Lawsuit claims SpaceX laid off hundreds without proper notice, pay

Former employees of Elon Musk's SpaceX filed a class-action lawsuit against the private rocketry firm this week, alleging it unlawfully terminated hundreds of employees without giving proper notice or payouts for back wages and benefits. SpaceX reportedly let go between 200 and 400 workers from its factory in Hawthorne, …

[Swarthy]

It does seem hard to spin it as lay-offs if they (SpaceX) are still hiring. On the other hand, sacking 5-10% of the work force as firing under-performers does strain credulity.

I would love to jump on here and defend SpaceX, lambasting the plaintiffs with much vitriol and frothing at the mouth, but I need more information before I can develop an informed rant.

[Anonymous Coward]

Why?

In most companies, far more than 5-10% are underperforming or otherwise slacking off. Everyone reading El Reg while at work, for instance :)

[Yet Another Anonymous coward]

Re: Why?

At some places I have worked upto 50% are below average

[Eddy Ito]

Re: Why?

It doesn't surprise me they were firings. One of the biggest problems here in SoCal is the lack of able talent. We're constantly hiring and about nine in ten are let go in the first six months because they simply can't or won't do the job they claimed they could. Frankly we had a better time of it at the depths of the recession as it was much easier to find good help even though it also increased the pool of inappropriate people to wade through as many folks were just applying for any job hoping to get lucky.

[John Brown (no body)]

Re: Why?

"We're constantly hiring and about nine in ten are let go in the first six months because they simply can't or won't do the job they claimed they could."

To be honest, that sounds like you really need to tighten up your entire hiring process if it's such a constant problem.

[Steve Brooks]

Re: Why?

And I believe it was once commented that 50% of the population of the United States were of below average intelligence. I will take your comment as sarcasm until demonstrated otherwise but will add, it's not the below average that's the problem it's the distribution of that proportion of the workers that could be the issue. If 50% of the workforce are performing below average, and 100% of those below average workers are in the one facility then you have a problem.

[Chris 244]

Re: Problem

Problem? What do you mean, problem? That's how most companies are organized. R&D/manufacturing in one facility and sales/customer service/management in another.

[ratfox]

Re: Why?

I would posit that way over 50% are performing below average. I would however agree that almost exactly 50% are performing below the median.

[baynesa]

Re: Why?

That's very mean.

[Alan_Peery]

10% fired yearly was General Electric's process for years

I don't know if they still do it, but it was corporate policy during most of the years Jack Welch ran the company.

[alwarming]

There is long term vision .

And then there is short term execution.

Apart from some notable exeptions, you can't be *exemplary* at both. I am glad SpaceX are thinking long term... as most others are doing the other way round.

Having said that, I hope the workers get their due, being laid off when you have not done anything particularly wrong at your job is a terrible event for most people.

[elip]

Re: There is long term vision .

> Apart from some notable exeptions, you can't be *exemplary* at both.

I know quite a few private companies that easily excel at both. The stock markets are the issue with the short term game plans in most (all?) public companies. Unfortunately, the markets have become too big to fail.

[Weapon]

Re: There is long term vision .

The workers did get severance pay, but I guess that wasn't enough? That said, when I hear "class action" I think money grab by lawyers. That pretty much describes every class action.

[Anonymous Coward]

Re: There is long term vision .

Re: There is long term vision .

The workers did get severance pay, but I guess that wasn't enough? That said, when I hear "class action" I think money grab by lawyers. That pretty much describes every class action.

True, but paying less than the legal requirement isn't on either - I bet someone only did the sums later and came up short (at which point lawyers come in and it gets proper costly). This "under performing" part could be similar to what quite a few UK companies do as well: constructive dismissal. The trick is easy: set people up in a way that makes it impossible to perform, then ding them repeatedly for malperformance, then terminate their contract. No need for pesky severance pay. I worked for a company like that, and that was the game when they needed a headcount reduction.

Unfortunately for them, we started briefing people on this and the threat of being taken to court properly was enough to stop it (it appears a company cannot get a government contract if convicted of constructive dismissal).

However, we will never know what it really is - keeping unproductive employees or those that don't align with the company's vision isn't good for the company either.

[A Twig]

Re: There is long term vision .

I believe from the article - "up to 60 days" payment.

Similar to broadband speeds then?

[Woodnag]

That pretty much describes every class action...

"money grab by lawyers" is the mechanism for class actions to work, not a fault. Class actions were put into law to allow companies to be *punished* (by money) for pulling fast ones for small amounts of money on a lot of people. It wouldn't be worth each individual pursuing action. The lawyers work on contingency, and get a large part of the settlement.

Again, the prime purpose of the class action is not to get restitution for the victims, but rather to punish the offender by money. It is therefore more important for the sum to be large, than for the victims to be compensated, to stop repeat behaviour. Thus it is not too important where the money goes.

[Anonymous Coward]

Re: There is long term vision .

> And then there is short term execution.

I heard that SpaceX take discipline seriously, but I had no idea to what point. :-(

Do higher pay grades get executed by Mr. Musk in person?

[Anonymous Coward]

one trick my employer does.

You can be fired for accumulating too many points for missing days, tardies and spending too much time in the bathroom ( I wish the later was a joke but it is not).

They keep them around since a lot of them are good workers and they might need someone to fire in stead of laying off.

Let's say you can be fired for three points. They need to reduce head count so they get rid of everyone with eight or more points. Not enough people, everybody with seven or more. So on and so forth until they get the number they want.

Oh and the manufacturing people have no idea how many points they have. Some days are double point days. Sometime the Supervisor said it was excused but not really. People really panic when slowdowns hit like they are now.

They get rid of a lot of people this way but it is never a layoff. It is always for cause. Always the under performers.

AC for obvious reasons.

[Anonymous Coward]

Re: one trick my employer does.

That can still be constructive dismissal, and this system sounds like it would not survive an inspection in the UK as it's too vague and random. I'd think about leaving, if you could, of course.

[Chris Miller]

Re: one trick my employer does.

There's an old Chinese* story of how to deal with a famine that's affecting two provinces. You identify which province has been more loyal to the emperor (and if their record is about equal you can just flip a coin). Confiscate all food in the 'bad' province (cf Ukraine 1931) and give it to the 'good' province. The people of the good province will be even more loyal to the emperor, because you've just saved them and their families from famine. And the people of the bad province don't matter, because they're all dead,.

* I think (from memory) - apologies if I'm unfairly stigmatising the Chinese.

[mike2R]

Re: one trick my employer does.

Shades of Machiavelli in that:

"Upon this, one has to remark that men ought either to be well treated or crushed, because they can avenge themselves of lighter injuries, of more serious ones they cannot; therefore the injury that is to be done to a man ought to be of such a kind that one does not stand in fear of revenge."

[Chris Miller]

@mike2R

True. But unless my memory's faulty it pre-dates Machiavelli by a millennium or so.

[Anonymous Coward]

equivalence

In the UK there is similar legislation which defines a "mass redundancy" and the requirement to "consult" the workforce and notify the ministry. If I recall - it was nearly 15 years ago - its closer to 30 than 50.

Anon cos my settlement included compensation for the statutory shortcomings of my employer and an element of non-disclosure.

[Yet Another Anonymous coward]

Re: equivalence

In the UK you can't just walk upto people and fire them for no reason (at least once they have been there for a year) in most US states you can - so defining redundancy is harder.

[Chris Miller]

Re: equivalence

IANAL (and have never worked there) but I don't think California is a pure 'at-will' state. There are implied contract (of employment) fairness rulings that apply.

[Hud Dunlap]

@ yet another anonymous coward

That is not true even the the states that are so called "right to work states". Firing some one for no reason after 30 days is just asking for a lawsuit.

[Anonymous Coward]

Re: equivalence

In the UK you can be made redundant without reason within two years of employment. It had been reduced to one year but the Lib-Con coalition switched it back.

[joeldillon]

Re: equivalence

If you're thinking of the right to an industrial tribunal, that's been upped to two years now. Thanks Tories! (And thanks Labour for introducing the year limit in the first place; they're all the same)

[Anonymous Coward]

another chink in the Musk armor

lots of "business as usual" d*ckheadedness that fans excuse from his Tesla operation because SPAAAAACE - but now the less cheered on stuff like this kinda makes the "pump the stock announcements" of hyperloops and utility-replacing batteries even less legit.

[Gordon 10]

Re: another chink in the Musk armor

Seriously dude what thread were you reading? Of the 6 on here only 2 are about spacex directly and one is a mild con and the other fairly even handed.

If I were you I'd avoid short ugly eastern European women in comfortable shoes and lifts with disappearing floors for a while.

You'll also be last on the list to repopulate the earth with a sweet shy girl with big speccy glasses.

We love the leader!

[VinceH]

Re: another chink in the Musk armor

"If I were you I'd avoid short ugly eastern European women in comfortable shoes and lifts with disappearing floors for a while.

You'll also be last on the list to repopulate the earth with a sweet shy girl with big speccy glasses."

Are you suggesting that, perhaps, the people who were fired were the ones who were deemed unlikely to become henchmen?

("were deemed unlikely" because they were fired. If they were offered the job and refused, well, sharks in swimming pools and stuff.)

[publius]

Makes no sense

SpaceX has a very ambitious launch plan for the next couple of years. Based on previous performance of there competitors, there is probably no chance they can meet that schedule. So, they are firing employees?!! A few questions come to mind:

How does this help them get their rockets onto the launch pad?

Who hired "underperforming" employees in such a tight skilled-labor market?

How is this being spun to other potential SpaceX investors, now that the pressure is on to produce?

Ordinarily, a high-tech engineering comany will weed out those who can't perform at the required level, one at a time. A mass firing indicates that the bean counters and marketeers have stepped in.

Nothing good about this news.

--publius

[Anonymous Coward]

Re: Makes no sense

Or it suggests that they went through the reviews, built up a list of names and fired them all around the same time so they wouldn't scare the employees they want to keep.

[Anonymous Coward]

@publius

What tight Skilled labor market? First you have the H1B visa workers and then you have the people who have been laid off. Most of the people I know have taken a 30% pay cut just to have a job. I know far too many people working outside of their field just to put food on the table. Musk is just going for cheap because he knows too many good people don't have a choice.

[Weapon]

Re: Makes no sense

Are you being serious? The answer is pretty simple, SpaceX needs talented employees, so they let go off the less talented ones so they can stock up on more talented ones. You would be surprised how far people can get based on connections.

Other things that come to play is workers that might be talented, but don't work well with teams or cause other people to perform poorly.

Then there is a possibility that SpaceX was exploring a project, the team of specialists failed to deliver on that project so they don't need them anymore.

There are plenty of scenarios, but important thing to note is that they are hiring more employees and plan to finish the year with more.

[keithpeter]

Re: Makes no sense

"Then there is a possibility that SpaceX was exploring a project, the team of specialists failed to deliver on that project so they don't need them anymore."

Isn't that the very definition of a layoff? Or redundancy as we say in UK.

[Anonymous Coward]

Re: Makes no sense

There is a tremendous difference between the design and manufacturing sides at SpaceX. I've worked in aerospace for the last dozen years. Anecdotal as this is, in that time, I've seen that maybe half the workforce are actually worth keeping. The other 50% keeps the first 50% in overtime pay.

[Denarius]

have they been hiring more managers lately ?

as PHB count rises, coalface declines. Don't know, but this resembles similar cuts in Big Co (tm) elsewhere.

[Notas Badoff]

Perfectly normal behavior for a Vogon, you know?

I used to work for a company that every year got rid of about 5% of the lowest performers. Always hiring a few, always dropping a few. Isn't this the way to keep your talent pool healthy?

Of course, later on that company laid off my whole group, spun off everyone else in the building into another company, and left the state entirely, because, well, we weren't in their "home state", where the company political pressure points were. So, not entirely proof against irrational and damaging behavior...

[MrBilious]

I wonder if those workers have skills in the more fundamental/foundational type areas and now that the launch facility is constructed and basic rocketry components are designed and tested they just need to move to a more support type setup for those areas than needing all those designers, rather than invest in re-skilling. 10% is a ridiculous amount if still hiring.

[Anonymous Coward]

You only need 10%

In the software industry, we have the rule of 10% (especially in big companies). That is 10% of the people do 90% of the real work. The remaining 90% do contribute, but it's insignificant, their main contribution is 'donkey work', that is the mundane effectively data-entry, routine work that could be replaced by a machine/automation if you really wished. Also amongst this 90%, about half of them actually create more problems than they solve, thus leading to the need to hire more workers to fix their problems.

Also lots of project managers, business analysts, product owners and other fancy pointless titles plague the software industry.

I would speculate that this is a major problem outside of the software industry too. If you need 100 people to build one rocket, you don't 1000 to build 10 rockets. Otherwise how will the cost per kilo to get a payload into orbit decrease???

SpaceX needs lots of smart people, not millions of dumb people.

[Yet Another Anonymous coward]

Re: You only need 10%

Yes - and when their jobs are no longer required they are redundant and there are laws about what you have to do with people that are made redundant. SpaceX decided to ignore these laws by claiming that all the people were simply fired.

It's like the coal board closing a pit and claiming that every single worker at that pit was coincidentally being fired for poor performance on the day the pit closed

[TheOtherHobbes]

>Also amongst this 90%, about half of them actually create more problems than they solve

And in most companies, you'll find them clustered at vp level and above.

[Dave Stevens]

Firing the underperformers is the same as laying off.

Every layoff exercise has either a monetary reduction or head count target.

The particular strategy can vary: letting go of those on a specific project, those that want to work from home, those that finished low on the latest review, those that make too much or--all too common yet completely illegal--those that are too old.

Those are all layoffs.

Firing a single individual over a specific incident or a history of under-performance is a different matter. Employees are hired and fired one at a time. They are laid off in groups.

[johnwerneken]

sorry mates

Fire at will unless a union contract says otherwise. To heck with laws in general, that law in particular.

[KrisMac]

My Guess? Stack Ranking in action...

http://en.wikipedia.org/wiki/Vitality_curve

Many organisations have tried to energise their workforces through use of stack ranking performance metrics - all have failed eventually. One of the prime boosters of this concept was Microsoft, who only finally gave it up late last year: http://online.wsj.com/news/articles/SB10001424052702303460004579193951987616572

Stack ranking forces the concept of large scale dismissals on an annual basis because it presumes that there will always be a percentage of 'under performers' in any population of employees. In theory culling the drones out leaves space into which higher performing individuals can be employed improving the organisation incrementally over time. On the face of it that argument might not seem far wrong, especially if one looks at government departments where if you sacked all the under performers you might get down to the one person actually doing anything, (likely the cleaner).

But it is too simplistic, and fails horribly in practice since it creates an environment where internal competition, back-stabbing and brown nosing become the only means of keeping a job - performance suffers and the organisation either wakes up to itself, (have to give Microsoft small kudos for that even if it was very late), or it implodes.

If SpaceX is using Stack Ranking then it is a business in which I for one would not want to work...

[Anonymous Coward]

Technology and science allows humans to achieve so much, yet when it comes to money, there is no tech that can help humans achieve common decency.

[paulc]

Firings?

Well if they were firing the incompetents, then there should have been advertisements to fill those posts...

[Herik]

Underperforming

Underperforming, in the context of one large US IT company, recently positioning more into software, means the bottom 10% rated. Oh, and that can rating can be forced not by the employees performance but by the performance of the a) Market. b) Management c) Sales team. "Your division has not done well so we are handing out mostly average and below performer ratings for that group" Those folks could be doing 60 hour weeks and doing above what the average joe does, its just a way US Corporate culture "encourages" others to do better/more or they may be next.

Anyone who has worked for a large corporate will have seen this version of "performance" culture. It is merely a great getting folks to work them seleves into the grave that bit quicker.