices have become flashpoints in an election year where immigration and jobs are central themes.

Industry backdrop

Technology and automotive companies have long relied on H-1B visas to fill specialist roles. Critics argue the programme is frequently misused to depress wages, while supporters say it is essential to address skill shortages.

Tesla, which has cut costs aggressively while investing in new vehicle programmes and artificial intelligence, has already shed thousands of jobs this year. The lawsuit ties those layoffs directly to a preference for cheaper foreign labour — an allegation that, if substantiated, could sharpen debate over how employers balance innovation with obligations to domestic workers.

For Tesla, the case adds another layer of legal risk as it navigates slowing demand in some markets, intensifying competition, and scrutiny of Musk’s management. For U.S. policymakers, the lawsuit highlights the unresolved tension between attracting global talent and protecting American workers’ rights.

Whether the class action gains traction remains to be seen, but its claims cut to the heart of how America’s most prominent electric carmaker manages its workforce — and how the benefits of immigration are weighed against the costs to domestic employment.