In a rare instance of standing before a public court, Tesla has been ordered to pay a Black former employee a total of US$137m as recompense for the alleged racism he endured at the company.

A federal jury in San Francisco decided the electric vehicle maker would have to pay the price after the management supposedly ignored the racial taunts that other workers hurled against complainant Owen Diaz.

The award covers compensation for emotional distress ($6.9m) and punitive damages ($130m).

In 2015, Diaz was hired as an elevator operator at Tesla’s northern California plant where he allegedly heard co-workers telling him to "go back to Africa" and calling him racist terms.

"As opposed to a zero-tolerance policy, Tesla had a zero-responsibility policy," said J. Bernard Alexander III, a lawyer for Diaz, in speaking before the jury.

Tesla, however, argued that it had never set out to ignore the conditions faced by African-American contract workers and that it had earlier addressed the issues raised by Diaz.

Unlike most cases in which Tesla turns to mandatory arbitration to address employee complaints, Diaz's case was heard in a public courtroom.

Tesla has a history of winning arbitration cases. Data from JAMS showed the company has won 11 out of 90 employment-related arbitration cases filed against it between 2016 and March 2021. 

A few months earlier, Tesla was also forced to pay $1m to another Black employee. Back then, the company supposedly failed to stop supervisors from calling the employee the “n word”.