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Tesla accused of exploiting cheap labor to make its factories (updated)

A contractor allegedly took advantage of foreign workers to build Tesla's US facilities.
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Jasper Juinen/Bloomberg via Getty Images

Tesla may pride itself on making the world a better place through eco-friendly electric cars, but it's not immune to ethical concerns. Mercury News has discovered that at least one of Tesla's contractors has been using sub-contracted, low-paid labor (as little as $5 per hour) from eastern Europe to work on the automaker's facilities. The partner companies have avoided offering overtime pay and even compensation for injuries -- one man is suing his employers after he fell three stories while working on a Tesla paint plant in Fremont. The practices let those contractors finish crucial factory work at a fraction of the cost of using American labor, which could cost as much as $52 per hour for similar tasks.

Tesla initially downplayed the findings. In a statement, it maintained that its work agreements require contractors to "hire and pay their workers appropriately" while saying little about its own responsibility. However, CEO Elon Musk is very much the hands-on sort. He tells his Twitter followers that he only just learned about this exploitation, and that he plans to "investigate and make it right." Don't be surprised if Tesla has better oversight of its contractors going forward.

To some extent, the problem rests in the US visa system. While it's easy for officials to verify that temporary visitors and workers are going home at the end of their stints, it's difficult to make sure that they're doing what their visa says they're doing -- let alone that anyone who's working is being paid well. Tesla isn't alone among tech companies facing labor issues, and it certainly bears some responsibility in caring for its contracted workers, but it may need help from the government to minimize labor abuses.

Update: Tesla has written a blog post explaining its views. It stresses that government regulators cleared it of wrongdoing, but it also vows to "take care" of underpaid and injured workers. The company doesn't want the "wrong thing to happen" just to save a few bucks, it says.

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