The DoJ Sues SpaceX For Allegedly Discriminatory Hiring Practices Against Refugees

Key takeaways

• SpaceX has come under fire from the DoJ regarding claims of deliberately excluding refugees and people granted asylum from getting jobs at the company
• Musk claims the move would have caught SpaceX in international arms trafficking violations
• SpaceX is the dominant private space company in the U.S. and is set to complete 8% of Earth’s payloads this year

Private space company SpaceX, run by eccentric CEO Elon Musk, has gotten in hot water with its hiring strategy. The Justice Department has filed a lawsuit against the company concerning its alleged refusal to hire anyone without U.S. citizenship or a green card.

SpaceX pleads its innocence, but Musk’s many companies face many other employee-led lawsuits. Still, it’s been an exciting week for space exploration as India became the first country to land on the south pole of the Moon on a shoestring budget – which is what SpaceX is all about. Here’s the latest

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Why is the DoJ suing SpaceX?

A new lawsuit from the Department of Justice claims SpaceX has discriminated against refugees and people granted political asylum for years. Filed Thursday, the lawsuit alleges SpaceX has routinely turned away people granted asylum and refugees or refused to hire them based on their citizenship status from at least September 2018 to May 2022.

The lawsuit, if true, would put SpaceX in violation of the Immigration and Nationality Act. The DoJ also claims SpaceX wrongly stated in job postings that it can only hire U.S. citizens and green card holders. According to the agency, there aren’t such restrictions in place in any law.

The Justice Department has apparently been investigating SpaceX since 2020 when an interviewee raised the alarm after claiming the private space company didn’t hire him after revealing he wasn’t a U.S. citizen or permanent resident.

In 2021, SpaceX was ordered to hand over hiring records as part of the probe. At the time, SpaceX’s lawyers claimed, “SpaceX cannot afford to artificially limit the talent pool from which it hires by discriminating against anyone on the basis of their citizenship”.

What was Elon Musk’s response?

Billionaire and CEO Elon Musk responded swiftly, which was made on his social media platform, X (formerly Twitter). Musk replied to a post on the site saying, “SpaceX was told repeatedly that hiring anyone who was not a permanent resident of the United States would violate international arms trafficking law, which would be a criminal offense”.

SpaceX hasn’t taken the lawsuit lying down. In 2021, when the Justice Department requested the hiring records, SpaceX filed a petition against the subpoena because the request exceeded the Immigrant and Employee Rights Section (IER)’s scope. The petition was denied.

The DoJ is asking a court to award back pay and civil penalties for anyone denied a job at SpaceX based on their citizenship status. The Justice Department said in a statement that SpaceX “actively discouraged asylees and refugees from seeking work opportunities at the company”.

The various employee lawsuits against Musk’s companies

There are several ongoing employee lawsuits against Musk’s various companies, mainly concerning alleged discrimination.

Reports in June emerged that Tesla could face a class-action lawsuit after 240 Black factory workers testified about alleged rampant racial discrimination. The testimonies filed in Alameda County Superior Court involve Tesla’s Fremont factory in California. Workers allege that racial slurs were frequently used, racist graffiti wasn’t cleaned up quickly and there were references to the manufacturing site as a plantation or slave ship. The lawyers suing Tesla say 6,000 workers could be part of the case.

Earlier this year, a judge found Tesla owes $3.175 million to a Black former contract worker, Owen Diaz, for failing to shield him from racial abuse. It’s a 98% drop in damages from the 2021 case, which ruled Tesla should pay $137 million. At the time, it was one of the highest-ever awards for an individual suing for discrimination in the U.S. The case went to a retrial after a judge concluded $15 million was the most the Constitution would allow from such a case.

SpaceX has several ongoing lawsuits from former employees alleging discrimination against their age, race and disability. Another recent lawsuit from earlier this month was filed by a former SpaceX technician claiming he experienced disability harassment and open retaliation in the workplace.

It was also reported in July that X (formerly Twitter), which Musk purchased last year, has been hit with a lawsuit for allegedly failing to pay at least $500 million in severance payments to laid-off Twitter workers. The proposed class action lawsuit in San Francisco accuses X and Musk of violating federal laws regulating employee benefit plans.

The space race heats up

News of the lawsuit comes at a time when SpaceX’s model of cheap and straightforward reusable rocket launches looks even more attractive, as India became the fourth nation this week to land a spacecraft on the moon. The Chandrayaan-3 ship is the first to land on the Moon’s south pole.

The Indian Space Research Organization (ISRO) spent around $1 billion researching, building, launching and landing the probe; in comparison, NASA’s annual budget is $20 billion. SpaceX was the first company to introduce reusable spacecraft parts, bringing down the cost of launching a rocketship to a tenth of the price.

Another private space company, Rocket Lab, also made the headlines this week with its 40th mission launch using a reused engine. The Electron rockets delivered a satellite for Capella Space to low Earth orbit. The stock is up 4.2% in the last five days and has risen 45% in 2023.

As for SpaceX, it’s still the big dog in private space. The company is expected to make $8 billion in 2023 sales, compared to Rocket Lab’s $290 million forecast. Musk has previously commented that 80% of all payloads this year are set to be delivered by SpaceX.

The bottom line

Were SpaceX ever to go public, it’s a little concerning from an investor point of view to see employee lawsuits against the company. That said, it still has a promising future, with most of Earth’s payloads coming from SpaceX alone.

It’s unlikely the Justice Department will let the lawsuits go any time soon, having already pulled up other companies for similar issues. But at the same time, SpaceX is still on an upward trajectory regardless of the litigation.

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