Elon Musk’s long-awaited face-off with federal labor regulators starts now.
Over a Zoom hearing on Tuesday morning, SpaceX will begin defending itself against allegations that it illegally fired eight employees for distributing an “open letter” that criticized Musk, the CEO.
The National Labor Relations Board hearing, which is expected to last several days, will provide a rare look into workplace relations at SpaceX, Elon Musk’s privately held $180 billion space company.
While the stakes for SpaceX are relatively minor, the company has gone to great lengths to fight the charges as well as the NLRB itself. SpaceX immediately sued the NLRB after being charged in January, arguing that the independent agency, tasked by Congress to protect employees who are engaging in collective action or unionizing, was unconstitutional.
“This seems much more an ideological debate than how most employers handle it,” says Matthew Bodie, a labor law professor at the University of Minnesota and a former field attorney with the NLRB. He adds: “It just seems like more of a crusade, almost, than a rational economic response to litigation.”
It wouldn’t be the first time that Musk, the world’s second-richest person and the CEO of electric car company Tesla as well as the owner of X and Boring Company, has doubled down when faced with adverse rulings or scenarios. In 2022, Musk’s lawyers told a judge that the Securities and Exchange Commission was subjecting Tesla to “unrelenting” harassment to punish the company for Musk’s criticism of the government. And when a nonprofit group published a report saying that hate speech on Twitter had increased since Musk acquired the social media platform, Musk sued the group for allegedly illegally accessing its data.
It’s unlikely Musk would be asked to testify at the hearing, which will be open to the public, but a witness list should be discussed later today, according to the NLRB. SpaceX did not respond to Fortune’s request for comment.
While the SpaceX hearing starts today, it could take months for the NLRB to make its final decision. Here’s what has led up to today’s hearing and what to expect from it:
How we got here
The conflict dates back to June 2022, when an open letter that criticized Musk began circulating within SpaceX’s internal chat system.
“Elon’s behavior in the public sphere is a frequent source of distraction and embarrassment for us, particularly in recent weeks,” the letter stated. It went on argue that the company wasn’t living up to its “No Asshole” policy and its zero-tolerance sexual harassment policy, suggesting certain “action items” to deal with the situation, including publicly addressing and condemning Musk’s “Twitter behavior,” according to The Verge.
Shortly after that letter was circulated around the company, a handful of employees who had helped draft it were fired. Eight of them went on to file wrongful termination charges with the National Labor Relations Board, which ultimately decided to pursue litigation, and filed its complaint two months ago.
The NLRB’s charge letter is heavily redacted, but it asserts that SpaceX employees who were associated with the letter were interrogated, then discharged or put on leave. One part of the complaint specifically stated that an employee was told to quit if they disagreed with the CEO’s behavior.
SpaceX immediately hit back, filing a lawsuit in Texas against the NLRB the very next day. SpaceX denied the charges against it and argued the agency itself was unconstitutional. This legal battle has turned into its own saga—with a judge deferring the case to a court in Los Angeles, only to have it sent right back to Texas after an appeals case.
Meanwhile, SpaceX filed multiple motions with the NLRB in an attempt to delay the hearing while the case in Texas played out—though those attempts have clearly been unsuccessful, as the NLRB hearing begins this morning in Los Angeles.
While companies like Amazon and Trader Joe’s have pushed back against the constitutionality of the NLRB in administrative hearings in recent months, SpaceX’s response—to file an independent lawsuit—has been particularly aggressive.
“It’s basically in my mind an attempt at repudiating the basic foundations of labor law and an attempt to stifle any sort of concerted activity,” says Bodie, the former NLRB field attorney.
What to expect
The hearing will start off focused mostly on procedural matters—a discussion of subpoena issues and scheduling for further hearing dates, according to the National Labor Relations Board.
While it’s unclear exactly when the testimony and opening statements will begin, once they do, NLRB trials themselves are pretty quick—typically just a few days and sometimes a week if many witnesses are called to the stand, according to Bodie. After all, there is no jury for NLRB cases—just an administrative judge who hears the evidence.
It’s unclear exactly what argument SpaceX plans to make during the hearing, as the company didn’t lay out a specific defense in its response to the NLRB. Bodie says it is common for employers to justify other reasons that the employees were terminated—such as underperformance.
In this particular case, Bodie suggested that SpaceX may argue that employees were complaining about something that was non-job-related—Elon Musk’s Twitter—and therefore wouldn’t have been protected. “I think there’s at least an argument there that what they were doing was not about their own terms and conditions of employment,” he said.
After the trial, the administrative judge will write an opinion, detailing his or her findings from the trial as well as an application of facts to the law. That decision can then be appealed to the board in Washington, D.C., and later to a federal appeals court.
As for the final decision, it could take anywhere from six months to a year to get a final ruling, according to Bodie.
Should SpaceX be found in violation of labor laws, damages typically aren’t high in these kinds of cases: Employees are usually entitled to back pay as well as reinstatement if the NLRB wins its case. That suggests this may not necessarily be about the money for SpaceX.
“I would hazard a guess that they’re spending more on attorneys fees than it would cost them in back pay if they were just to settle the case with the board,” Bodie says.
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