US judge refuses to dismiss lawsuit accusing Tesla of discriminating vs. American citizens in hiring

A U.S. judge has refused to dismiss a lawsuit accusing Tesla TSLA.O of discriminating against American citizens in hiring so it can pay less to foreign workers, but said he was skeptical that the software engineer who sued would prevail.

U.S. District Judge Vince Chhabria in San Francisco said in a brief order late Monday that Scott Taub, who filed the proposed class action in September, had offered up "just enough facts" about Tesla's hiring practices for the case to move forward.

Taub says the electric carmaker led by billionaire Elon Musk passed him over for an engineering job, part of its "systematic preference" to hire foreign visa holders in violation of federal civil rights law. He also says layoffs at Tesla have disproportionately targeted U.S. citizens.

Chhabria on Monday said Tesla must face Taub's claims that a recruiter for a staffing company told him that the engineering job he sought was "H1B only," referring to H-1B visas granted to highly educated foreign workers and heavily relied upon by the tech industry.

The judge dismissed claims by a second plaintiff, human resources specialist Sofia Brander, saying it was implausible that Tesla prefers to hire foreign workers for HR positions. He gave Brander two weeks to file an amended complaint fleshing out her claims.

Tesla and lawyers for the plaintiffs did not immediately respond to requests for comment. Tesla has denied the claims in the lawsuit and called them "preposterous" in court filings.

President Donald Trump, a Republican, has imposed a $100,000 fee on new H-1B visas, an unprecedented move that he says will deter businesses from abusing the program and displacing American workers. The fee is being challenged in at least three lawsuits.

The lawsuit says Tesla is dependent on holders of H-1B visas, including in 2024 when it hired an estimated 1,355 visa holders while laying off more than 6,000 workers domestically, the vast majority believed to be U.S. citizens.

Chhabria on Monday said that beyond the recruiter's comments, Taub has presented scant evidence of discrimination. The statistics from 2024, for instance, merely show that Tesla hired a substantial number of H-1B holders that year, but not that it preferred them over U.S. citizens, the judge said.

"All of this causes the Court to be somewhat skeptical of Taub’s allegations," Chhabria wrote.

-Daniel Wiessner/Reuters